Understanding Your Financial Aid Award Letter
There have been a lot of stories in the news lately about the large number of states having to cut state financial aid out of their budgets, affecting millions of college students. If you were counting on, or awarded, a state education grant to help you with your education expenses, you should review the financial aid award letter you got from your school to be sure you understand its information.
Student Aid Report and Financial Aid Award Letters
After you filed your FAFSA, you should have received a Student Aid Report (SAR) that told you how much the federal government concluded you can afford to contribute to your college costs. Your SAR also listed any Pell Grant or other federal grant that you qualified for.
The financial aid award letter from your school tells you how much financial aid it has given you, based on your SAR. The financial aid may come from a combination of sources, including federal grants and student loans, state education grants, and school grants or scholarships.
Financial aid award letters can seem just as complicated as the FAFSA itself, however. Knowing what to look for in your award letter will help you figure out how much “free” aid you’re getting in grants or scholarships, how much aid is in loans, and how much you will still need to come up with on your own.
The experts at the FinancialAidLetter.com website review examples of financial aid award letters from six schools, translating the jargon into plain English and decoding what the award letters are really saying (or not saying).
Vague information about expenses and fees not included in the tuition
One common problem with financial aid award letters is vague or confusing information about what is actually a group of different costs. Also, expenses such as fees, books, computer services, transportation, and housing are not usually considered part of tuition, but financial aid award letters often do not make this clear or list these extra expenses separately. Your award letter should list each cost of attendance and each financial aid award separately so that you know exactly what you’re paying for and what types of aid you’ll have to repay, if any.
Schools may add private loans to your financial aid without explanation
In order to cover costs not covered by federal, state, or school grants or federal loans, your school may add a private loan to your financial aid package, often from the school’s “preferred lender.” If the award letter doesn’t clearly label and explain the private loan, it may give you the impression that some of your costs are being covered by the school itself when the money will actually come from a loan you’ll have to repay, perhaps at a high rate of interest or under terms and conditions unfavorable to you.
State budgets under pressure in 2009
Many states are having to make very difficult choices about what they will fund this year. In states where financial aid has been cut back, students who received a state education grant last year or were counting on getting one this year may be disappointed on short notice. Check your financial aid award letter for information about your state grant and call your school’s financial aid office as soon as possible if you have any doubts.