Your FAFSA (Free Application for Federal Student Aid) has been submitted and you are anticipating your financial aid award notification. This award letter may arrive either by postal mail, email, or online, and spells out the details of your financial aid package from the college(s) to which you applied. If you applied to more than one college, then you will receive more than one award letter. Once all award letters have been presented to you, you’ll want to compare them to determine which college is the best option and most affordable, depending upon your budget.
How do you decipher what is being offered to you?
As you may recall, there are four types of financial aid available to students; scholarships, grants, work-study and loans. Scholarships do not have to be repaid, are awarded for various reasons, and may be renewable if you maintain certain criteria such as grade point average. Grants are also free to the student and do not have to be repaid. This award is based on the family’s financial need and is determined from the results of the FAFSA. Work-study is the opportunity to be employed by the college so you can earn money while you are a student. Keep in mind that you will be paid as you perform the job, so the money will not be available up front like other types of financial aid. Loans may be offered to you, which is money borrowed to pay for college expenses and will have to be repaid. Some loans are interest-free while you are a student, and other loans have interest that begins accruing as soon as the loan money is put into your account.
Will the financial aid offered to you cover all of your costs?
Often times, the college will list their cost of attendance on the award letter, but if not then you can go to their website to determine their total cost of attendance. To better understand if you will have enough money to cover all of your expenses, you’ll need to understand direct verses indirect costs of college. Obviously, you will be charged for tuition and fees, and you will have to buy or rent textbooks and supplies. If you will be living in campus housing, you’ll also be charged for room and board (which is your campus meal plan). Those expenses are considered your direct costs of attending college. Many colleges will include an estimate for indirect costs as well. Indirect costs are an estimate of the amount of money a student may potentially spend throughout the school year on transportation, personal items, eating out, etc. You will have to determine if you would like to cover these indirect costs with your financial aid, money from savings, or if you will work while going to college.
What if all of my college costs are not covered?
The college(s) may not be able to cover all of the costs for a student; this is referred to as “gap” or “unmet need.” In this case, loans are offered to the student first, and then to parents if there are still remaining costs to cover. Your other choices are to set up a payment plan with the college, take out an alternative loan, or perhaps choose a college that is more affordable, based on your financial situation.
Do I have to take any action, once I receive my award letter?
After you receive your award letter(s), have compared packages (if you are entertaining offers from more than one college), and decided on a particular school, you will be asked to accept or reject each type of financial aid presented to you. You will then need to sign and submit that copy and return it to the college’s financial aid department, either via postal mail or online. The money that you have accepted will go to cover your direct expenses at the college.
Remember to read through all paperwork received from the college and take action on anything that requires a response.