Financial aid decision time for college

The Savage Truth

College acceptance letters are arriving now — and with them the financial aid offers that can make or break a college dream. Comparing those offers of loans, grants and scholarships can be a complex task. But if you're organized about the process, the right decision will stand out.

It's important to get going quickly, because decision day is May 1. By then, you must have accepted one offer and submitted a deposit. So don't procrastinate on this analysis. Here are the financial facts you'll want to compare — and a tool to make it easier.

Each financial aid offer comes with three basic components, which are determined after the school studies the Free Application for Federal Student Aid form you submitted:

The cost of attendance, or COA, for one year at the college. This includes tuition, room, board and typical fees.

The expected family contribution, or EFC. This could be different at each college making an offer, and is not specifically the amount your family is expected to pay after all grants and loans. Rather, it is the number used by the school to calculate the amount of federal aid you are eligible to receive.

The financial aid package. This is a mix of federal student loans, grants, scholarships, work/study programs and other assistance the school is willing to provide.

If it were as simple as these three numbers, your choice would be clear. Simply subtract the offers of free money (from grants and scholarships) from the cost of attendance to get the net cost. Then figure out which aid package is most affordable and how much gap you and your parents will have to fill.

From this perspective, it might be better to accept a smaller financial aid package that includes more outright grants that do not have to be repaid and less debt (for you and your parents).

But be sure to read the fine print in the offer. Does the school promise that the awards will be renewed as long as you maintain acceptable grades? According to Mark Kantrowitz of, a college advice site, about half of all colleges practice “front-loading” of grants, where the grants for the freshman year are far more generous than in subsequent years.

He notes that at, you can search each school, click on the “financial aid” tab and compare the percentage of students receiving grants, as well as compare the average grant amount for first year students with all undergrad students.

Remember, there are other sources of financing a college education. Parents can take out a home equity loan, or sign for parental Plus loans or parental private loans. Or they can co-sign for private student loans. However, each of these is more costly in terms and interest rates than a direct financial aid package.

And there are other considerations in this decision. Which school has a higher graduation rate and employment rate for graduates with your degree? How far will you have to travel, and will the cost of travel affect your ability to stay connected with your family?

Rick Castellano of Sallie Mae, the largest private student loan lender, says, “Take a look at what's in the letter, and what's NOT in the letter!”

One way to make that easier is to use a spreadsheet format. You can create your own, or you can use the one at, which makes all of this comparison process quick, easy and detailed — leading you to the best choice.

One tip: It might pay to go back to your favorite school and ask for more support to swing your decision, especially if your circumstances have changed since filing FAFSA. But that's a long shot.

In the end, do the comparisons, trust the numbers and make the smart financial decision. It will affect you for several years. And that's The Savage Truth.

Terry Savage is a registered investment adviser and the author of four best-selling books, including “The Savage Truth on Money.” She responds to questions on her blog at

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