The calendar says it’s spring but, for millions of college-bound high
school seniors, it’s award letter season. That’s when colleges across
the country follow up acceptance letters with financial aid award
letters to offer students financial assistance.
Many families consider the award letter to be the key determinant of a
college’s affordability, because it reveals what the college might be
able to contribute toward the cost and how much of the cost students and
families will be expected to cover. According to Sallie Mae’s How
America Pays for College 2014 study, during the college
selection process, almost half of families eliminated a school from
consideration after receiving its financial aid award letter.
To help students and families reach such a critical decision, Sallie Mae
has added new free, online
resources that simplify the process of interpreting and analyzing
award letters.
“This is the moment families have been waiting for – they’ve received
their college acceptance letters, they know how much aid each school is
offering, and now the ball is in their court to make their college
decision,” said Martha Holler, senior vice president, Sallie Mae. “Just
like students, no two award letters are exactly alike. Our new tips and
tools make it easy for students and parents to evaluate award letters
and ultimately determine which school best meets their needs.”
When evaluating award letters, Sallie Mae suggests keeping these points
in mind:
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Not all award letters are the same. There is no prescribed
formula or format for award letters, although they generally contain
the same types of information: how much one year at that college will
cost, the amounts and types of scholarships and grants that may be
available, and how much the student may be eligible for in federal
student loans.
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Tuition is not the only cost. Award letters generally include a
Cost of Attendance (COA), which is the school’s best estimate of
one year of tuition, fees, room and board, books, and other expenses,
including travel. The COA is not all-inclusive, however. For example,
it does not include transportation, living expenses or other personal
and out-of-pocket expenses a student may incur.
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Some money is “free” money, but some needs to be repaid. Scholarships
and grants are examples of “free money” that does not have to be
repaid. Money received through work-study programs generally doesn’t
have to be repaid, but recipients are required to work while they are
in school. Loans, however, including those from the federal
government, will have to be repaid.
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Mind the gap. To more easily compare what each school is
offering, set up a simple spreadsheet. Start with each school’s COA
and then subtract all the financial aid and federal loans listed in
the award letter. The difference, or gap, is the amount students will
need to cover with savings, private
student loans, or other funding sources. The gap can vary widely
from school to school, depending on what’s offered in the award letter.
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It’s only for one year. Although some items may be renewable,
students and families need to fill out the FAFSA and apply for
financial aid every year in school, and will receive a new award
letter each time.
In addition, new and free resources for analyzing award letters are
available on SallieMae.com/awardletters.
Students and families will find simple and straightforward information
regarding common award letter terminology, details on how award letters
are determined, and tools to help calculate college costs.
When it comes to paying for college, Sallie Mae recommends students and
families follow its 1-2-3 approach: first, maximize money that does not
need to be repaid, such as scholarships and grants; second, explore
federal student loans; and, third, consider a responsible private
education loan.
More information and free tools and tips about saving, planning, and
paying for college are available at www.SallieMae.com.
Sallie Mae (NASDAQ:SLM) is the nation’s saving, planning, and
paying for college company. Whether college is a long way off or just
around the corner, Sallie Mae offers products that promote responsible
personal finance including private education loans, Upromise rewards,
scholarship search, college financial planning tools, insurance, and
online retail banking. Learn more at SallieMae.com.
Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are
not sponsored by or agencies of the United States of America.
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