scholarship award

It’s finally April, and even if spring hasn’t arrived in many parts of the country, financial aid award letters most definitely have. Many families are now wondering if what they see is what they get.

In my experience as a College Coach finance educator, I’ve found that extra research may be required to fully understand those financial aid awards.  Here are our top five tips for more accurately calculating the bottom line at each institution:

  1. Are the costs or the award estimated or incomplete? Some schools release award letters prior to setting actual tuition/housing/board rates for the upcoming year. Read the fine print carefully to see whether costs are estimates or actual, and keep that in mind so you’re not surprised if they change later. The award itself may be based on your estimated 2013 tax information.  If it is, and your actual tax data differs significantly from your estimates, contact the school to find out what effect the change will have.  Finally, some schools only list “direct” costs (tuition and fees, room and board) on the award letter, while others present a total cost of attendance that includes transportation and an allowance for personal expenses. Make sure you count ALL expenses when you are comparing awards and planning for college costs.
  2. Are the costs average or actual? When colleges present an award, they often do so using average costs for tuition, fees, room, and board. These may not reflect what you will actually pay. Is your child in a special program featuring additional fees?  Do room rates vary by dorm? Is there choice in meal plans? These are all questions to answer as you calculate your bottom line.
  3. What does the work-study award really mean? Remember that work-study funds are not disbursed up front—the student has to find a job and earn the money in order to receive them. The amount awarded is the maximum the student can earn in a year.  Read the terms of the award to find out how the student can find a job, how likely they are to get one, and what the wage rate is. (Contact the Financial Aid Office if you can’t find this information.)  Then do the math. How many hours per week will the student have to work to earn that money? Is it a reasonable amount? Use those calculations to come up with a realistic estimate of what your student can contribute to college costs via an on-campus job.
  4. What are the renewal criteria for need-based grants?  The renewal criteria for merit scholarships are generally straightforward (e.g., a required GPA), but are often less clear-cut for  need-based grants. Sometimes colleges use terminology like “renewable assuming your family demonstrates similar need from year to year.” What does that actually mean? The answer can vary from college to college. Don’t hesitate to ask for more specific information. Will the number of people in your household enrolled in college change over the next four years?  Do you expect a future income increase?  Find out exactly how “renewable” that grant is.
  5. Is this really a free ride?  Beware of awards that equal close to or the entire cost of attendance. These look wonderful at first, but upon closer examination they often include a Federal PLUS Loan, which is a loan available for parents to borrow on behalf of their student. We have seen them called other names, like “Family Financing Option” and “Parent Financing,” and that is exactly what they are.  PLUS Loans are a parental financing option, not financial aid, and they are available at just about every college, not just those that “award” them on a financial aid offer.

In sum, paying for college is just like any other major purchase – you need to read the fine print before letting your child sign on the dotted line. This will minimize unpleasant financial surprises and make the next four years much more manageable for your student and for you.



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Written by Kathy Ruby
Kathy Ruby is a member of College Coach’s team of college finance experts. Before joining College Coach, Kathy was as a Senior Financial Aid Officer at St. Olaf College and Shippensburg University of Pennsylvania.