Four Steps to Evaluating a College Financial Award Letter

Four Steps to Evaluating a College Financial Award Letter

Applications are submitted, and decisions are coming in. What’s next? Financial Aid Award Letters.

Once admitted to a college, students will receive a financial aid award letter from the financial aid office from every college to which they were admitted; these letters will quantify the package offered and the cost of attendance. Unfortunately, financial aid award letters are not uniform and can be difficult to understand.

💡Expert Tip: At most colleges, people rarely pay the advertised sticker price. However, even with need-based and merit aid, private colleges usually have higher costs of attendance than in-state public institutions.

💡Expert Tip: Ivies and most other highly-rejective institutions only provide need-based aid.

Follow These 4 Steps to Evaluate a College Financial Aid Award Letter 

ONE: Understand What is Being Offered

The main types of aid “awards” seen on financial aid award letters can be neatly divided into two broad categories: free money and money borrowed and/or earned.

TWO: Ensure the College is Affordable

Feel accomplished and proud when colleges offer generous merit scholarships but don’t conflate that with a good return on investment or as a signal of affordability. Ensure a college is affordable by considering the total cost of attendance and then extrapolating it over four years, accounting for inflation and any other costs not quantified in an award letter (e.g., travel, winter clothing, computer, and other anticipated expenses). 

THREE: Determine if Awards are Fair

Use data to compare the amount awarded to institutional averages. Current Fine Educational Solutions clients are encouraged to take advantage of the Compare and Appeal Feature by uploading award letters. Doing so will provide a side-by-side comparison of all offers and helps determine if asking for additional funds is appropriate (i.e., is the price fair and/or reasonable?).

A word on loans. Loans lower the institutional bottom line, NOT the students. If Parent Plus and/or private loans are included in a financial aid “package,” ask, “is that fair?” Should parents delay retirement? Should young people take on excessive debt to attend an institution that essentially offers the same product as State U? Conversely, since the maximum amount of federal loans is $27k over four years and $31k over five years, is it reasonable to ask students to have some skin in the game?

💡Expert Tip: Loans are “use or lose” by year. Make sure you take loans each year if you don’t have sufficient funds available to pay for all four years of college.

FOUR: Consider Appealing for More Scholarship Money

Colleges are businesses. Regardless, there are circumstances in which an appeal makes sense. Generally, an appeal is worth a shot at private colleges when an award is less than reasonably anticipated or something has changed in a family’s circumstances. If an appeal is appropriate, present a sound case; the worst thing that can happen is they say “no.”

Strong candidates for appeals due to changes in circumstances include retirement distribution, Covid-related issues, separation, divorce, remarriage, unemployment, illness, death, better offers from competing colleges, and business ownership. Additionally, twins may have some luck with an appeal.

💡Expert Tip: Even if you can afford to pay, why overpay? Using the data available to evaluate an award is smart. To see great examples of this in practice, click HERE and watch the video (start at 45.25).

💡Expert Tip: Colleges don’t care how, when, or if people retire. An appeal based on funds earmarked for retirement or a desire to avoid loans will likely fail.

Tune in next week for step-by-instructions on how to formulate an effective financial appeal. For more information on evaluating college financial award letters or anything related to the college admissions process, please reach out to kathy@fineeducationalsolutions.com.