Financial Aid & Paying for College

Understanding Your Financial Aid Package: Has the College Made Its Best Offer?

Each year, college-bound students receive offers of financial aid from colleges who have accepted them. And every year, enrollment and financial aid offices across the country wait for one of two responses from students and their families.

The first response is: "Is this the most we are eligible for?" The second response is in the form of a matriculation fee, commonly called a "deposit." Colleges hope students respond favorably to their financial aid packages, and send the required matriculation fee. More often, however, families are considering their first offer of aid as a starting point for bargaining with the college. How does a
college award aid? How do families know if this is the "best" offer a college can make?

Financial aid is made up of three primary components: (1) merit scholarships, (2) grants, and (3) self-help. Philosophically, merit scholarships are intended to reward the student for academic achievement in high school and extra-curricular involvement. College have different definitions of achievement and various methods of awarding merit scholarships. Some colleges do not offer merit awards to families with no financial need. Others limit merit scholarships to non-athletes. Check with the colleges you are considering for the exact method they use to determine your eligibility, if any, for the various merit programs they might offer.

Grants, on the other hand, are customarily a need-based award. Like merit scholarships, grants are not "paid back" to the college. Again, every college uses different methods of determining financial need against the total list price: tuition, fees, room, and board.

The third component, self-help, is made up of all other sources such as loans and work-study. When all forms of aid are compiled for a particular student, the remaining net cost is commonly known as "expected family contribution." This often is considered to be the amount that families must pay to make up the difference between the college's total award and the remaining charges left on the annual charges for attending a college.

Each college has an award ceiling it sets for individual student's packages. The ceiling is the total amount of aid, from all sources, that can be awarded to that student. What makes up the ceiling? Financial need, determined by the Federal Methodology (FAFSA ), or by other required financial aid applications, is one component. Another is academic quality, determined by the individual college on variables unique to that school alone. Special considerations, such as alumni status, athletic ability , musical or art talent, demographic and ethnic issues, and thousands of other variables can be found in the models colleges use to determine who gets what institutional financial aid.

Your goal as a consumer is to reduce the "list price" and know the final net cost of attendance for the various colleges you are seriously considering. Once you know the system each college uses to determine your net cost, the decision about which college to attend is primarily one of value. Weigh the net cost at each college against what you--and your family --consider to be the most important values. The college that matches your values, needs, goals, and offers the most reasonable net cost for those values, will most likely be the one you choose to attend.