Understanding Financial Aid Offer Letters: What College-Bound Families Need to Know

Sallie Mae Offers Guidance and Free Resources to Compare Financial Aid Offers

NEWARK, Del.--(BUSINESS WIRE)-- Each spring, students and families reach one of the most important milestones in the college decision process: receiving financial aid offer letters from colleges and universities. Sent after a student is accepted and completes the Free Application for Federal Student Aid (FAFSA?), these letters outline the mix of scholarships, grants, school, state-based, or federal aid a student is being offered ? and are often the primary way families estimate what college may cost and compare schools.

While these letters provide critical information, differences in terminology and how information is presented often make it harder for families to compare options and understand the full picture. In fact, only 36% of families said their offer included the full cost of attendance, and just 27% of offer letters clearly outlined expected out-of-pocket costs. In addition, one in five families (20%) were unaware that loans could be included in their aid package, and 19% believed that any loans offered had to be used.

?Choosing a college is one of the biggest financial decisions a family will make, and they need clear, easy-to-compare information to make that choice with confidence,? said Rick Castellano, Vice President, Sallie Mae. ?Greater clarity, consistency, and transparency in financial aid offer letters around costs, including what?s free and what needs to be repaid, would go a long way in helping families make informed choices and ultimately support better outcomes.?

Important tips for helping students and families understand and compare financial aid offer letters:

• The biggest financial aid offer might not be the best. Look beyond the total dollar amount and focus on how much of an offer is scholarships and grants versus money you?ll need to repay. In many cases, a smaller financial aid offer with more free money can cost less over time than a larger package built around loans or higher out-of-pocket costs.
• Understand the lingo. You may notice schools use different terms for the same thing. For example, you might see federal loans listed as a ?federal direct unsubsidized loan,? ?federal loan,? a ?direct loan,? ?direct unsub,? or even just ?L.? Take the time to understand exactly what is being offered, and if you have questions, don?t hesitate to contact the school?s financial aid office.
• Accept only what you need. You are not required to accept everything that?s included within your financial aid offer. After you?ve established your plan to pay for college, only accept the types and amounts of aid you need, and make sure to respond to your school before the deadline.
• Pay attention to the details and ask questions early. Some scholarships and grants may depend on academic performance or enrollment status and may not be guaranteed each year. Financial aid offices can help clarify unclear terms and explain how an offer may change year to year.
• It?s okay to negotiate. Before responding to a financial aid offer, students and families can contact the school?s financial aid office if their financial situation has changed and learn whether their offer can be reconsidered.

Frequently Asked Questions About Financial Aid:

• How can families determine the actual cost of college? Families should start by understanding the full cost of attendance, including tuition, fees, room, and board, before subtracting grants and scholarships. Comparing offers side by side and asking schools to clarify unclear items can help families better understand the remaining cost ? or ?gap? ? they may need to plan for.
• What is the difference between ?free money? and a loan? Scholarships and grants are considered ?free money? because they typically do not need to be repaid, while loans are a tool families may use if additional funding is needed. Families are encouraged to prioritize free money first and borrow only what fits their plan. Exploring scholarships early ? and continuing to search throughout college ? can help reduce how much students may need to borrow. Families can also explore options such as Sallie?s monthly $2,000 No Essay Scholarship, quarterly $5,000 Grad School No Essay Scholarship, and Scholly Easy Apply.
• Where can families go for help or more information about financial aid? College financial aid and admissions offices can help explain offer details and how costs may change year to year. School counselors are also a valuable resource and online guides provide additional support to help families know what questions to ask and how to compare offers with confidence.

Sallie Mae believes education and life-long learning, in all forms, help people achieve great things. As the leader in private student lending, we provide financing and know-how to support access to college and offer products and resources to help customers make new goals and experiences, beyond college, happen. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation (SLM) and its subsidiaries are not sponsored by or agencies of the United States of America.

Category: Financial Literacy

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Source: Sallie Mae