Hello! Life has been crazy recently as I’m sure it has been for many of you. As some of you know, I recently started my full-time job in Washington D.C. I moved up here with my car full of stuff, and it’s so nice having my own apartment. Fun fact: life is really expensive, especially when you live in an expensive city. I’ve been carefully budgeting for everything, and I realized that balancing my budget would be so much harder if I had student loans hanging over my head ( thankfully, I have none). So today, I wanted to share with you how to understand your financial aid package, so you can understand it, negotiate and end up with fewer loans, too!
Let’s start with some financial aid vocabulary:
Grants: Free money that goes towards education costs. You do not have to pay these back. Usually, these are provided by a governmental organization, through a Pell Grant, or other grant.
Scholarships: More free money that goes towards education costs.You don’t have to pay these back, either. These differ from grants because they’re usually provided by an individual, organization or the educational institution. The only real difference is where the money comes from. Both are free money that you don’t have to pay back, so both are good.
*Grants and scholarships sometimes can only be applied to tuition, or housing, or a specific element of the bill. Make sure that you know what it can be applied to.
Subsidized Loans: These are government loans to pay for undergraduate education, where the government pays the interest while the student is in college. So if you got a $3,500 loan your first year, your loan is still worth that amount when you graduate because the government paid the accrued interest. These are only available to students with need who fill out the FAFSA.
Unsubsidized Loans: These can be government or private loans for educational costs. Whoever signs for the loan is responsible for all interest, that begins accruing once the loan begins. Learn more about the difference between these loans here.
Federal Work Study: This one is tricky. A student may receive a $2,000 Federal Work Study Program (FWSP), but that does not mean you will earn that amount. Basically, this FWSP is the government providing an institution with money to pull from to pay you. However, students still work hourly jobs, you don’t magically make more because you have the FWSP. You’ll still have to find a job (some schools help with this, others don’t), and you’ll still get paid that hourly rate. Some on-campus jobs are only available to FWSP students, so it can help you get a job, but you will not earn this amount, so don’t make the mistake of counting that as a scholarship. It is not. Feel free to email me about this or comment below and I can explain further!
EFC: Your Expected Family Contribution (EFC) was determined by the FAFSA. This is not the amount of money you’ll pay for the year. This is a number that financial aid offices use to determine eligibility for aid, by comparing it to Cost of Attendance.
Cost of Attendance (COA): This is how much the institution costs with everything included (like tuition, housing, meal plan, fees) and then some more (health insurance, transportation, books, etc). Usually the cost of attendance is slightly exaggerated for most people, because some of those extra costs may not apply to you. I lived 45 minutes from Elon University, so transportation was relatively inexpensive. I’d rent used books on Chegg, Bookbyte or Amazon. Financial aid offices take the COA - EFC to determine your need. Some people have an EFC that’s higher than the cost of attendance, which means you have no need.
WARNING: Schools vary on what they consider in the COA total. Some include room and board, some don’t. So please make sure you look at what that number includes. You don’t want to think you have it all figured out and realize you didn’t account for housing or a meal plan.
First, look at one award package at a time. If you have multiple, you’ll eventually want to compare them, but you want to fully understand what each one means before you compare apples to oranges. Some schools have particular scholarships or programs that others don’t have, and each scholarship can have different terms (like being renewable annually or a one-time gift). So for your own sanity, start with one award letter. Once you fully understand it, look at the next one.
Second, read it carefully. Sometimes award letters abbreviate loan to L., so you may not know it’s a loan (award letters are notorious for not differentiating the difference between scholarship aid and loans, so make sure you carefully look at this). I’ve included the questions I’d ask myself about each aid item on my award sheets:
-Is this a scholarship, grant or loan?
-Are there any terms tied to this aid? Do I need to keep a certain GPA, be a full-time student, etc?
-Is this renewable every year, or a one time gift?
-Is this merit or need-based?
These questions are important because if your financial situation changes, your aid can change. My mom got remarried (yay!!) but because I now had two incomes in the household, that changed my need. Similarly, when I became a part-time student my last semester, my total aid was cut to ¾ because I was no longer a full-time student. So make sure you understand the situation and what you need to do so you don’t accidentally lose a scholarship.
Third, call the financial aid office and confirm that you understand the award. I’m not kidding. If you’re going to make this huge decision, you’ll want to verify with the office that you have all the right information. If you call and tell them you want to talk through the award letter to make sure you understand it, they’ll go through it with you. If you say each item and ask each question I included above, you’ll have the right information. Personally, I didn’t use these calls to ask for more aid, because they need to know that you’re a great investment before they’ll offer any aid. A random phone call will not prove that to them.
Fourth, repeat this with all the award letters until you have them all done, then compare them. Some private schools may have a higher cost of attendance, but may offer enough scholarships so the COA is cheaper than a public school.
Remember, these award letters are not final. You can always negotiate! Which will be the topic of the next blog post. As always, if you have any advice or questions about the process, feel free to comment them or email me!
Hi, I'm Riley! I graduated from college in December 2016, after working to earn over $100,000 in scholarships and aid.