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Reading through the Fine Print on College Honor Letters

Posted by admin on in College Advice |

CoCo 130820 0175 It’s finally April, and even when spring hasn’t arrived in many parts of the country, financial aid award words most definitely have. Several 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 educational funding 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 words prior to setting actual tuition/housing/board rates for the upcoming year. Read the fine print cautiously to see whether costs are quotes or actual, and keep that in your mind so you’re not surprised when they change later. The award itself may be based on your own estimated 2013 tax information .   If it is, and your actual taxes data differs significantly from your quotes, contact the school to find out what impact the change will have.   Lastly, some schools only list “direct” costs (tuition and fees, space and board) on the award letter, while others present a total cost of presence that includes transportation and an allowance for personal expenses. Make sure you count MANY expenses when you are comparing awards and planning for college costs.
  2. Are the costs average or actual? When colleges present an honor, 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 costs?   Do room rates vary by dorm? Is there choice within meal plans? These are all questions to answer as you calculate your main point here.
  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 cash in order to receive them. The amount granted 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 college 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 meant for need-based grants?   The renewal criteria meant 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 shows similar need from year to year. ” What does that actually mean? The answer may differ 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 yrs?   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 on closer examination they often include a Federal PLUS Loan , which is a loan available for parents to borrow on behalf of their student. We now have seen them called other names, like “Family Financing Option” and “Parent Financing, ” and that is exactly what they are.   PLUS Loans really are a parental financing option, not educational funding, and they are available at just about every college, not merely those that “award” them on a educational funding offer.

In sum, paying for college is just like any other major purchase – you need to watch out for hidden clauses before letting your child sign on the dotted line. This will minimize uncomfortable financial surprises and make the next 4 years much more manageable for your college student and for you.



Kathy Ruby is a member of College Coach’s group 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 .

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