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This post was updated on March 9, 2023. It was originally published on March 23, 2021.

We will also be hosting a specialty webinar on this topic on Thursday, March 16, at 7:00 PM EDT. All are welcome to attend. Register for free here.

Colleges are mailing financial aid award letters to millions of college-bound students, and these students need to make their enrollment decisions by the May 1st deadline. Many students will have multiple offers, and families should decide which award offer is best.

Here are a few things to watch out for when reviewing your financial aid award letter(s):

The Total Cost of College

Award letters can seem rather generous if all the costs are not listed. Many award letters only show basic costs, such as tuition, room & board, and books and supplies. However, tuition can vary depending on the availability of classes, and there are typically fees attached to tuition costs.

Room and board can also vary depending on the meal plan and lodging chosen. Many students, for example, will purchase snacks during the day or grab Starbucks to get started in the morning. It is important to be mindful that these expenses add up; perhaps, the full-blown meal plan may not be necessary for your student.

Books and supplies can also be understated: a $1,000 budget for books and supplies can dwindle quickly when many textbooks cost $100 or more, and a laptop can eat up that entire budget. Supplies and fees can also be far more expensive alone for engineering, art, and computer science majors.

Additionally, travel costs and personal expenses are rarely covered in the financial award letter but can add up to $3,000 per year or more.

If the entire cost of attending that particular college is not represented, the financial aid award letter can look pretty good.

Here’s a little-known way you can get the bottom-line total cost of attending a particular college: simply call the college’s financial aid office and state that you would like to know the total amount of Federal Direct and PLUS loans that you can borrow for the entire year of college. That dollar amount will be the “true” total cost of that college.

Percentage of Need Met and The Missing Expected Family Contribution (EFC)

The EFC is the dollar amount the family is expected to contribute for college expenses each year before any financial award is given by the college. The EFC is based on the results of the family completing the FAFSA (Free Application for Federal Student Aid) or the CSS Profile, as well as other institutional forms.

Colleges that use the CSS Profile can essentially create their own EFC for you. They can supply additional questions in Section Q which may raise your EFC dramatically.

The EFC may not even be shown on the family’s financial aid award letter; in these cases, call the college and ask for your EFC so you may determine whether the college is meeting 100% of your family’s “financial need.” Then, compare this percentage with your other award letters. Tools like TuitionFit may also help you compare award letters for specific colleges so that you have better information when analyzing the costs and understanding how much aid is possible.

One-Year Awards or Scholarship Frontloading 

Colleges may award the student grants or scholarships in the first year, only to remove them in subsequent years. The only way you can be prepared for this is by asking the financial aid administrator of each school what is required to renew each grant and scholarship in the following years. This is a must-do! To have a grant or scholarship removed completely by the college after the first year can increase your costs drastically and put your family in financial jeopardy.

PLUS Loan Maneuvering

Some financial aid awards may bundle loans together with grants and scholarships, or in some cases not even use the word “loan” to describe the award given. You may see award letters with grants and scholarships, the student’s Federal Direct loan, and the big Parent PLUS loan at the bottom, but guess what? The total amount of that award just happens to equal the entire cost of attendance on the award letter.

I’ve worked with families who believed that their entire cost of college was covered by the college. At a 4.228% origination fee and 7.540% interest, that would be a huge mistake; a college loan for 11.768% is NOT a good deal!

The College Funding Coach Is Here to Help

Financial aid letters can be very confusing to families; this is where working with a College Funding Coach can help alleviate the stress while trying to make the best decisions for you and your student’s financial future.

If you want to understand everything your letter contains and make sure you are avoiding costly mistakes, you can schedule a free consultation with one of our coaches to answer your questions.

After all, the less the student borrows, the less student loan debt they will (or you will) have to repay. Who doesn’t like saving thousands of dollars in potential interest?


James L. Hicks, CFP®, ChFC®, ChSNC™, CFBS, CLU®, CPFA®, MBA










Related Reading:

A Peek Behind the Curtain of College Pricing

The Financial Aid Appeals Process: A Guide to Everything You Need to Know

8 Tips for Writing a Successful Financial Aid Appeal Letter


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