When you get your student aid offer letter, your eyes may automatically scroll down to the bottom line — but that's a mistake.
Why? Because most student aid offer letters fail to give you the complete picture.
Here are three things that might not be obvious when evaluating your offer letters.
1. Different types of gift aid may not be guaranteed
When evaluating financial aid assistance the school is offering, it’s important to make sure you can count on that aid. Otherwise, a school that looks like a good deal at first glance can quickly become a bad deal.
If the school has a limited number of work-study positions available, you may not be guaranteed a spot. So, you may not always be able to depend on those work-study unds to pay the tuition bill.
Even if you are granted a work-study position, remember you won't get all of those funds at the beginning of the semester. Work-study money is disbursed via paychecks over the course of the semester.
Some schools also front-load their gift aid by offering grants or scholarships on your initial offer letter that may not be available in future semesters. It’s important to clarify with the school about when, and how often, certain types of aid will be offered.
It’s also important to maintain the conditions each year that initially qualified you for merit aid.
If part of your award is based on you maintaining a certain GPA or staying enrolled full-time, you need to know that and make sure you keep up your end of the deal. Otherwise, you could lose out on a big chunk of your funding.
If you receive need-based aid, a significant jump in your household income from year to year on the FAFSA could reduce or even disqualify you from receiving the same types and amounts of aid on your future aid offer letters.
2. Your actual cost of attendance
Many schools will give you a number they call the cost of attendance (COA). Seems pretty straight-forward, right? The problem is, that number rarely takes into account everything you'll need to pay for. And you might be surprised by some of the items that could be missing.
You might think this would be a no-brainer to include, but many colleges actually don’t include a tuition number.
Why? Some schools revise their tuition amounts over the summer and can't give an exact number until then. But ultimately, the reason why doesn't matter — you need this information to complete your funding plan.
If you can't find a tuition estimate from your school, ourNitroScoretool can give you a ballpark number.
In addition to tuition, all schools tack on a variety of fees for facilities, student activities, and various other programs and services. And those fees can add up! Typical fees can range from a nominal $50/year to use the college fitness center to thousands each semester in lab fees. You need to make sure you've accounted for all of the fees that are likely to apply to you so you can get a more accurate estimate of your total costs.
Housing and meals
While many schools do provide room and board cost estimates, not all do. That's especially true at colleges where many students commute from home or work full-time.
If you won't be living at home, you'll need to budget for your housing and food costs, too. (Even if you are living at home consider that you may have slightly higher than usual food expenses. For example, you're probably going to be grabbing snacks on campus, not to mention the occasional lunch or dinner.)
If your offer letter doesn't include room and board as well as a meal plan, check with the financial aid office or the bursar's or business office to find out what it will cost.
If you won't be living on campus, make sure you know how much you'll need to budget for housing and food. Check out average local rents and line up roommates if you need to split the cost — and don't forget about other extras like the security deposit, utilities, and parking fees.
Book costs are included in some school aid offer letters, while others leave it out. While there are ways toreduce your book costs, you're unlikely to be able to avoid buying at least some books and supplies for classes.
That’s especially true if you're taking classes in the sciences, math, or business, where classes often require the newest editions and texts can costs hundreds of dollars a piece.
Equipment and supplies
Depending on the courses you take, you may need more than just books for your studies. Students majoring in science programs are especially likely to need to purchase lab kits and other equipment or supplies in addition to their books.
Those studying computer science, graphic design, and other tech fields may also be required to purchase a laptop to bring to class or to do homework. Art students also often need to purchase their own materials, such as charcoal, clay, paints, etc.
Transportation costs are similarly omitted in some school award letters, especially at smaller regional schools. If you're living off-campus, you’ll want to include daily commuter costs like parking and gas or a subway card in your financial picture.
Don’t forget to include the cost of transportation home during breaks and holidays — especially if you need to fly home. If you live on campus, your school will likely require you to leave the dorms for Thanksgiving, between semesters, and for spring break, so you’ll need to have a way to get home.
3. Some aid must be repaid
Every school has their own language and abbreviations they use on their aid offer letters and it's not always clear what's what.
For instance, a standard student loan can be called a subsidized or unsubsidized loan, a Stafford loan, or a Direct student loan. Sometimes loans may even be referred to by abbreviations such as "ln" or "Stffd" — none of which are standard and used by all schools. (Why make it easy, right?)
Other schools group all types of loans with work-study and refer to the total amount as "self-help" aid.
Because of this confusing terminology, many families understandably don’t initially realize the loans listed on their financial aid award letter must be paid back.
Federal student loans
Almost every student is eligible to take out a limited amount of federal student loans through the William D. Ford Federal Direct Loan Program.
For those with financial need, some or all of that balance may be subsidized, meaning that interest doesn’t accrue while payments are on hold during school. Students who don’t demonstrate need typically can only take out unsubsidized loans.
In addition to federal student loans, aid offer letters sometimes also list Perkins loans and/or Parent PLUS loans as funding options.
Perkins loans are another type of need-based loan. Though they typically have affordable rates, they must be paid back. You'll want to leave them out when calculating your true estimated costs.
Parent PLUS loans
Parent PLUS loans, as the name suggests, are loans taken out in a parent’s name. Many students without credit have their parents take out loans to cover their remaining costs.
But not only do these loans, like all others, have to be paid back, they also require a credit check and are therefore not a guaranteed option for every family.
The bottom line
Overall, when comparing your aid offer letters, make sure you keep loan offers separate from gift aid. Prioritize the aid that you won’t have to repay (grants, scholarships, etc.) when comparing award packages from different schools.
And especially for families with strong credit, remember there may be other loan options with more competitive rates.
Carol Katarsky is a contributing writer for Nitro. She is an award-winning journalist with extensive experience writing about both finance and education. Her corporate and non-profit clients include AIG, Children's Hospital of Philadelphia, and the Project Management Institute. She lives in Philadelphia with her husband, son, and one cat more than she should. Read more by Carol Katarsky