Student Loans

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Comparing Your Financial Aid Awards

If you’re fortunate enough to have been admitted to multiple colleges one task you will now be faced with is deciding which one is going to be the most affordable option. If you’ve done your homework ahead of time, and know your Expected Family Contribution (EFC), you should have a ballpark idea of what your net, or true, cost is going to look like.

Note that I didn’t say net price.

Net cost is your out-of-pocket cost – it’s what the college will cost you after gift aid (read, free money!) is applied to your overall cost of attendance. If the school’s cost of attendance, which includes tuition, fees, housing, a meal plan and insurance, is $60,000 and they are going to award you with $25,000 in gift aid, your net cost will be $35,000.

If you’re noticing that I didn’t mention loans, then good for you! Loans, while a part of financial aid awards, are not gifted money. Loans have to be paid back, with interest, and therefore should be factored in after your net cost has been determined. They are helpful, but you can’t dismiss the fact that they have to be paid back later.

So, what do you do with all of this information as you try to decide where you will enroll?

First, gather all your award letters and take a close look at them. Award letters are not created equal. Some will be incredibly detailed and will include your EFC and the complete cost of attendance broken down into semesters with the award broken down into categories (gift aid, loans, work-study) while others will show just a total for the year.

Second, create a little spreadsheet for yourself so that you can compare apples to apples. Make columns for each school and then break down the costs and the awards so that you can see the total for each school.

Third, subtract the gift aid from the cost of attendance and you will get your net cost.

Keep in mind that the lowest net cost isn’t always the best offer. And this is where you have to look at what kind of loans you’re being offered and if you’re being offered work-study.

You already know loans have to be paid back, but if you were to take out a small loan and that makes up the difference between your top choice school and the second place one, that loan may make sense for you. Work-study can be a great help as well, but you have to remember that you will be required to work on campus for so many hours each week to earn it. Even then, it is not applied to your bill because you earn the money on a week-to-week basis like a paycheck.

At the end of the day, be honest with yourself in regards to how much you can handle. You are making a decision about the next four years based on information you have for your first year only. What happens when the cost of attendance goes up in your sophomore year? What if you’re working for your work-study money and its affecting how much time you have to study? What if you struggle and lose your merit scholarship?

These are all questions you need to ask yourself before making any decisions. Just keep in mind that you have to make a final decision by May 1st.

If you would like some assistance with your college search or financial aid process, contact me today for a free 60-minute consultation.

Here’s what other families like yours are saying about how Dobler College Consulting made a difference for them.

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Eric Mar 16, 2017 , , , , , , , , , , , , , , No Comments
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Comparing Financial Aid Awards

Comparing Financial Aid OffersIf you’re fortunate enough to have been admitted to multiple colleges you will now be faced with the task of deciding which one is going to be the most affordable option. If you’ve done your homework ahead of time you should have a ballpark idea of what your net cost is going to look like.

Note that I didn’t say net price.

Net cost is your out-of-pocket cost – it’s what the college will cost you after gift aid (read, free money!) is applied to your overall cost of attendance. If the school’s cost of attendance, which includes tuition, fees, housing, a meal plan and insurance, is $55,000 and they are going to award you with $23,000 in gift aid, your net cost will be $32,000.

If you’re noticing that I didn’t mention loans, then good for you! Loans, while a part of financial aid awards, are not gifted money. Loans have to be paid back, with interest, and therefore should be factored in after your net cost has been determined. They are helpful, but you can’t dismiss the fact that they have to be paid back later.

So, what do you do with all of this information as you try to decide where you will enroll?

First, gather all your award letters and take a close look at them. Award letters are not created equal. Some will be incredibly detailed and will include your EFC and the complete cost of attendance broken down into semesters with the award broken down into categories (gift aid, loans, work-study) while others will show just a total for the year.

Second, create a little spreadsheet for yourself so that you can compare apples to apples. Make columns for each school and then break down the costs and the awards so that you can see the total for each school.

Third, subtract the gift aid from the cost of attendance and you will get your net cost.

Keep in mind that the lowest net cost isn’t always the best offer. And this is where you have to look at what kind of loans you’re being offered and if you’re being offered work-study.

