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Evaluating Financial Aid Offers: Which Offer To Take

While a college acceptance is certainly exciting, the hard work is not quite over. What’s next? Well, your teenager needs to decide which financial aid offer to take. An important part of that decision: Making sure to compare your student’s financial aid awards, so you know exactly how much each college will cost.

We asked David Levy, editor with Edvisors and an expert on financial aid, for his top tips on how families should compare financial aid offers.

How to Evaluate Financial Aid

1. Clarify what’s in your financial aid package.

A college financial aid package will include two types of “aid,” says Levy. These are:

Gift aid: These are grants and scholarships you WILL NOT have to pay back.

Self-help aid: These are loans and work-study that you or your teenager WILL have to pay back. As such, they are not really “aid,” but rather (in the case of loans) deferred tuition payments with interest and (in the case of work-study) hours your student will be required to work for the college.

2. Read carefully.

Award letters can be confusing. Unfortunately, this makes it a challenge to accurately compare financial aid offers, so work extra hard to make sure you understand what you’re reading. “Award letters may not be consistent in how they describe things,” explains Levy.

3. Calculate the net price.

Your goal is to determine the net price (what your family will pay out of pocket) for attending each institution. Your net price is the total cost of the  institution (the sticker price) minus the gift aid stated in your financial aid package.

For example, if the total cost of the institution is $40,000 per year and you’ve been awarded $15,000 in gift aid, your net price is $25,000. Do not subtract loans from the total cost of attendance. Loans must be paid back; therefore you should include them in your net price. “A lot of times the award letters use language that suggest that loans reduce college costs, but all they do is defer costs,” stresses Levy.

Families might consider creating an Excel document in order to compare financial aid offers side by side. Columns can include total cost of attendance, gift aid, total loans, net price (again, total cost minus gift aid) and anything else you find helpful (loan terms, for example).

4. Be aware of total cost (beyond tuition)

Remember total cost includes all the costs of attendance, not just tuition.

“About one-third of award letters do not mention full cost of attendance, things like transportation, textbooks, computers, and living expenses,” says Levy. “If that’s the case, go back to college’s website and get the information.” This is also available on websites like

5. Factor in loans and debt.

Understand the amount of loans in the financial aid award and the specific terms of those loans.

“More than half of award letters don’t include information about loans,” says Levy. “What are the monthly payments? What are the total payments? Some letters don’t even signal that you’ve been offered an award that has to be repaid. They may mix loans and grants together, so families are confused about what’s what.”

Remember, the rule of thumb for total student loan debt is that your student should graduate with no more debt than she expects to earn her first year out of college.

Your teenager wants to major in marketing? Her debt should be no more than $40,000, or $10,000 a year. Visit for entry-level salaries in hundreds of fields.

6. Identify the rules for gift aid.

Understand the terms and conditions of the gift aid you’ve been awarded.

Will your student have to maintain a particular GPA? Take a certain number of courses? Make sure your student understands that if she does not meet those terms and conditions, she risks losing that gift aid.

7. Find out if your financial aid award is front-loaded.

The financial aid award you receive is for freshman year only. Unfortunately, it’s not uncommon for colleges to front load gift aid into the freshman year. “Colleges may be more generous in the first year than they are in subsequent years,” says Levy.

“But families will make a decision based on freshman year, not understanding that in subsequent years there may be more loans.” Levy says families can use to see how grants and scholarships may change from year to year at a particular institution.

8. Inquire about outside scholarships.

What happens to your financial aid package if your teenager wins an outside scholarship?

Some colleges will deduct the amount of those scholarships from the amount of gift aid they’re offering.

9. Pick up the phone and ask questions.

Parents should not hesitate to call up an institution’s financial aid office to get specific answers about the financial aid award. The only way to realistically compare financial aid offers is to have accurate information for each institution you’re considering.

10. Try to appeal if necessary.

If your family has received little to no financial aid, you can consider writing a college financial aid appeal letter. Colleges use financial aid appeal letters to determine whether or not to reevaluate the amount of aid they’ve offered an applicant.

If your family’s financial situation has changed considerably (high medical bills, job loss, etc.), there’s a decent chance a college may bolster the package you’ve received. Likewise, if your student receives a better package from an equally (or higher) ranked institution — and especially if your student is in the upper end of the applicant pool — it doesn’t hurt to ask a school to match that offer. Some schools will do so.

Diana Simeon is an editorial consultant for Your Teen.

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