Comparing College Financial Aid

2006-10-05

On one hand, your child has just been accepted to several colleges of her choice and your family is overjoyed about it. On the other hand, you now have to figure out which offer is the best one for your child and how you are going to pay for you’re his or her college education. You may have also been informed in those letters what the total cost of enrolling in the school would average to, how much you should contribute and what is included in the whole package. In other words, the letter may have provided you with estimated budget for college.

Financial aid offers normally consist of two kinds:
• Gift Aid – like grants or scholarship that do not have to be repaid.
• Student Loan or self-help – there are subsidized loans (Stafford, Perkins) or aid offers to student-workers.

In considering which one is the best for your son or daughter, you have to look into many aspects.

First, determine the type of financial aid offered to your child. Is it a scholarship? Is it a loan or a work-study?

Second, consider the cost of attendance against your budget. A more expensive school or course may require more resources. Aside from the tuition fees, make sure to take note of what your child will need in order to go to that school and consider these in the total expenses. Include in the cost other things your child may have to spend for while in college --- like room and board, transportation, books, and other personal expenses. Will your child be living off campus? Skip meals? Borrow or buy textbooks? Avail of cheaper airfares when he or she goes home for the breaks?

Third, consider your EFC (Expected Family Contribution) or what you may need to contribute to your child’s college expenses, out of your own money. If your child’s financial aid package includes a scholarship grant (which will then need not be repaid) the total amount does not necessarily mean the exact figure or cost of attending such a school, since that may just cover some fees, depending on the grant. You may still need to avail of an educational loan or work doubly hard, just so you may come up with an EFC that will pay for those expenses not covered by the grant. If the grant will provide your child with a higher proportion of the fees and expenses, then you will probably have to borrow less to be able to pay for the expenses. But again, you have to consider the total cost of attendance.

Fourth, always check the fine print of the financial aid offered to your child for some unexpected charges and fees that may arise.

Then, if you have all of these figured out, subtract the scholarships or free money from the total cost of attendance, including your allotted EFC, then you will have the actual estimates. Once you have the exact estimates of how much your family will need to spend, it is easier to decide from there. Compare these with all the offers your child have received and decide which ones you are most comfortable with.

If you have done the subtraction and find that there is little difference of maybe about $1,000, then you will not have a harder time choosing which offer is best. But if there is a substantial difference of more than $10,000 for example, it would probably mean adjusting your financial plan once again. Will you have to seek for higher loan? Will you have to do away with some personal expenses like a family vacation or a new car or some home improvement projects?

Ideally, in most extreme situations, you may also have to consider asking for a more conservative estimate from the school. This is especially helpful if:

• Your current job situation is unstable - as in the case of possible retrenchment, or receiving less overtime pay, or a slowdown in business interests.
• Your family have considerable expenses like maybe another sibling going to graduate studies, legal expenses or medical expenses.
• Your family expenses have changed dramatically because of death or divorce or disability.

Even if you have the numbers and estimates computed for you, in the end, the choice to accept all or none of the offer is a big decision the family must make together.

Related Articles:
» Federal Grants for College Students
» College Costs On The Rise
» Sources of Free Money for College

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