Parents and students often find it challenging to understand the financial aid award letters they receive from each college. PayForED has developed college funding and student loan solutions that include a combination of articles, videos, software, and webinars that can help families with this process.  Our goal is to help families understand the different line items of the financial aid award letter. We believe the best way to solve the student debt problem is to avoid excessive student loans and that begins with making the right college decision.

The high school class of 2024 has a different problem this year due to the expected changes related to the FAFSA Simplification.  The colleges normally only give one year of financial information for a variety of legal reasons.  What makes this year different is for many families what they receive this year in grants could change significantly in the outer year and could make the cost much higher than what the first year’s cost is.  Parents and students need to be particularly aware of the reduction in any non-merit financial aid.  These would be need-based scholarships and grants.

Need for Financial Aid Transparency

The Department of Education has been making steps towards colleges using a standard award letter format but it is not universal at this time. This lack of financial aid transparency and literacy is a driving force for our Financial Award Letter Program.

The government has a tool called the College Financial Plan.  It was formally called the College Shopping List.  The form is helpful but does not help you compare colleges side by side in one place.  It also only projects one year of cost.  To avoid excessive student debt families need to have a four-year view of tuition and debt projections.  The PayForED College Cost Analyzer helps families project the debt and easily compares colleges side by side based on the financial award letter.

Understanding Financial Award Terminology

The financial aid process has its own unique terms.  This can be frustrating for both students and parents.  This is why it is important to organize your award information in a consistent method.

As an example, some colleges will list an item as a scholarship.  For proper planning, the family will need to know if this is a need-based scholarship or a merit scholarship.  A need-based scholarship is not always guaranteed in future years.  This could have a big impact on the total cost and debt in future years.

Understanding the Loan Listed

Most financial award letters will have a Federal Direct Subsidized Loan and Federal Direct Unsubsidized Loan listed.  Sometimes a Stafford name will be added to that loan.  To get this loan the student must complete the FAFSA.

Understanding why different loans are available at each school’s award letter can be confusing for parents. For example, on one college award letter both loan types might be available to the student while on another award letter, the student will only be eligible for an Unsubsidized Direct loan. The reason for the difference is at one college the student qualifies for need-based financial aid and at the other college, they do not.

You should ignore the Parent PLUS loan that is listed on the award letter. Some colleges include the Parent PLUS Loan to distort the net cost. This loan is available to parents if they have completed the FAFSA and have fair credit.

Appealing the Financial Award

I recommend that everyone submit the FAFSA form if you have not already done so. If there is a financial change and you need to appeal the financial award letter, the college financial aid office will need that completed. The FAFSA also allows the student to structure in the debt the best way.

The FAFSA uses a timing process called Prior Prior. This means for the October 1, 2023, FAFSA, the families would use taxes from 2022. If your financial situation has changed then this would be a reason for an appeal. There could be other reasons to appeal but this is the most common.

Financial Aid Award Letter Webinar

PayForED will be hosting a webinar titled “Understanding the Financial Aid Award Letter,” to give clarity to families.  The event will help families better understand the details found on their financial aid award letters such as need-based aid, merit aid, and student loans. College selection is one of the most critical decisions made by parents and students. Breaking down the award letter and understanding merit aid versus need aid is vital. This program provides insights that go beyond the financial aid process and helps families understand and compare their award letters.

Listed below are just a few items that we will cover in the upcoming webinar:

• Analyze the college financial aid award letter and the terminology
• Learn and apply for student loans and financing options
• Understanding cash flow & debt at graduation
• Appealing the Financial Aid Award Letter

The presenter is Fred Amrein, a recognized expert in financial aid, college funding, and student loans.  Fred brings personal financial expertise to the college financial decisions.

PayForED hosted a webinar to help families understand the Financial Aid Award Letter.  The Click here to see the recording of the Decoding the Financial Award Letter Webinar.