How to Understand Your Financial Aid Package

Do you want to know the easiest way to understand your financial aid packages and how much it will cost to attend college? Have you gotten several financial aid packages and they all look different? Do you need help making sense of what your financial aid package actually means?

Understanding your financial aid package can be a stressful and daunting task, especially if you are new to the process. I don’t want it to be, so I’m sharing some insider secrets on how to interpret your Financial Aid Package below!

If your college decision comes down to a financial one, and for many of us it does, it’s important to understand what your financial aid package covers and how to make sense of it to ensure that you make the most of your resources and avoid any unexpected costs.

In this blog post, I talk about how to understand your financial aid package and give you the 6 types of aid you might see in your award letter. But, before we get there, we need to understand the basics of the financial aid package.

Step 1: Determine Your Cost of Attendance

The first step in understanding your financial aid package is to determine your cost of attendance (or if you want to sound fancy, your COA). Your COA is the total cost of attending a particular school, including tuition, fees, books, room and board, and other expenses. This information can typically be found on your school's website (some will actually put it on your financial aid package, which is so helpful!)  or by contacting the financial aid office directly.

Step 2: Understand Your Expected Family Contribution

Your expected family contribution- industry insiders refer to this as your EFC, and it is the amount of money that your family is expected to contribute to your education. This is calculated using information from your FAFSA and can vary depending on your family's income, assets, and other factors.

While the FAFSA dictates your EFC, many families don’t feel like it is actually a fair representation of what they can pay or afford. I completely understand this and have been there myself. So, if this is you, I feel your pain!

Step 3: Review Your Financial Aid Package

Once you have determined your COA and EFC, you can review your financial aid package. Your package will typically include grants, scholarships, loans, and work-study programs that can help cover your costs. It is important to carefully review each component of your package to understand how much aid you will receive and the terms and conditions of each award.

Here are 6 different types of financial aid that may be included in your package:

Pell Grant

The Pell Grant is a federal grant that provides financial aid to undergraduate students who demonstrate financial need. The amount of the grant is determined by your EFC and can be up to $6,495 per year. The great part about this is that you don’t have to pay it back! But, you also only get it for so many years, so make the most of your time in college and graduate on time.

State Grants

Many states offer grants to students who are residents of the state and attend a college or university within the state. These grants can vary in amount and eligibility requirements, so it’s best to research your state to see what they offer. The best chance of being eligible for any state grants, if your state offers them, is to apply for the FAFSA as early as possible.

Federal Work-Study Program

The Federal Work-Study Program provides part-time jobs for undergraduate and graduate students with financial need. These jobs can be on or off campus and can help cover your educational expenses. 

These are also the sneaky part of your financial aid package. All schools will list this on your package if you are eligible and they will also deduct it from your cost of attendance, so if you just skim over your package it may seem like you have more money to pay for college than you do. 

Federal work-study is great, but I always remind families that most schools will pay this out in the form of a paycheck to the student every week or two and so the funds are best used to offset personal expenses, rather than school expenses.

Federal Direct Subsidized & Unsubsidized Loans

Federal Direct Subsidized Loans are low-interest loans provided by the federal government to undergraduate students who demonstrate financial need. The interest on these loans is paid by the government while you are enrolled in school, and you will not be required to make payments until after you graduate.

Merit Scholarships

Merit scholarships are awarded based on academic or extracurricular achievements and do not typically require you to demonstrate financial need. These scholarships can vary in amount and eligibility requirements and may be renewable for multiple years if you continue to meet certain criteria.

Parent PLUS Loans

Parent PLUS Loans are federal loans that are available to parents of dependent undergraduate students to help cover educational expenses. The amount of the loan is based on the cost of attendance, minus any other financial aid that the student is receiving. The interest rate is typically higher than other federal loans, and parents are responsible for the repayment of the loan, not the student. To be eligible, parents must have a good credit history and meet other requirements as determined by the Department of Education.

Step 4: Contact Your Financial Aid Office

If you have any questions or concerns about your financial aid package, it is important to contact your school's financial aid office. They can provide additional information and help you understand your options for paying for your education. Sometimes, they even have other grant options that may be available that they don’t share with everyone, especially if you are planning to commit to that school.

Pro Tip: Apply for Scholarships

Scholarships are a great way to offset the cost of attending college. There are tons of different types of scholarships available, ranging from academic and athletic scholarships to scholarships based on community service or other criteria. It's important to research scholarship opportunities early and often because many scholarships have early application deadlines. Students can start by looking at scholarship opportunities offered by their chosen college or university, as well as external organizations such as community foundations, corporations, and nonprofit organizations during their junior year.

I hope you’ve found this helpful and I wish you the best of luck in your writing process. If you are looking for more information, please visit my website- Higher & Hire. If I can be of assistance to you, please reach out to me here.

Many Thanks!

Valerie