Making Sense of Your Financial Aid Award Letter
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So you filled out your FAFSA and submitted all the required paperwork for your financial aid application. Congratulations! Soon, you can expect to receive a financial aid Award letter from your school. The purpose of the award letter is to explain the financial aid package your school is offering to help you cover your education costs.
Financial Aid Award Letters: What You Should Know
Like the FAFSA itself, however, your award letter may take some time (and tips) to fully understand. Knowing what to look for and how to make sense of the information provided in the letter will help you determine how much of your school costs you will have to plan on paying yourself.
Recently, criticism about the true usefulness of award letters has grown. The FinancialAidLetter.com website reviews examples of financial aid award letters from six schools, putting the jargon into plain English and discussing what the award letters are really saying (or not saying)!
Many school expenses and fees are not included in tuition
Award letter critics point out that although expenses such as books, transportation, room, and board are not a part of tuition, typical financial aid award letters do not call attention to this fact or list the extra expenses separately. These costs can easily total several thousand dollars per year.
In order to create a reasonable financial plan for school, you need to know what expenses you'll have to cover beyond tuition. If your financial aid award letter doesn't clearly separate ALL the many different costs of attendance, you should contact your school's financial aid department and ask them for this information.
Schools may add private loans to their financial aid package without explanation
In order to cover costs not included in tuition, financial aid officers may add a private loan or two - often from the school's "preferred lender." If the award letter does not clearly label and explain the loan, it may give you the impression that some of your costs are being covered by the school itself when in reality the money will come from a loan that YOU will have to pay back.
What's more, if the loan is not from a federal loan program, or subsidized in some other way, you might end up paying interest as high as 17%!In your financial aid award letter, if you see costs covered by private loans, ask your school's financial aid department to explain the loan and lender before you agree to accept it.
More on Student Loans
Stafford loans, Perkins loans, and PLUS loans are the only federal loans you can get before you graduate.
For more information about new rules for schools and "preferred lenders," see Student Loan Programs: New Rules.
Ask your school to explain vague information
Your financial aid award letter should clearly tell you how your financial aid package will help you cover your education expenses. Look for your award letter to list, break down, and explain all the separate costs of attending your school and the financial aid awards you will receive. If you don't understand all the information in the award letter, consult your school's financial aid office as soon as possible.
In the end, you are responsible for paying all the expenses you agree to, but you also have the right to straightforward information from your school!
Sources:
1) Financialaidletter.com
2) "Funding Education Beyond High School," Student Aid on the Web, U.S. Department of Education, studentaid.ed.gov
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Carlos Soto is a Content Editor at CourseAdvisor.