One of the most important steps to deciding on your dream college this fall is understanding your financial aid award letter. Between the EFC, FAFSA, grants, scholarships, loans, and all the deadlines, it can bring on a headache or two, especially when every college financial aid award letter looks a little different. Questa Education Foundation teamed up with Shawn Morris, Assistant Director of Financial Aid at Indiana Tech, to provide a few tips on reading your financial aid letter and the next steps to help you make the best financial decision. Morris has been in the financial aid world for 19 years and is passionate about helping students and families understand their finances and find financial freedom.
“I know that many view the process of financing college as daunting and I want to change that. My number one goal is to provide students and their parent(s) with all of the knowledge and direction necessary that helps them to make the best financial decisions for themselves and for their future,” says Morris.
Read on to learn a few tips from Morris and the Questa team.
Shawn Morris, Assistant Director of Financial Aid at Indiana Tech
What is a financial aid award letter?
A financial aid award letter gives you information from an institution about what they can offer to you for your attendance in a specific period (semester and/or academic year). There could be many types of aid offered, such as scholarships, grants and/or loans*.
*Note from Questa: Remember, grants and scholarships do not need to be paid back, but student loans – whether federal or private – require payback after graduation and often accrue interest, so your balance may be larger after you graduate.
Are financial aid award letters a guarantee of financial aid?
Award letters are not a guarantee of aid, but more an offering of aid available based on current information the school has for the student. For example, a student may be packaged with a Pell Grant based on their FAFSA but if the student is selected for verification* and must provide additional documentation for that process, the aid eligibility could change based on required updates to the FAFSA. It’s important for students to submit any requested documentation as soon as possible to avoid being surprised by changes late in the process.
*Note from Questa: Many students are asked to provide proof of their information through a verification process. You may be asked to submit federal tax return transcripts, proof of income, siblings’ college registration forms or other types of documentation. This does not mean something is wrong with your application. It is to confirm the numbers that you’ve added to your FAFSA match up with original documentation, not an indication that you’ve done something wrong. Read more here.
What is the difference between a financial aid award letter and a billing statement?
For most institutions, the award letter will only detail the aid that is being offered. It will not include information on charges and fees. The billing statement will show a student a breakdown of any and all charges being assessed to them for a semester or year. In most cases, anticipated aid (from the award letter) is included on a billing statement.
What is a financial gap?
A financial gap is the difference between the costs that the student will incur and the financial aid awards. A financial gap can be covered in many ways: Parent PLUS loan, Questa loan, private loan, outside scholarships, semester payment, university payment plan, etc. Students and their families should check with any institution that they are considering to find out what kind of payment plan is offered.
Note from Questa: This is often where we see students decide to take on a lot of debt. If their cost of attendance is still high after scholarships and grants are subtracted, students or parents will often take out loans. When making these decisions, it is helpful to weigh all of your options -both between schools and between available sources of aid. Prioritize scholarships and other aid you don’t have to pay back. Talk with your financial aid office and currently enrolled students to ask about scholarship opportunities. For loans, consider the terms – including interest rates – to fully understand what you’ll have to payback. Check out our blog post with James Cashman, College Funding Advisor at 3Rivers Federal Credit Union, for more information on how to estimate your loan payments after college.
Are there any other important tips or things to watch out for when you are reviewing your financial aid award letter?
Be sure to educate yourself on the aid being offered so that you know the difference between loans that are required to be repaid and aid that is “free” to you. The federal government maintains a great website (studentaid.gov) to use as a resource. Also, don’t be afraid to ask questions of those who do this on a regular basis, like your high school guidance counselor, your college’s admissions counselors and financial aid counselors.
Note from Questa: We encourage students to make sure you understand the differences between your financial aid award letters per school. Some schools may list your aid for only a semester, while others will list your aid for the whole year. It may seem like you’re receiving more money from one school, but in reality, it may be similar. Other schools will list a large scholarship, but in the fine print, the scholarship will be spaced out for 4 years rather than applied to each year. It’s important to make sure you understand the differences.
Next Steps
After you receive the financial aid award letters from your top school, what are the next steps to take?
Make sure you understand what you are being offered and understand what gap will still need to be covered. Submit any documentation being requested from the school. If you haven’t already, brainstorm organizations that might offer scholarships for college (e.g. student’s or parent’s place of employment, church, community organizations, your high school, scholarship contests, etc). Stay in close contact with your designated Admissions Counselor to stay up-to-date with the process!
What is a word of advice that you give to many of your students?
I like to remind students to live like a college student while they’re in college, so they don’t have to live like a college student after they graduate. Living (and borrowing) conservatively is key.
Important financial aid updates, as of 2021:
A few changes will be made to the FAFSA this year. Read this article from Forbes about 5 big changes you should be aware of including changes to the EFC (estimated family contribution), Pell Grant eligibility, federal loan limits and more.
