Demystifying financial aid offers
For parents with college-bound seniors, spring means more than just planning graduation parties — it's also the season for making major decisions about college. After finding out which schools have accepted them, students have a limited amount of time to choose where they will attend college. A key factor in that decision is deciphering financial aid award letters.
For many reasons, the task of reading and understanding these letters is seen by some families as a challenging part of the college-decision making process.
"I think it can be confusing," said Brian Lindeman, director of financial aid at Macalester College. "One of the issues is that schools all present them in a different format, so translating apples to oranges can be tricky, especially with three, six or 12 letters."
However, even if all letters laid out information in the same way, looking at them would still be challenging, because they represent making one of the biggest financial decisions of a student and family's life, said Jane Haugen, executive director of financial aid at the College of St. Benedict and Saint John's University. "You might get identical bottom lines, but there are very different value propositions involved at different institutions. You have to weigh in other factors in addition to the awards themselves."
Different letters but a common goal
Just what about financial aid award letters makes them seem hard to understand? Because they are financial documents, they can be filled with jargon, acronyms and financial terms that are new to families. At some schools, the total cost of attendance listed on the letter doesn't actually include every expense a student will incur.
In addition, because each school uses its own formula to calculate how much institutional aid a student will receive, awards from different colleges can vary greatly.
But all of the award letters Haugen has seen at private colleges in Minnesota are typically pretty clear, she said, and schools are trying their best to make things apparent for families. "When families call you, they don't say, 'I'm so confused about the letter.' They clearly know what they are being awarded. It's just the experience as a whole," she said.
At the College of St. Benedict and Saint John's University, they have tried to make the letters as clear as possible by printing the total cost of attendance on one page and the summary of the financial aid the student is getting on a separate page, Haugen said.
Macalester College's letters have a similar, two-page layout. The award and a paragraph detailing total cost of attendance are on the first page; the second page is a simulated tuition bill for each semester, so families can see exactly what they will be responsible for paying and make a plan for how to pay it, Lindeman said.
The simulated tuition bill tries to take into account details that parents or students might miss, he said. For instance, almost all students at Macalester qualify for work study, but that money isn't available yet when the student's fall bill is due — so the bill explains that and doesn't include that aid, he said.
At St. Catherine University, clarity is also the objective; the financial aid award letters there include a cost estimation worksheet for families to fill out, and the school reminds students on the letter to include expenses they might not initially think of, such as transportation and books.
Lindeman notes that despite all of these measures, "transparency is, of course, always in the eye of the beholder." While one family might consider a letter with certain content or a specific layout informative, another could prefer things presented in a different way.
Communication is key
Because questions inevitably persist, most institutions, including Minnesota's Private Colleges, recommend families speak to someone at the college if they have questions.
At St. Catherine University, all admission staff members are trained to answer financial aid questions — and they take an additional step to ensure families understand their letters by calling each student individually a few days after the letters go out. "It's one thing to get a piece of paper with an award on it, and another to have a conversation and be able to ask, 'Okay, what does this mean for me?'" said Elizabeth Stevens, associate dean of enrollment and director of financial aid at St. Catherine.
Parents and students shouldn't be afraid to call their schools' financial aid offices throughout the spring months — and many people do. The offices receive many phone calls, everything from "nuts and bolts" questions about the specifics of a loan or grant to more general inquiries to confirm they actually understand everything correctly, said Lindeman.
Communication is also essential within each family, between parents and students, Haugen said. Students need to be actively involved in financial discussions, both in order to select a school and later, so that they know where their money for college is coming from. "It's a very big decision and many families haven't thought through the financing and had discussions as a family until the aid letter comes," Haugen said.
Lindeman agrees that open communication about financial aid is critical, so that a family can make a payment plan together after an institution is selected. "It's important for there to be an honest dialogue about financial aid, with the right balance between parent and student responsibility," he said.
Other tips and advice
In terms of advice for navigating the world of financial aid for the first time, Lindeman uses this analogy: "Dealing with the financial aid part of college is not unlike going to the dentist. Nobody wants to do it and there's a tendency to drag your feet, and that generally is counterproductive. I would challenge them to push themselves and engage sooner, rather than later," he said. "It's a process that can seem complicated, but if families are bold and if they do that spreadsheet, they will find that they can understand it."
Stevens agrees. "We don't want them to have any (financial aid) surprises. We help them understand the value of the education they're getting and what resources are available so they can plan for the fall."
The following is a list of financial aid tips compiled from advice from Lindeman, Stevens and Haugen:
- Contact the college first, before you talk to your friends, neighbors or a bank.
- Start early, as comparing letters and talking to colleges about financial aid can be stressful if time is limited.
- Keep a spreadsheet to compare the comprehensive cost, the total aid in grants and scholarships and the loans offered at each school. Then you can consider value and find the best fit.
- Ask about outside scholarship policies at each institution, so you know how aid might change if the student receives private, non-institutional scholarships.
- Determine the deadline for accepting your financial aid award and confirming attendance at your college of choice. The national deadline is May 1, but some schools have a later deadline or will continue to work with students as needed.
- Ask about renewability of scholarships, grants and loans for each year so you can have as realistic a four-year picture as possible. This will be challenging because many factors, like whether a student has siblings in college, determine aid eligibility.
- Apply for federal loans first since they generally have the best interest and repayment terms for students and parents. The federal student loan programs have funding limits, however. Be aware that you have many options with private loans, but colleges can help — for example, some schools give a list of preferred lenders or a selection of loans their students have chosen in the past.
- Remember to file the FAFSA every year. If there are major financial changes during the year, let the school's financial aid office know.
- Follow through over the spring and summer by signing promissory notes for loans and by either accepting the work study position given or applying for jobs. This varies by college.
- Ask the college for the exact amount you'll owe each semester; then ask what your payment plan or schedule options are.