Comparing college financial aid offers

A desk, with books, an apple and $ signs on the board
  • Scrutinize award letters to determine the amount of free money offered.
  • Add up all school expenses, including books, room, board, lab fees, etc.
  • Pick the best school based on award as well as best fit for student.

The only thing harder than getting into college is figuring out how to pay for it.

This month, college students nationwide will receive their financial-aid award letters, the paper that says how much a school and the government will help fund their education.

While a big bottom line is tempting, schools that offer generous financial-aid packages to first-year students frequently wind up costing more long term. Here's how to pick the best financial-aid package for your college tenure.

Choose the best school for you
  • Break down each offer.
  • Tally the total college cost.
  • Pick the best package.
  • Fill in the gap.

Break down each offer

"A lot of students look at the total at the bottom of their award letters and don't realize that it includes different types of aid," says Brenda Dillon, vice president and director of product management at Key Education Resources, the education financing arm of KeyBank N.A., headquartered in Cleveland. "Students need to figure out who's giving the most free money they won't have to pay back."

Financial-aid packages are comprised of three types of awards -- nonrepayable gift aid, loans and work-related awards that are predicated on the student holding a certain job while they're in school or after -- none of which come without strings attached.

To discern how much a school is truly offering, first examine:

  • How much in nonrepayable scholarships, grants and fellowships each school offers.
  • Whether each award is renewable for all four years.
  • If it comes with stipulations such as a minimum grade-point average or a course-load requirement.

Once students know their gift aid totals, they can then examine work-related aid, such as federal work-study positions and the federal Teacher Education Assistance for College and Higher Education, or TEACH, grant, an award that provides up to $4,000 for future teachers willing to work in a high-needs area after graduation.

When eyeing work-related aid, Mark Spencer Williams, a former financial aid director at the University of North Carolina at Wilmington, advises students to carefully consider awards like the TEACH grant that require post-grad service.

"If you don't fulfill the employment requirement after you graduate, awards like that could convert to loans," says Williams. "That's not the same thing as free money."

Tally the total college cost

Once students know how much nonrepayable aid they're getting (scholarships and grants plus any work-related aid they've accepted), it's time to compare that figure to how much each college really costs.

"Finding out the real, actual costs of college is usually the hardest part for families," says Jacqueline Moreno, director of college access initiatives for the Illinois Student Assistance Commission. "A typical financial aid award provides a cost of attendance, but it's just a rough estimate."


Moreno encourages families to investigate what's included in the total cost of attendance. Beyond tuition, the figure should factor in funds for books, supplies, room and board, lab and club fees, a laptop (if the school requires one), entertainment money and transportation -- not only around campus, but also to home and back a couple of times each semester. Students moving from low-cost areas to high-cost cities will also need to factor in the inflated cost of living. Bankrate's Cost of living comparison calculator can help you investigate.

Pick the best package

Once you know how much each school really costs and how much free money they're willing to throw your way, finding out how much you'll pay out-of-pocket for each school is simply a matter of subtracting. Bankrate's work sheet helps you do the math.

Be careful, says Lori McGlone, a consultant with Coast to Coast Educational Consulting in Buffalo, N.Y. Choosing the wrong college with the right price tag could leave you in even more debt.

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