At this time of year, your senior is probably anxiously awaiting award letters from the schools he or she applied to. While receiving an award letter is exciting, it’s important that to understand how to read and interpret these awards.
Award letters may all present the information a little differently, but the key fact you and your student want to find out is how much you may need to borrow to cover your costs. The “Expected Family Contribution” may only be part of that figure.
When schools list your student’s financial aid package, they may include student loans as part of the aid they’re awarding. But remember, that student loans have to be repaid. Look closely at how much of the award package is made up of student loans and how much is made up of aid that doesn’t have to be repaid (grants and scholarships, typically). One school may award more aid that doesn’t need to be repaid, and less in student loans that do have to be repaid. Keep a careful eye on those figures. If you’re not sure whether an award is a loan, grant or scholarship, contact the school’s financial aid office to clarify.
When comparing award letters, there are four main things you’ll want to understand:
- How much of the aid awarded is money that doesn’t have to be repaid? This type of aid is usually in the form of grants and scholarships. (A student may need to pay back all or part of a grant if they withdraw from school before finishing an enrollment period, but does not need to repay the grant if the student completes the enrollment period as planned).
- How much of the aid awarded is in the form of loans? This money will need to be repaid, with interest.
- After tallying the total financial aid package (including all grants, scholarships and loans), how much is your family expected to pay? This is sometimes listed as Expected Family Contribution.
- What are the total expenses for college? This should include tuition, room and board, books, fees, and personal expenses.
Once you know these things, you can use this simple equation:
- Scholarships and grants
Total amount your student needs to borrow, work to earn, or get from your family contribution
Using this simple math, you can more clearly compare your award letters by looking at how much you’ll need to borrow to attend each school. Make sure to only borrow what you absolutely need. Remember to contact your school’s financial aid office with any questions you may have about your award letter.