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Consider all aspects of financial aid offers

The Savage Truth

In the coming weeks, millions of college freshmen will know the joy of acceptance and the agony of money anxiety as they figure out whether they and their parents can afford the college of their choice.

Financial aid packages soon will arrive along with acceptance letters. My first piece of advice: Don’t jump to conclusions by looking at the bottom line. The largest aid package also may bring overwhelming debt. This is the time for serious comparisons of the aid offers — line by line — and potentially an opportunity to ask the school to increase its offer. Here’s how to proceed.

Compare all parts of the offer, not just the bottom line

Start by figuring out the total cost of attending each school. That COA may be disclosed as part of the financial aid package, or you may have to go to the school’s website to get the numbers.

The total cost includes not only tuition and room and board but also compulsory fees, books and supplies, student health insurance and more. Some of these ingredients are standard for all students. But your travel expenses for the year can make a big difference in your budget.

You’ll need a spreadsheet to do it right. At, they’ve created an online comparison tool that will make the job easier. (Visit tors/awardletteradvanced.phtml.)

Read the fine print

Understand which components of the aid package are loans, which are outright grants and which are work/study programs. Grants are “free” money that does not have to be repaid, while loans are a burden you will carry for many years.

Check the terms of each loan. Is the interest subsidized — i.e., not accruing while you are in college? Does some of the package consist of parents’ PLUS loans or private loans that could come at higher rates and require a credit check?

Importantly, are these loans and grants renewable in future years? Remember, you’ll have to reapply for aid each year, but the best aid is promised to be renewable if you keep your grades up.

Understand the deadlines and procedures

Most colleges require you to make a decision to attend by May 1 — and to send a nonrefundable deposit. Look carefully through the aid package to find a letter that you must sign and return with your deposit. Some require that form to be returned within two weeks.

If you are wait-listed or still waiting for an acceptance and financial aid package from a school you prefer, you’ll have to consider whether it’s worth forfeiting a deposit if you get that acceptance after May 1.

It’s possible to negotiate

If your family financial circumstances have changed since you filed the FAFSA, you should contact the school financial aid office directly. In recent years, schools have become more willing to add to the financial aid package if they are given good reason.

“Parents should feel free to pick up the phone and ask,” advises Rick Castellano of Sallie Mae, a private student loan lender. “They need to become savvy consumers.” If you can show that another school has given enough aid to create a lower total cost of attendance, your favorite school might be willing to increase its package.

If you’re a parent, you must set expectations. If you know you won’t be able to afford that dream school, let your child know early that he or she will have to attend a nearby college or win a scholarship.

And if you’re a student, accept the fact that the college experience is similar, no matter which school you attend. Your education is about how much effort you put into it, not the reputation of the school or the beauty of the buildings or the football team’s record.

And that’s The Savage Truth.

Terry Savage is a registered investment adviser and the author of four best-selling books. She responds to questions on her blog at

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