The excitement is building when you start getting those notifications that you have been admitted to colleges that you applied to.  However, when your ability to afford college is paramount to saying yes, then the receipt of an aid offer or financial aid award letter becomes more essential.  The problem is that no two aid offers look the same.  They use different terms, different formats, and, of course, different amounts.  So as you start to compare aid offers, keep in mind these four key concepts.

1. Understand Your Cost of Attendance

The feds mandate that every college must break down their cost of attendance.  This is your sticker price for a specific college. This doesn’t just mean how much tuition will cost you for the academic year.  The federal government acknowledges you have direct college costs like tuition, mandatory fees, room (housing) and board (food or meal plans) if you are living on campus.  Plus, every college must build into the cost of attendance their indirect costs like books and supplies, transportation, and room and board if you live off campus. 

In fact, some colleges build in other allowable costs into the cost of attendance like loan fees, orientation fees, and specific expenses required for your program of study like lab fees, distinct software, or costs associated with a cooperative education requirement.  Occasionally, some colleges will build in unique items in your cost of attendance if you are paying for your own kid’s childcare while attending or have disability-related expenses like personal assistance, equipment, and supplies not provided by another agency.

2.  Count Up the Free Money

We all love it when someone else gives us money.  The fact is true with paying for college.  The amount of gift aid - that is need-based grants and merit scholarships - is the best form of funding you can get. 

Maximize the amount of gift aid by applying for all federal, state, institutional, and private grants and scholarships by their deadline.  Most deadlines are centered around the February through May timeframe.  Just know there are always outliers. 

For most federal and state aid, completing the FAFSA by the college’s recommended deadline will ensure that you get as much of the gift aid as you are eligible.  When it comes to gift aid from colleges and universities, it’s not a one-size fits all.  Of course, there are some who just use your admissions application and FAFSA to award their need-based and merit aid.  But for many, they require separate, unique scholarship applications and/or the CSS Profile.  Ask your admission counselor at each college or university about what you need to do to ensure you know the process and deadlines to get a chance at everything you are eligible for.

Don’t just stop at looking at the federal, state, and institutional gift aid sources.  Many private foundations, generous corporations, and civic organizations sponsor grant and scholarship programs.  Scholarship search engines like the College Board’s Scholarship Search, Scholarships.com, and Fastweb are great, free ways to search for scholarships that you may be eligible for.  Also, your high school college counselor may also have a list of local scholarships you can consider.  Paid scholarship search services also exist like ScholarshipOwl and Scholly.  We just suggest that you exhaust free search options before you go this route.

3.  Know the Ins and Outs of the Self-Help You are Offered

Most college’s aid offers will include some form of self-help aid - financial aid that the student invests in themselves to help pay for college costs.  Self-help aid comes in two forms: work-study and student loans. 

Work-study is a need-based form of part-time employment that helps pay for college costs.  As you work in an approved work-study job on campus or off campus, you get paid hourly wages to help you pay for college costs.  In Sallie Mae’s “How America Pays for College" study they found that the average work-study amount is $1,847.  At the current federal minimum wage that is about 250 hours of work or about 8 hours a week per semester. If you are offered work-study but have an opportunity to work in another part-time job, make certain you understand the pros and cons of work-study vs. part-time employment.



Student loans are a form of self-help financial aid.  It may not be a fun use of time, but it’s essential to understand the terms and conditions of the student loans you are being offered before you sign a promissory note.  Student loans typically have financing costs in the way of interest and often loan fees that are repaid over the loan period of time.  The best student loans don’t require repayment and have someone else paying the accrued interest while you are enrolled (typically at least half-time) like the Federal Direct Subsidized Student Loan.  Some private colleges have their own loan programs that have low or no interest rate and fee loans.  These may be great ways to help you pay for college. 

Assessing your loan options doesn’t just mean understanding your financing costs.  It also means knowing when you start repayment, how long the repayment is, and what options you have if you can’t make a payment.  Plus, some lenders offer benefits like co-signer release for demonstrated on-time payments or interest rate reductions for setting up automatic payments.  In fact, the feds offers a 0.25% interest rate reduction to Federal Direct Student Loan borrowers who sign up for auto-debit.

Federal Direct Student Loans and many college loan programs have annual loan limits, which means that some students need to borrow more than one type of student loan to pay for one academic year.  Many families consider whether to use other financing options like the Federal Parent PLUS Loan, Private Student Loan, or Private Parent Loan after they have exhausted all other forms of gift aid, work-study, and subsidized loans.

If you are like many students who have a hard time conceptualizing how student loans will affect their lives after graduation, consider diving into what your student loan repayment will be on a monthly basis.  Quatromoney’s College Finance Planner does just that.  In less than 5 minutes, you can add in your college price, any savings and cash you can use along the way to pay for college costs, and then see your eligible financing options for all four years.  By diving into the details, you can see the breakdown of your estimated borrowing needs for each year and the student and/or parent (depending on the federal and/or private financing option you select) monthly repayment.



4.  Calculate Each College’s Net Price

It’s great when you see that you are awarded a $25,000 merit scholarship.  But when the cost of attendance is $75,000 per year, that may not be enough.  To truly compare aid offers, you want to assess the net price of each college.  The net price formula is easy.   Take your cost of attendance and subtract all your gift aid.   But if you need a bit of help, use this college net price comparison spreadsheet. 

Pro Tip:  If you really want to go to a specific college, but your aid offer is not enough, try appealing the financial aid offer.  Ask the college for more free money.  Be specific about why you need more money, how much will make the difference, and document your reasons for your request (i.e., employment termination notice, another college’s aid offer with more money, or required, looming medical bills).