You already know loans have to be paid back, but if you were to take out a small loan and that makes up the difference between your top choice school and the second place one, that loan may make sense for you. Work-study can be a great help as well, but you have to remember that you will be required to work on campus for so many hours each week to earn it. Even then, it is not applied to your bill because you earn the money on a week-to-week basis like a paycheck.

At the end of the day, be honest with yourself in regards to how much you can handle. You are making a decision about the next four years based on information you have for your first year only. What happens when the cost of attendance goes up in your sophomore year? What if you’re working for your work-study money and its affecting how much time you have to study? What if you struggle and lose your merit scholarship?

These are all questions you need to ask yourself before making any decisions. Just keep in mind that you have to make a final decision by May 1st.

If you would like some assistance with your college search or financial aid process, contact me today for a free 60-minute consultation.

Here’s what other families like yours are saying about how Dobler College Consulting made a difference for them.

Read More
Eric Mar 17, 2016 , , , , , , , , , , , , No Comments

College Counseling Tip Of The Day – Don’t assume you won’t qualify for financial aid

Everyone should apply for aid, regardless of what type of salary they earn. You never know when life might change and if a situation should arise where you want to take out a loan, you will need to have filed a FAFSA to qualify. 

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Eric Jan 29, 2014 , , , , , , , , No Comments
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Answering Your Questions About The FAFSA

Answering Your Questions About The FAFSANow that January has arrived, it’s time for high school seniors and their parents to fill out the FAFSA, or Free Application for Federal Student Aid. The FAFSA is the form you are required to fill out if you want colleges to consider you for financial aid.

While families have their own unique circumstances, here are some of the top questions I come across this time of year and my answers which will hopefully help you along the way as well.

1. We make too much money, we probably shouldn’t bother filling out the FAFSA, right?

Wrong. Regardless of how much (or how little) you make, you should always fill out the FAFSA. Even if your EFC is very high, there are still non-need based loans like the Direct Unsubsidized Loan or Parent PLUS Loan which can help you spread out the costs. But, to qualify you must fill out a FAFSA.

2. How do parents who have joint custody and are both remarried with new spouses file the FAFSA??

When students come from divorced families, financial aid eligibility is based on the income and assets of the custodial parent. This is the parent who the student lives with for the majority of the year, even if it’s six months and one day. Even if the non-custodial parent has a considerably higher salary than the custodial parent, this parent’s income and assets are not factored into the federal financial aid eligibility calculation.

3. We’re going to have two kids in college at the same time, how will this affect our financial aid eligibility?

How many kids you have in college at the same time has a very big impact on financial aid eligibility. Consider that your EFC is divided by the number of children enrolled in college. If you have one child in college and your EFC is $40,000, then that’s what colleges would expect you to pay. If you have two kids in at the same time, the EFC will be $20,000 each. This is why it’s also important to file a FAFSA each year. Even though you may not get a lot with one child in college, if you have a second one entering a year or two later, you may end up qualifying for something.

4. We won’t have our taxes done until late March, can we just apply for financial aid then?

You can, but you shouldn’t. Financial is aid is very much a first-come, first-serve process. Additionally, some states like Connecticut have February deadlines for state grants which you don’t want to miss. If you wait until after you file your taxes, colleges won’t have as much money to give out as they would have if you had applied in January. File your FAFSA now with estimated income and then use the federal data retrieval tool after you file your taxes to update your information.

5. My daughter’s grandfather has put away money in a 529 for her which we plan on using this year. Since it’s his money and not ours, do we have to report it on the FAFSA?

Yes, you have to report any distribution from a 529. The more important factor here is that the 529 is owned by a grandparent and, therefore, may reduce your aid eligibility considerably. Where a distribution from a 529 owned by either parent is considered a parental asset, a distribution from a 529 owned by someone who is not the parent is considered student income. When calculating aid eligibility, student income and assets are assessed at a much higher level than parental assets so even though the intention is a good one, the outcome may not be helpful.

If you want some help and guidance on your college application and financial aid process, check out what other families are saying about Dobler College Consulting and then contact me today to set up an appointment for a free consultation.

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Eric Jan 06, 2014 , , , , , , , , , , , , , No Comments