Understanding (and Maximizing) Your College Financial Aid Package

Scholarships, loans, and grants...oh my. Here's how to decipher exactly what's in your financial aid package and how to maximize it to the fullest.

As students who have started or been through it know, financial aid is an important part of the college application and decision process. However, it takes a good deal of preparation and research to truly understand just how important and intricate this aspect of your college decision is, as there are ways in which your financial aid package can be adversely affected or, more positively, maximized. Recent changes in your financial state or circumstances can notably affect your family’s household income and therefore your financial aid package. But don’t worry. As I will detail below, there are ways you can show this to your college and work with them to make sure you graduate with as little debt as possible.

Applying for financial aid

First off, you must apply for financial aid. This process always begins with filing the Free Application for Federal Student Aid (FAFSA), which becomes available online on October 1. This important document provides colleges with detailed information on your family’s financial state and what your family will be expected to pay after any financial aid you are offered. It’s the main document that colleges use to decide what they will give you in your financial aid package. The FAFSA is based on tax return documents and payroll information from the tax year preceding your filing. For example, my freshman year in college will begin in fall of 2018, so I filed the FAFSA in October of 2017 using my parents’ tax forms from 2016. You must file the FAFSA each year that you are enrolled in college, as your eligibility for aid may differ year to year.

Even if you have to make changes to your FAFSA later on, it is still based on the same tax filing year as when you first filled out the FAFSA. Because you may be starting college over a year after you file the FAFSA, this may elicit changes in your FAFSA that you will want to update. Many things can and will affect your FAFSA, which will in turn affect how much in financial grants you are given and how much in loans you will be eligible for. Situations like a recent move, a change in your family’s income, or a new dependent since your last tax filing can all drastically affect your perceived versus true income and your expected family contribution (EFC). You will want to ensure that every bit of information you and your parents put on the FAFSA is completely accurate. If one of the aforementioned changes occurs after you’ve already filed the FAFSA, you can sign in online again and update it to reflect that change.

Many private colleges will also require you to fill out the College Scholarship Service (CSS) Profile, which is similar to the FAFSA. You may also have to fill out a college-specific application for financial aid: a college’s own forms that require information ranging from names of members in your household to a list of your family’s sources of income. This document can be printed out from the college website’s financial aid page to be filled out and emailed or mailed back for review. This supplements the FAFSA and the Profile to complete your financial aid application.

Related: How to Fill Out the FAFSA, Step by Step

Your financial aid package overview

Once a college has received your FAFSA/financial aid application and offered you admission, they will send a financial aid package overview along with your acceptance letter or soon after. It’s very important to review it thoroughly, because this letter will detail your merit scholarship amounts in addition to financial grants; eligibility for unsubsidized (interest-accruing) and subsidized (non-interest-accruing) loans and their dollar amounts; and eligibility for a work-study program and its dollar amount. This financial aid letter will also include the amount you will be required to pay after all of these scholarships, grants, loans, and work-study programs. This number (in addition to the cost of books) is important to understand as the deficit you will have to amortize throughout the year. 

Merit scholarships

A substantial part of your college costs can be paid through merit scholarships. Most of your scholarship amount on the FAFSA will come from the college directly, and some can also come from external sources, such as those specific to students from certain school districts or those specific to students of certain demographics. Merit scholarships work separately than other aid and typically have a ceiling you can hit specific to each college, such as $30,000 for students in the upper echelon. How much you are given in this aspect of covering your college costs depends simply on your grades, test scores, and class rank.

Public and private loans

Public loans, the ones you are eligible for as stated on your financial aid award letter, are loans that offer lower interest rates than private loans and typically have more flexible repayment plans. These loans are deferred until after school and also offer six-month grace periods after you graduate, which give you some time to get a job and begin making money. These are called Stafford student loans, and subsidized Stafford loans are based solely on need, for which the government pays the interest during your college enrollment and the grace period after graduation. Unsubsidized Stafford loans are not based on income but on your year in school, other financial awards, and estimated cost of attendance, for which the government does not pay the interest. Typically these loans have a limit of a few thousand each per year.

Private loans, which are taken out to offset remaining costs after scholarships, grants, and public loans, may defer the amount you owe until after you graduate, but these loans have far higher interest rates than public loans and are more difficult to attain—typically because they require a cosigner, a good credit score, and a certain income.  Since these loans are offered by private companies, they are usually subject to various, more stringent rules and regulations. 

When taking on loans, always make sure you are absolutely certain in your decision and need.  Loans always come with an amount of debt and interest that must be repaid later, a considerable responsibility to take on as a young adult. Private loans can become especially burdensome in the future, dragging down your income with required monthly payments for many years, so maximizing your financial aid becomes even more important to minimize debt in your future. Other (perhaps better) ways to offset your deficit are to take summer jobs or jobs on campus during the school year, such as a resident assistant (RA) position, which will often cover 50%–75% of room and board—a considerable aspect of your college costs.

Related: Types of Student Loans Explained: Federal vs. Private

Maximizing your financial aid

If your financial aid package isn’t what you were expecting, another way to lower your deficit cost and maximize your offer is to appeal it. This is particularly effective when a sudden change in your financial state comes up and isn’t accurately reflected on the FAFSA. It’s possible for colleges to add several thousand more dollars onto your financial grants if you show evidence of a major change in income or anything else that may have recently affected your EFC.

Often after meeting with the financial aid office, the college themselves will update your FAFSA to reflect the change that you’ve discussed with them; you’ll receive an email notifying you of this update to your FAFSA and can view it then. Even if you haven’t had a major change recently, simply meeting with financial aid officials and providing evidence that you won’t be able to manage your remaining costs could boost your grants—and every amount helps when paying for college. Do your best to be professional, grateful, and thorough, and your appeal can go a long way for the better. If all goes well, you could end up with more financial aid than a college originally offered—all you have to do is ask.

If the college does end up boosting your grants, you’ll be sent an updated financial aid package review letter to show this new amount. The numbers will shift in accordance with the increase, and you’ll have a new idea of how much you’ll be required to pay after financial aid. Read this letter thoroughly too, because those numbers can quickly get confused, and you’ll want to make sure you understand this new amount.

Related: How to Appeal Your College Financial Aid Package

Understanding your own financial state and your college’s offered financial aid package is imperative to making an informed decision as to where you want to go to college and making the most out of your college experience. All your hard work before college begins will certainly pay off (literally!) in the long run.

Find more advice about paying for school in our Financial Aid section. 

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