Making Sense of Your Child’s College Financial Aid Package

How to understand, compare, and negotiate offers

How to negotiate a better financial aid offer
Verywell / Emily Roberts

Aside from the acceptance letter, no letter holds more significance than the letter containing a college's financial aid package. After all, there is a lot at stake financially. In fact, according to "The Princeton Review," 85 percent of college students estimated their college cost would be more than $50,000 and 41 percent of those students said it would be more than $100,000. Tuition prices continue to climb, making affordability and worries about debt the number one concerns for high school seniors.

For this reason, it is extremely important for students and their families to take the time to truly understand their college aid award letters. This is extremely important because it gives you insight into the net price of the college, which includes the college's tuition, room and board, and fees (minus grants, scholarships, and financial aid awards). 

It also allows you to compare colleges, especially if you have received financial aid offers from more than one institution. While it is tempting just to look at the bottom line, you want to carefully evaluate what makes up that final number.

For instance, how much of the aid package actually consists of student loans that must be repaid and how much consists of grants and scholarships that do not have to be repaid? Overall, your goal is to be sure you are maximizing the amount of free money your student receives. Remember that you do not have to accept everything that is in the offer. You can pick and choose, especially when it involves loans and work-study programs.

Understanding the Letter

Financial aid award letters are the key to determining how you are going to pay for college, including how much of the fees will come out of your own pocket and how much the college will pay for. If you submitted a Free Application for Federal Student Aid (or FAFSA form) and were approved for financial aid or merit aid, you should receive a financial aid letter from every school that accepted your student. If you do not receive a letter, contact the college's financial aid office to be sure they have received your FAFSA form.

As you begin to review your letters, keep in mind that schools have different names for these documents including everything from financial aid offer and merit letter, to award letter or financial aid package. There is no standard format for these letters. So, they are all going to look different, which can make comparing them a challenge. 

Typically, financial aid letters will include the Cost of Attendance (COA). This number is an estimate of what you and your student can expect to pay for one year at the college.

Overall, the number will likely include tuition and fees, room and board, books and supplies, transportation and personal expenses. If your Cost of Attendance is not mentioned in your letter, call the financial aid office or check the school's website for more information.

Other items that may be included in your financial aid letter include federal student loans, work-study options, college grants, college awards and your Expected Family Contribution (EFC). Knowing what each of these items represents is an important part of making sense of your financial aid package. Here is an overview of what these different elements represent:

  • Federal student loans are loans for which you borrow money directly from the federal government. Once your student graduates, the money is paid back with interest. Sometimes a financial aid letter also will include the amount you can borrow with a credit-based loan.
  • Work study usually involves a work program provided by the school where students work to earn their financial aid.
  • College grants are typically need-based and can be given by the federal government or a state's government.
  • College awards consist of scholarships that are awarded to a student based on need or merit. These gifts can be awarded by the school, a company, or a private organization.
  • Expected Family Contribution (EFC) is a number the school uses to determine how much financial aid you are eligible for. Many parents often assume this number represents how much they will have to pay for college. This is not true. It is used as a guide by the college. ​

​It is also important to know the difference between free money, borrowed money, and earned money. Free money is money that does not have to be paid back and usually consists of grants or aid, scholarships, fellowships, and other awards. Borrowed money is money that has to be paid back, often with interest. Examples include Federal Direct Loans and credit-based loans.

Finally, earned money is money that is applied to tuition by working and does not have to be paid back. Dissecting each of these elements is the first step not only in understanding your financial aid letter but also in comparing college aid offers. Additionally, inviting your student into this process helps them learn financial responsibility.

Facts About Financial Aid

Before you get started comparing college aid offers, it helps to know some facts about the financial aid process. For instance, research indicates that the majority of families are not going to have their actual financial need met. Even students who qualify for financial aid often end up falling short. For instance, according to the National Center for Education Statistics, undergraduates who received aid still had to take out an average of $7,600 in students loans. Meanwhile, parents of undergraduates borrowed an average of $14,000 in federal Direct PLUS Loans. 

Consequently, it is not surprising that the majority of families are shocked to see their Estimate Financial Contribution (EFC). This number is usually much higher than they anticipated, especially for parents who are sending their first child off to college. What's more, just because a family has a demonstrated financial need, does not mean schools are obligated to meet it.

Most parents are surprised by this fact. They also are stunned to discover that what they have to pay for college is often significantly more than what they anticipated. So, they are faced with decisions about loans or selecting a different college path altogether. 

