Choose the Right Envelope: Sallie Mae Helps College-Bound Students Evaluate Financial Aid Award Letters
Sallie Mae’s ‘Do’s and Do-nuts’ for Evaluating Award Letters Help Students and Families Weigh Their Options and Make an
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“In many ways, financial aid award letters are like donuts — they’re tempting, but the fanciest-looking may not be the tastiest, and it’s a good idea to know what’s inside before making your choice,” said
- Look for three basic ingredients. Each financial aid award letter includes the school’s Cost of Attendance (COA) for one year; the Expected Family Contribution (EFC), an estimate the school uses to determine financial aid eligibility; and the financial aid offer itself, which typically consists of “free money,” like scholarships and grants, as well as federal student loans, which have to be repaid.
- List each ingredient in a spreadsheet. Even though the ingredients are generally the same, the way financial aid components are organized and how they’re described may differ from school to school. A spreadsheet makes it easier to weigh the pros and cons of each offer side by side.
- Think about what’s not in the letter. Add campus culture, location, sports teams, social scene, and other quality-of-life considerations to the spreadsheet.
- The biggest award may not be the best award. Look beyond the total dollar amount of each award to see how much is gift aid, such as scholarships and grants, and how much consists of money that will need to be paid back, like student loans. It may make sense to accept a smaller award that offers more scholarships and grants than a larger award that consists mainly of loans.
- Calculate the bottom line. Subtract the total financial aid offer, including federal loans, from the COA. The difference is the “gap,” the amount that will have to come from savings, income, 529 plans, or other sources of funds to meet college costs. Using a private student loan, like those offered by
Sallie Mae , can be a responsible way to bridge the financing gap. - Read the fine print. Pay attention to award conditions and contingencies, and note which parts of the award are renewable and which are for one year only. Complete and submit required documents promptly; missing a deadline could jeopardize the award.
Schools generate a new financial aid award letter each year the student is enrolled. The types and amounts of aid can change from year to year, so students should submit a FAFSA every year they are in school. The FAFSA may be submitted beginning
Find more award letter “do’s and do-nuts” at SallieMae.com/awardletters and in Sallie Mae’s “How to Read Your Financial Aid Award Letter” video.
Additional information about saving, planning, and paying for college is available at SallieMae.com.
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