Each spring, enticing financial aid offers from colleges begin to show up in high school seniors’ mailboxes. Sadly, many of these notices are deceptive.
These award letters are meant to guide families through big financial choices. Yet a large portion of them obscure the real cost of attendance, a recent government report found.
Here’s the typical scenario: when you (or a child) are accepted by a college or university, that institution will mail or email a statement outlining the financial aid you qualify for — usually a combination of loans, grants, scholarships and work-study opportunities.
That information is supposed to help families determine whether the school is affordable. However, as the Government Accountability Office notes in its report, too many of these letters fail to disclose what students will actually pay out of pocket.
“Most colleges are not following best practices for providing clear and standard information in their financial aid offers,” the GAO report stated. “Colleges should estimate the net price — how much a student will pay to attend that college… but about 91% of colleges understate or don’t include the net price in their offers.”
So what should you do with that insight? We’ve got a few recommendations.
Key Things to Know About College Financial Aid Letters
Misleading aid letters have led students to enroll at institutions they couldn’t afford, forcing them to accumulate unnecessary debt and sometimes drop out.
Nearly one in four colleges omit cost details entirely from their award notifications. Even when tuition and housing are listed, many schools neglect to include out-of-pocket expenses like textbooks, transportation and personal costs, the GAO found.
What should you do when you receive one of these notices? What should you ask? Consider the following tips:
- What’s not being said? Train yourself to spot missing information. Knowing that letters can be misleading, examine carefully what they fail to disclose.
- Find the facts you need. To compare schools accurately, you must gather every relevant cost. If you’re seriously considering a college, search the financial aid section of its website for full details. A little targeted Googling often helps.
- Understand the types of aid. “Financial aid” covers both grants and loans. Grants and scholarships are money you don’t have to repay; loans must be paid back.
- Merit aid: If you receive merit-based assistance, check the conditions — for example, whether it renews each year — and weigh it against your total yearly expenses.
- Need-based aid: If the package includes need-based aid, read the fine print carefully. There can be complexities beneath the surface.
- How does each offer function? Will the amount remain the same across four years? What does the college mean by a “full” award? Could outside scholarships reduce the institution’s contribution?
- Beware of front-loaded grants. As the nonprofit guide Finaid warns, some schools front-load grants in the first year and then replace them with loans in later years. Ask whether the grant level is likely to continue.
- FAFSA: If all this makes you nervous about the FAFSA, seek out a step-by-step guide — and don’t skip it. Filing is critically important.
These factors are essential when you evaluate financial aid offers from the colleges you applied to. Before accepting anything, make sure you fully understand what’s being proposed.
The letters usually land in mailboxes and inboxes every April. Now you know how to evaluate them.
Jordan Fielding is a senior writer at Savinly. Alex Moreno oversees social media and messaging at Savinly.
