Amie: CSLF Podcast 7 – Decoding Your Financial Aid Award
Mariana: Welcome to CSLF’s informational podcast series. The Connecticut Student Loan Foundation, or CSLF, is a non-profit organization dedicated to providing access to funding for higher education through customized and high quality service. We hope to be able to provide you with regular installments of useful, accurate, and up to date student loan and financial aid information. Please feel free to contact us with your questions and comments at our MySpace profile at www.myspace.com/first_rate. You can find our blog at cslf.wordpress.com or find us on Facebook. And, as always, you can visit www.cslf.com. We are your hosts Mariana Evica –
Amie: — and Amie Aragones.
Amie: It’s finally that time of year. Financial aid award packages are in the mail and soon colleges will be expecting your deposit and commitment to attend. Once you’ve got a few of those financial aid award letters in your hands, how do you decide what’s the best choice for you? Before you can make an informed decision, you must decode the financial aid awards and compare the offers.
Mariana: Unfortunately, financial aid offices are not currently bound by rules making the presentation of financial aid information in award letters uniform across schools, so making comparisons can be tough. Some national financial aid organizations have come up with guidelines for schools to follow, but often you may still be missing important information.
Amie: So, how do you decode the financial aid award to compare the options you have?
First, you have to understand the costs associated with attending each school. Many schools don’t provide the “Cost of Attendance” in their financial aid award letters, but it is a crucial piece of information. This should include direct costs paid to the school, such as tuition, fees, room and board, and also “indirect” costs, such as books, supplies, travel or transportation, and incidental living expenses. If it isn’t listed, contact the school’s financial aid office for the total cost of attendance. This is the “sticker price” of the school, before financial aid is factored in.
Mariana: Next, you should see a list of the types of aid you have been awarded. The first thing you need to determine is which portion of your total award is gift aid, and which portion is self-help. Your total financial aid award may be a combination of types of aid, with different requirements and obligations. It isn’t simply an amount deducted from the costs.
Amie: Gift aid is award money that you do NOT need to pay back, and may include scholarships and grants. This is “free money”, and you want to see as much of it as possible. This doesn’t mean there aren’t requirements you need to meet, though. For instance, if a scholarship requires you to maintain a certain grade point average or take a certain number of classes and you fail to do so, you might lose those funds. Make sure you know what is required to keep your scholarship and grant funding.
If you take the Cost of Attendance and subtract out the amount you are awarded in gift aid, this is the true cost to you, and may be one of the most important figures for you to compare from school to school.
Mariana: Self-help is financial aid that you basically have to earn or pay for, including work-study funds and student loans. Loans may not be money you’re expected to pay toward the cost upfront, but it is still money that you will have to repay. It just comes out of your pocket in the future. You’ll want to minimize the amount of debt you will have when you graduate, because you don’t want to start off too far in the hole.
Also, you need to understand the kinds of loans that may be awarded to you. Be sure to listen to our other podcasts for more details on the types of student loans, but here are a few things you should keep in mind now when looking at your financial aid awards.
Amie: If you are considering taking out loans for school, always take any federal loans you qualify for first. They usually have lower interest rates with protections built in for students, like more flexible repayment terms. You can recognize these in your financial aid award letter by name. They are the federal Stafford Loan and the federal Perkins Loan.
Amie: You may also see a federal PLUS loan listed with your financial aid. This is a federal loan, but it is taken out by your parents, and they must agree to be responsible for that debt. If they don’t, or are not approved, that is another portion of your costs that you’ll have to cover another way.
Mariana: If you aren’t sure if all of the costs are being considered in the cost of attendance, or what types of aid you are getting, be sure to ask the financial aid office to clarify that for you.
Amie: What you need to look at is the true cost to you to attend each school, that is the cost of attendance minus gift aid, and compare. Will you need to pay more upfront or repay more in loans to attend one school instead of another?
Mariana: How will you pay for the balance due each year? Will you be over your head in debt when you graduate?
Amie: Of course there are many factors to consider when you are deciding which school to send that deposit to on May 1st, but these are only a few of the questions you’ll need to ask yourself when looking at how much of the cost of your education will come out of your pocket now, and how much will in the future.
Mariana: If you’d like more information on how to evaluate financial aid awards, the website www.financialaidletter.com has some great information and tools.
Amie: As always, you can call CSLF’s Training and Early Awareness Department at 1 -866-PLAN-4-IF, that’s 1-866-752-6443, and speak with someone who can help you decode your financial aid award.
Mariana: This podcast has been brought to you by CSLF, the Connecticut Student Loan Foundation.
Amie: The purpose of CSLF is to improve the education opportunities of individuals who wish to obtain a postsecondary education. CSLF supports its purpose by promoting access to higher education, by providing services designed to educate individuals about higher education opportunities and by offering affordable financing solutions that best meet the education funding needs of families.
Mariana: For more information, visit our website at www.cslf.com or come to our profile on MySpace at www.myspace.com/first_rate. And you can also read our blog at cslf.wordpress.com.
Amie: You can also find us on Facebook.
Mariana: Information in this podcast was accurate at time of production. CSLF is not responsible for changes in federal regulations, which modify program guidelines or requirements. CSLF reserves the right to discontinue or modify benefits at any time without prior notice.
Amie: This CSLF podcast is copyright of the Connecticut Student Loan Foundation, all rights reserved. April 2009.