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How to Compare Financial Aid and Make That Final College Decision

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Mortar board on pile of coins meant to pay for college.

As offers of college admission and financial-aid awards arrive, students (and parents) are faced with some difficult decisions.

Do you accept an offer from a dream college that you simply can’t afford? Do you convince your student to be reasonable and attend a second- or third-choice college based on the financial aid awards?

For many families, these are difficult decisions that can only be made by carefully comparing awards and making the best financial choice.

Where do you begin?

Gather all the financial-aid award packages and compare them side by side. This may not be so simple since every college is different and may each use their own award form and breakdown. The best way to do this is to transfer the award amounts from the college form to the Financial Aid Shopping Sheet created by the U.S. Department of Education. This sheet breaks the award down into segments, including all the information you need to evaluate it. By doing this, you can easily compare the amounts on each line and determine what you will have to pay out of pocket.

The only way to accurately compare these awards is to examine each side by side. Compare the scholarships, grants, student loans and the overall costs from each college. The college’s full cost of attendance should be clearly stated on the award letter. To determine whether this amount is accurate or find it if it’s deleted from the award, you can visit the College Board’s site BigFuture. Just type in the name of the college and the search provides the pertinent information.

Once you have compared all the financial information, examine the bottom line: How much are you and your student going to have to pay out of pocket to attend this college? If the decision is purely a financial one and your student is happy with all the colleges on his list, the final decision should be simple. But in most cases, there are other factors involved and the money is merely one of the decision points.

What should you be aware of before comparing awards?

The college will provide figures for you to examine, but figures don’t always tell the whole story. Colleges use certain tools to encourage and discourage students from accepting their offers of admission. To encourage a student to accept an offer of admission, they offer large amounts of merit aid. To discourage a student from accepting an offer of admission, the money simply isn’t there.

Watch out for these practices when comparing your financial aid awards:

  • Front loading: This happens when colleges make their most generous award offers freshman year to lure students to attend. Make sure the awards are renewable for all four years. Also, verify the amount of the award will increase as tuition increases.

  • Gapping: This happens when a college doesn’t offer enough aid to cover the difference between the cost of attendance (COA) and your expected family contribution (EFC). Colleges use this tactic to weed out the average applicants in the hopes they will reject the offer of admission.

  • Padding the award: Colleges may pad a financial aid award with student loans, parent loans and work-study. This is not true financial aid since your student will have to repay after graduation. If the college meets your EFC by using loans, they are gapping your student.

The lesson here is to carefully examine, analyze and question each item on the financial aid award. Only then can you compare one award to another.

How can you make the final college choice?

The final college choice should be made after weighing all the financial factors. Which college offers the most merit aid? Is the merit aid renewable? Is the college meeting your expected family contribution and are you comfortable with the amount you will have to pay?

Don’t forget that you can negotiate your award and ask for more money if you have valid reasons:

  • Another college is offering more money than the college you want to attend, and you can use the award as negotiation power.

  • Your financial situation has changed since you applied.

  • There has been a significant change in grades or test scores that might increase the merit aid.

Once you have compared all awards, there's a decision to make.

If one college stands out and is offering significant aid, the decision might be simple. If several colleges offer similar aid packages, the decision might be more difficult. Either way, students should choose the college that is the best fit academically, financially and socially. Money is important, but sometimes parents and students are comfortable choosing a lesser award if the college is a better fit.

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