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Pamela Yip: How much college aid is enough?

McClathcy-Tribune Information Services

May 11, 2015


This is the time of year when many high school students decide where they will attend college.

A big factor in that decision for many families is how much financial aid they’ll receive.

The key tool that will give you that information is the financial aid award letter. It summarizes the types and sources of student financial aid available to a student.

But they’re not that easy to understand.

"Award letters can be confusing, in part due to a lack of standardization and in part due to confusing terminology," said Mark Kantrowitz, publisher of Edvisors Network Inc., which publishes college financial aid information.

For example, colleges often discuss the "expected family contribution" or EFC. But that figure often omits many costs. It may also include loans as part of the aid package, even though those loans must be paid back.

Each college designs its own financial aid award letter, Kantrowitz said. Nearly a third of them don’t mention the college’s cost of attendance — tuition, fees, room, board, books, supplies, equipment, transportation and miscellaneous/personal expenses. Or they list a cost that is incomplete.

"Many list only the direct costs, such as tuition, fees, room and board, which are paid to the college," Kantrowitz said.

The cost of attendance is a factor in calculating the net price of college. For example, most students will be required to have a computer.

"The true cost of college is reflected in the net price," he said. "The net price is the difference between total college costs and just the gift aid" such as grants and scholarships.

So subtract the total amount of gift aid from the total cost of attendance. This is the net price, which is the amount of money the family must pay from savings, income and loans to cover college costs.

And remember that financial aid packages often include loans, which do not cut college costs. They merely spread out the costs over time.

If you’re not satisfied with the amount of financial aid you receive, appeal to the school to review your financial aid package. If your family has undergone a major change in your financial situation, you have a good chance of winning an appeal.

Examples would be:

—A parent losing a job or having salary reduced.

—A family member is critically ill.

—There are high dependent-care costs related to a special needs child or elderly grandparent.

"The student and family should take action immediately," Kantrowitz said, "regardless of whether the special circumstances are due to an ongoing need or a crisis."