For this reason, many colleges have started offering more merit aid in the form of scholarships than in years past. It is a way for them to not only attract the top students but also address the number of students that do not qualify for any financial aid. The colleges are willing to alleviate some of that financial burden if the student has performed well in school. Still, even with these large awards, it is extremely important to go through college aid offers with a fine-toothed comb and determine which one best suits your family's financial circumstances.

At the end of the day, a $20,000-per-year Presidential Scholarship doesn't mean a lot if the cost to attend the school is still more than $50,000 per year.

How to Compare Offers

At first, you may feel like making comparisons will be an easy task. After all, you just need to look at the cost to attend minus any aid received. But, it's not always that simple. Here's how to make sure your evaluations are actually comparing apples to apples.

Decipher the Offer

Go through the letter or package line by line to determine what it contains. If you do not understand something listed, call the college's financial aid office to find out. If your student is being offered any scholarships or awards, be sure you know if those are one-year awards or if they are renewable. If they are renewable, is there a limit on the number of semesters and quarters?

You also want to determine if there are other requirements as well such as sending a personal thank you to a donor or maintaining a certain grade point average. Be sure you distinguish between scholarships, grants, and fellowships that do not have to be repaid and loans that do need to be repaid.

Crunch the Numbers

Be sure the college's cost estimate includes tuition, room and board, fees, as well as indirect expenses like books, supplies, and transportation. Then, make sure these numbers are in line with what you might expect. For instance, if your student will have to fly home during breaks, does the estimated transportation cost the college provided align with what you expect?

You may have to increase or decrease this number based on your personal situation.

Checking for expenses related to your child's major is also a good idea. For instance, are there lab fees or other expenses that may not be accounted for? 

You also should study the room and board policies. Many colleges require students to live on campus the first year and may even have requirements regarding the meal plan. Be sure you know what your options are so that you can accurately compare colleges. Some financial aid letters will include the least expensive option.

If your student is hoping for a single room with the maximum meal plan, then you need to plan for this. Likewise, some dorms are more expensive than others on campus due to location, demand, and size. You want to be sure you are prepared for these situations so that you are not surprised later.

Familiarize Yourself with College Policy

If your student earned some private scholarships through your community or other sources, you will need to ask the college about its displacement policy. In other words, colleges sometimes reduce need-based aid to reflect private scholarships and awards. Some college will offset grants first—others will offset leans. These little details can make a big difference in determining which college aid package is the most generous.

It also is helpful to know what courses are taken prior to attending the college your student might receive credit for. Some colleges will give students credit for AP courses or college courses taken in high school while other institutions require students to take the courses again. These small details can impact costs down the road. 

If your student has any plans of attending graduate school, research whether or not the university offers a fast-track program where your student could potentially graduate in five years with a bachelor's degree and a master's. If this is the case, this could save an entire year of tuition and fees.

Make Sure You Look Long-Term

Some colleges have what is known as a "tuition guarantee." In these situations, they freeze the tuition price for the four years your student attends and will not raise the cost. Not all institutions offer this perk, though. So, you have to look at the long-term cost as well as the short-term to accurately understand what it will cost in the end.

Additionally, some colleges "front load" aid. What this means is that they will offer more upfront and less as the student becomes an upperclassman. Again, knowing this information helps you determine the actual prize over the span of four years. Also, be sure you know what to expect if your child ends up needing five years to complete their degree.

Ask for Help

If your financial situation has changed, be sure you amend your FAFSA and appeal to the college. You also may be able to negotiate more money from an institution, especially if your child is a top-performing student. Just be polite and calm when talking with financial aid officers.

How to Negotiate a Better Offer

Of course, there is an art to getting more assistance. You cannot simply pick up the phone and demand more money. Instead, you have to be diligent, rational and persistent. Ask yourself a few questions. Why do you feel the package is lacking? Did circumstances within your family change, making it difficult for you to make tuition payments? Changes might include a recently-diagnosed illness, death of a spouse, caring for elderly relatives, multiple family members in college, or unemployment.

Be sure you communicate any changes with the financial aid officer. Perhaps your student received a better offer for aid from a different institution or is a first-generation college student. These are all things that would open the door to a discussion.

You just need to be sure you are savvy about approaching the financial aid officers. For instance, don't call first thing Monday morning or late in the afternoon on Friday. Instead, find out the name and email address of the contact person who makes the decisions about your child's aid; then send them a carefully crafted email. After a few days, if you do not receive a response you can follow up with a telephone call.

