Step 4: Understanding the Financial Aid Award Package
Typical Award Package
Once your application for admission has been accepted, you have taken all the steps to apply for financial aid, and your family demonstrates financial need, you are likely to receive a financial aid award.
Now what?
Interpreting a financial aid award letter fully may take some time. While most colleges try to make the award letter as clear as possible, you may still have questions. You will want to get them answered before the deadline to accept the financial aid award.
The following sample award may help you interpret your own situation.
| Sample Financial Aid Award Package |
| Total Cost of Attendance |
$20,000 |
| Expected Family Contribution |
$5,000 |
| Outside Scholarship |
$1,000 |
| Financial Need |
$14,000 |
| |
|
| Financial Aid Package |
| Federal Pell Grant |
$0 |
| State Scholarship Grant |
$1,500 |
| Institutional Grant |
$7,500 |
| Federal Perkins Loan |
$1,500 |
| Federal Direct Stafford Loan* |
$0 |
| FFEL Program Stafford Loan* |
$1,500 |
| Federal Work Study |
$2,000 |
| Total Award |
$14,000 |
*You will receive either the Federal Direct Loan or the FFEL Loan, but not both.
In this award, the college is covering more than half of the demonstrated financial need with grants. It will be important to check with the financial aid office to see whether this level of grant can be expected in future years.
You will also want to look into the continued availability of the state grant. If the grants look to be stable over the time you'd be enrolled, you can estimate the total student loan indebtedness you would have after four years - in this case, around $15,300, providing college costs remain the same. This is the average level of indebtedness for students graduating from Wisconsin schools.
You'll also want to look at the work-study figure. Are you willing to work on campus to earn these funds? If not, you will be expected to come up with the $2,000 figured in the above calculations in some other way (extra work beyond the summer earnings expectation, a gift from a relative, a loan, etc.).
How do I compare award packages?
If you've received more than one financial aid award package, you will want to compare them. Here are some points you'll want to consider:
- Ratio of grant to loan: In general, packages with higher percentages of grant aid than loan aid will be more appealing. You'll have less to pay while in college and fewer debts to repay when you graduate. This ratio may also give you a clue as to how much the college wants you, since colleges tend to award higher proportions of grant aid to the most desirable students in their accepted group.
- Ratio of self-help to grant: Take a look at the big picture beyond just grant versus loan. How much of the total cost of attendance are you expected to cover through loans, the Expected Family Contribution (EFC), and student employment on campus? You'll need to be realistic about whether you can meet the earnings expectations.
- Loan terms: Compare the types of loans you are expected to take on. Are the terms favorable in terms of interest and repayment? A student loan with low interest rates and no payments due until after college is preferable to private or unsubsidized loans with less attractive terms.
- Gapping: Some colleges award aid that amounts to less than the difference between the Expected Family Contribution and the total cost of attendance. If you find you have been gapped in an award, only you can determine if you will be able to, and want to, come up with the additional money in order to attend.
- Future packages: You'll want to find out if all or part of your financial aid award is renewable if family circumstances stay the same or change.
- Outside scholarships: If you are applying for or will otherwise qualify for outside scholarships, be sure to find out how this money will be treated in each college's financial aid award package. At some colleges, an outside scholarship directly reduces the institutional grant by the same amount. Other colleges allow a certain amount to go first against any suggested loan. Then, if the outside scholarship is greater than that amount, it will reduce equally institutional grants and loans.