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  • Beth & Tim Manners

Financial Aid: How to Compare Offers


The New York Times: "After the college acceptance letter comes the financial aid offer. But beware: The offers are not always easy to decipher, and different colleges often use different jargon for the same types of aid or loans ... A study in 2018 by the New America think tank and uAspire, a nonprofit group that promotes college affordability, examined thousands of award letters and found that not only was the financial aid insufficient for most students, they often used confusing terms. Among the colleges that offered a common type of federal loan, for instance, researchers found more than 100 terms for the loan, including two dozen that didn’t even mention the word 'loan'."


"To compare aid offers, student advocates recommend that you first determine the total cost of attending each college, including 'direct' costs like tuition, fees, on-campus housing and meal plans, and 'indirect' costs like books, supplies, transportation and other expenses. If your aid letter doesn’t include a breakdown of these costs, call the financial aid office, visit the college’s website or try tools on the Education Department’s College Navigator. Next, subtract any 'gift aid,' which includes grants — including federal need-based Pell grants — and scholarships. This will give the 'net' cost to you of attending the school — the amount you will have to come up with from savings, income or borrowing. Calculate this amount for each college."


"In general, an undergraduate can borrow up to $5,500 in federal student loans as a freshman, $6,500 as a sophomore and $7,500 each during the junior and senior years, for a total of $27,000 over four years. (Students can borrow more if they take more than four years to graduate; also, the limits are higher for independent students.) If families need to borrow more, parents can borrow federal PLUS loans, which carry higher interest rates, up to the total cost of attending. Families can also seek private student loans from banks and other lenders, but those loans lack important consumer protections available with federal loans, like the option for payment plans based on the borrower’s income."


"Four-year tuition guarantees, sometimes called 'fixed' tuition, can help families budget for college. They aren’t widespread, but they’re out there, so they are worth asking about. The University of Arizona and the University of Illinois system are among the institutions pledging that freshmen will pay the same tuition rate for their four-year undergraduate degree."