Keep in mind, you won't know which schools have the best offers overall until you press them. Here are five steps you can take to negotiate a better college aid package:

Know What the Package Entails

Before you can negotiate with the school, you have to be sure you understand the initial offer in its entirety. To do this, you need to go through the aid package line by line making sure you understand everything that is included. If things do not make sense, call the financial aid office for an explanation and clarification of specific terms.

For instance, if your child's at package says "self-help," that could mean that the college expects your student to contribute financially from their personal accounts or off-campus employment. Or, the term could apply to work-study.

Be sure you know exactly what each line item means before you address the package with the financial aid officer.

Be sure you also determine whether any awards or scholarships are one-year awards or if they are renewable. And, if they are renewable, is there a limit to the number of semesters or quarters they can be used? You also should determine what items constitute free money and what constitutes loans that must be repaid with interest.

Having a clear understanding of what the package entails will enhance your credibility and allow you to speak knowledgeably about the offer.

Appeal the Package If It's Not Adequate

If you feel like the amount of financial aid a college has offered is significantly lacking, ask the college's financial aid office to reevaluate your financial aid award. Many times, colleges will have a "special circumstances" form that you can use. Also, ask if there are additional resources they can recommend such as grants, fellowships or awards that your student did not know was available.

Remember, nothing will change within the college aid package unless you make an effort to appeal it and ask for a "professional review." Be sure you research the college's appeal process on the university's website though before making any requests.

Ask About Scholarships

Not every scholarship, fund, or award is listed on a college's website. Consequently, be sure you ask if there is anything else that your child can apply for. Oftentimes, universities have funds set aside from their own scholarship and grant money that they use to attract good students who might be considering other options. There is no way for you to know if this money is available unless you ask about it.

Don't Shy Away From Mentioning Other Offers

Many schools try to offer students a package of loans. You want to avoid this if you can. Instead, if another school has presented a better offer, mention that to the financial aid office. Let them know what you have received and ask them if they can at least match it or if they are able to bridge the gap in making their institution just as affordable as your student's other options.

There is nothing wrong with asking a college to compete for your student's attendance.

After all, there is not only a lot of money at stake but also your child's future to consider. You also don't want your student to be constantly stressed about money. Just be respectful when asking them to match another offer. You want to avoid sounding arrogant, demanding, or pushy. If you do, you run the risk that the college would prefer to just let your child go to another institution and in turn will not offer you anything.

Have a Number in Mind

Think about what you can honestly afford. You don't want to ask for more money without having a particular number in mind. Instead, try to come up with an educated estimate on what your family can truly afford. If you feel like you cannot afford anything and paying for college is largely your student's responsibility, then you need to consider your child's career path. What will be the starting salary once they graduate? How much debt can they reasonably afford to take on?

The key is that you are able to support your request for additional aid with real numbers and real facts. You want to avoid coming off entitled or demanding, but instead, approach the process as partners in your child's education. Remind them along the way that price is a key determining factor for your family because you do not want your student to start their post-grad life buried in a mountain of college debt.

Be Realistic

Remember, colleges and universities have limitations. There is only so much they can do to help you. So, it is not necessarily realistic to expect the college to take your student's college aid package from no college aid at all to a full ride. Instead, set reasonable and attainable goals.

Even if the college can offer only a few thousand dollars more, remember that a little bit more is better than nothing at all. In the end, you and your student will have to make the decision that makes the most financial sense.

Leave Fear at the Door

Do not be afraid to ask for more financial assistance in helping your incoming freshman attend the institution of their dreams. The worst thing that can happen is that the financial aid officer will say no. They are not going to rescind your child's admission or take away money they have already offered.

The biggest thing you have to lose is the time you spent creating your appeal letter. So, if you need a little more financial help to get your child to the school of their dreams, be sure to ask. After all, you will never know what additional help they can offer until you ask them.

A Word From Verywell

Figuring out how you will pay for college is a big deal and not a decision that should be entered into lightly. After all, your decision will have a direct impact on the amount of debt you or your student has after graduation. Ideally, you want to keep this number as low as possible. What's more, you also want to consider the quality of academic programs, graduation rates, the campus culture and degrees as well as the school's location.

Remember that while the net price you will pay is a priority, it should not be the only factor you use when determining the best fit for your student. Ideally, you want to choose a college where your student will get the best value for the money spent on education.

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