It probably feels like forever since you submitted your FAFSA form and you are still waiting for those final numbers. Then it happens: you get an email saying your award letter is available for review. You may even get a letter in the mail. You rip it open and … then what?
Award letters can be confusing. There are lots of columns and numbers, and often a big number at the bottom that indicates how much is due to the school. Where do you start to try and understand how much a college has awarded you? And, how do you accurately compare the different award packages you’ve received from each school?
Compare by Sections
By breaking down each award letter into comparable sections, you can figure out what your absolute costs are for tuition and room and board, and how your financial aid breaks down into free money (grants and scholarships), work-study and student loans.
There are a lot of tools you can use to compare award letters that will help you understand and breakdown these different areas. The Iowa College Access Network has a downloadable worksheet for Comparing College Costs available at www.ICANsucceed.org/materials, as well as other materials to help you understand award packages.
Going Beyond the First Year
Understanding your costs over your full tenure at a college or university is also an important piece of the college financing puzzle. These award letters will only outline a single year. You need to make decisions based on the full two or four years you will spend working toward your degree.
If your award package has you borrowing $10,000 for your first year, you should consider that you will likely borrow a minimum of $10,000 every year for a total of $40,000. If the career or major you are pursuing has a starting salary of only $28,000 you are already over-budget. You should aim to only borrow no more than your expected first-year starting salary. If you’re starting salary is $28,000, your top budget for borrowing to cover your education costs should be no more than $28,000. This puts you into a manageable repayment scenario after graduation, with payments you can afford.
Look for Other Options
An alternative to borrowing that may not be listed on your award letter is a payment plan through the college financial aid office. Many times you can make monthly payments, interest free, rather than borrowing a student loan to cover the remainder of your costs.
Award letters can be confusing, especially when trying to factor in the total number of years and the free money versus what you may or may not need to borrow. It’s important to have all the facts before making the decision on which school you want to attend. In addition to the online resources mentioned here, you can also call the Iowa College Access Network (ICAN) and speak to a student success advisor about any part of the financial aid process, including award letter review.
By: Iowa College Access Network
This is Contributed Content. Any opinions, advice, statements, services, offers, or other information contained in Contributed Content are solely those of the respective author(s) or contributor(s) and do not necessarily state or reflect the opinion of Iowa Student Loan and/or this blog. See the “About” page for additional important information about Contributed Content.