It’s very exciting when the first acceptance letter arrives from a college. The months of taking tests, writing essays, completing applications are over and the results of those labors are now arriving.

An acceptance letter will often include a financial aid award letter. The award letter contains important information about the financial aid package you are offered by the college. Many students apply to 10 or more colleges. So, when the financial aid award letters begin arriving, it is essential to review each award carefully and compare it to the others before you make your final decision.

Award letters typically include the college cost of attendance (COA), your family’s expected family contribution (EFC) and the types of financial aid offered to you -- usually a combination of scholarships, grants, and loans. Since there is no standard award letter, and each college uses its own format and terminology, it may be challenging to compare “apples to apples.” So, where do you begin?

You can use the accompanying financial aid award comparison chart to sort and analyze each award to see how each compares to the others.

Here are some important considerations to keep in mind as you review each award:

Cost of Attendance: The COA should include current costs for tuition, fees, room and board, in addition to projected costs for books, transportation and personal expenses. Does your award letter itemize these expenses and realistically estimate them?

Expected Family Contribution: The school’s EFC should be included on your award letter. This may be different than the EFC noted on the Student Aid Report (SAR) you received after filing the FAFSA. The figure is determined by whomever is awarding the aid—usually the federal government or individual colleges and universities.

Scholarships and grants are funds that do not have to be paid back. Does your award letter clearly list scholarships and grants? If so, and if not already stated, you should know whether the money will be awarded all four years or for a limited time. Must you maintain a certain grade point average to keep the scholarship? If you decide to switch majors, will you be able to keep the award?

Federal Work-Study: Most colleges have jobs on campus for students to work and earn money, usually at minimum wage. How many hours would you be expected to work to earn the work-study money listed on your awards? If you accept work-study, will you be guaranteed a job? Be careful how many hours of work per week you commit to, especially if you are a first-year student. You may wish to request the funds be converted to a loan, or conversely, ask that some of the loans be converted to work-study. You must ask immediately, since Federal Work-Study funds are limited. How will you manage the Work-Study money you earn? Will you put the money earned from an on-campus job toward your college expenses? Or, will you use it as your weekly spending money?

Loans are funds that have to be paid back. If loans are included in your financial aid package, what specific loans are being offered? What are the interest rates? Were you offered more than one federal loan? You may be offered a subsidized Stafford loan, a parent PLUS loan, an unsubsidized Stafford loan, a Perkins loan, or some combination of federal loans. It is important to know the difference. A quick reference chart outlining the difference can be found on HESC’s Web site.

Bear in mind you can accept the federal loans on the award letter, but you may decline them later when you are invoiced. It is more difficult to decline them on the award letter only to find you need them to help pay your invoice later.

Is there unmet need? Does the award letter clearly state the school is unable to award your full need? If it is offering you full need, is most of the money in the form of scholarships and grants or loans and work-study? How much of the money must be repaid?

After totaling the financial aid, and the amount, if any, your family will contribute, how much is left to pay? How will you fill the gap? You may have some money in savings to use, but if not, will you turn to an alternative (private) loan? And, most importantly, will you be able to afford the additional debt you will incur by taking a private loan, usually at higher interest?

Alternative education loans, also known as private education loans, help bridge the gap between the actual cost of your education and the amount the government lets you borrow. Alternative loans are offered by private lenders. There are no federal forms to complete. Eligibility often depends on your credit score. Rates, fees and terms vary, so compare alternative loans carefully and read the fine print.

Borrowing an alternative loan is a serious financial commitment. Alternative loans have higher interest rates and most charge fees making them more expensive than federal loan options. Be sure to exhaust all federal loan eligibility before taking an alternative loan.

If an alternative loan is needed, student borrowers will secure better terms and pricing by adding a credit worthy co-signer to their application. Always check the interest rate, fees, interest rate capitalization policy, repayment period, prepayment penalties and other terms and conditions before you sign a promissory note.

What will happen to your award if you receive an outside grant or scholarship or take a private loan? Will the school reduce your institutional grant or scholarship, or will it reduce the loan or job hours? Now is a good time to check each school’s policy on this issue, especially if you have applied for outside, non-institutional scholarships.

You can appeal your award if you feel your needs are not being met, if your family’s financial situation has changed since you applied, or if you have received a better offer from a competitive school. Ask for a reconsideration of your award, based on these new circumstances.

Talk to your family realistically about your “dream” college and those you can actually afford. The key is being open to all the possibilities each college or university can offer at a price you can pay.

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