What Is that Financial Aid Offer Letter Telling You?
Let’s make that picture a little clearer. Official financial offers usually begin appearing in the spring of the student’s senior year in high school after all of the financial aid forms and supplementary financial forms have been filed and processed. (Keep in mind that this is the official offer, not the preliminary offer you received about the same time as your acceptance letter.) Once you start receiving official offers, you can begin to get a much clearer picture of what college is going to cost you.
The first thing to do when you receive a financial package offer from a college is to make sure you are interpreting the offer correctly. Official financial offers will appear to be very unassuming forms but they are actually a vital element in the process. Select any of the links below to see an example of an offer letter from three different schools: Clarke College, Drake University and Monmouth College (the color highlight has been added by us).
Clarke College Official Financial Aid Offer Letter (PDF)
Drake University Official Financial Aid Offer Letter (PDF)
Monmouth College Official Financial Aid Offer Letter (PDF)
You might want to print off the offers and have it readily available as we walk you through how to develop an accurate interpretation.
The dollar amounts in yellow are the grants and scholarships, the free money. The amounts in green are the student loans and work-study, the self-help. The amounts in red are the parent loans. As you can see, each of the colleges produced a financial offer that looks different from the others, but generally follows the same pattern. You want to pay attention to the annual or total amount. Let’s use the Monmouth offer as an example.
Add up all grants and scholarships (yellow): $4,500 + $4,500 + $1,000 + $5,000 = $15,000
Add up all student loans and work-study (green): $500 + $3,500 + $1,860 = $5,860
Add the totals above: $15,000 + $5,860 = $20,860
Monmouth conveniently totaled the numbers for us already and is offering this student $20,860. We’ll assume for this example that Monmouth’s Cost of Attendance (COA) is $31,000. If you subtract the offer from the COA you will determine your actual out of pocket costs for attending Monmouth College.
$31,000 - $20,860 = $10,140
So you can expect to pay Monmouth College $10,140 for the year.
Do the same with the offer from Drake University. NOTE: DO NOT COUNT THE ITEM IN RED. IT IS A PLUS LOAN AND IS TO THE PARENTS NOT THE STUDENT. Assuming the COA of Drake is $38,000, you would be paying Drake $24,000 per year ($38,000 – $14,000 = $24,000).
It is important to do this with each financial aid offer you receive so you fully understand what each school is going to cost you for the year. You can use this information to assist you with any appeal you might choose to make or to make a more informed decision about where you will go to college in the fall.