College Admissions: 4 Ways to Increase Your Financial Aid Package

Monday, March 19, 2012

Cristiana Quinn, GoLocalProv College Admissions Expert

Early returns indicate smaller financial aid packages... are you prepared?

Over the next few weeks, many families with high school seniors will be comparing financial aid packages. The early returns for aid this year are not looking as generous as in past years. Some speculate that it is because colleges are nervous about major changes on the horizon regarding federal aid and the way it is distributed. Colleges may be concerned that in future years, they may have to dig deeper into their endowments--so many are tightening the purse strings this year.

When finaid letters do arrive, the different kinds of aid that make up the package can be confusing. What has to be repaid? What doesn’t have to be repaid? What are the interest rates and terms for loans? Which items are renewable? What is the true cost with all the fees and living expenses? Before you make your final decision, here are some critical things you need to know:

What is the TOTAL Cost?

Families need to look closely at the total cost of each college (tuition, room, board, fees, books, travel) to make sure that they are comparing apples to apples. Then, subtract the amount of financial aid awarded to determine what the out of pocket expenses will be. Allison Dean of Financial Aid Preparation Services, and a former financial aid officer for U. Chicago, says "When students receive their financial aid award letters, they can be very confused. I have seen some schools that appear to be covering the entire cost, but when looked at closely, they have actually added unguaranteed loans as a part of the package. This is very deceiving. Also, most schools do not include fees and living expenses on their award letters-so the overall cost looks lower than it is."

What Has to be Repaid?

It’s not the total amount of your award that matters. How much debt a student will graduate with should be a key factor in your assessment. So, first separate out money which does not have to be paid back, like grants, scholarships, merit awards and tuition reductions. Make sure to check the terms of each portion of the package to determine which are renewable for future years. Next, look at the work study and loans. Remember that work study is paid to you throughout the year, not up front. Compare the amount of aid that does not have to be repaid across all your colleges. Then, look at the loans as a separate amount. It’s one thing to graduate with $10,000 to $50,000 of debt. In fact, small student loans can be good way to teach a child the value of education and have them vested in getting good grades. However, coming out of college with $75,000 to $150,000 in debt is a heavy burden. There are few private colleges I could say would be worth six figures in debt, if you can attend the primary campus of your state university without debt.

Appealing the Offer

Most families don’t realize it, but you can appeal your financial aid offer. Colleges usually reserve 10-15% of their financial aid pool for appeals. Call the financial aid office at the college(s) where you need more money, and ask about their appeal process and timeline. You will most likely need to write a letter outlining the reasons that you are asking for more money (loss of a job, better offer at another school, unforeseen medical expenses, loss of child support). Be ready to provide documentation to support your case. A college will usually come back with more money, but it will rarely be the full amount that you request.

Filling the Gaps

For many students, even after an appeal, there will be a gap between what they can afford and what they receive in aid. This means hard decisions, and in some cases, it can mean looking at outside loans. Make sure to ask the financial aid office at your desired college for their recommendations. They may have approved lenders with good interest rates on loans. PLUS loans for parents are one option, but second mortgages and bank loans can often have lower interest rates. Private scholarships are another option, but be sure to check the terms of your financial aid package before accepting outside scholarship money. You are required to report all scholarship sources to your college, and many will reduce your package by the amount of the outside funding. Also, keep in mind that private scholarships are usually just for one year vs. college-based aid which will often be renewed. Never pay for scholarship searches—Fastweb is a great free resource or ask your high school guidance office or local library about state and local scholarship programs.

Cristiana Quinn, M.Ed. is the founder of College Admission Advisors, LLC, a Providence-based educational consulting firm which provides strategic, individual counseling for college-bound students. www.collegeadvisorsonline.com

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Comments:

Monica Matthews

9:54am on Monday, March 19, 2012

It is so important for families to completely understand what is actually offered on their financial aid award letters. Great explanation! Sharing and tweeting! M.M., http://how2winscholarships.com