Deciphering a Financial Aid Package, Part 2

In my last post, I explained what kind of federal financial assistance you might find in a financial aid award.  Here it is:

Deciperhing a Financial Aid Package

Today, I’m going to cover the types of college grants that parents typically find in a student financial aid letter.

College Grants

Many families believe that the biggest source of cash is the private college scholarship, which is absolutely untrue. You can find the biggest pile of scholarships at the schools themselves. And that’s why you want to pay close attention to whether a student financial aid award letter contains college grants.

Colleges dispense their grants in two main ways.   Almost all colleges and universities, state and private, award merit scholarships without regard to financial need. You often don’t need to be an “A” student to receive a generous scholarship. In fact, at some schools everybody pockets something.

Often colleges will notify students that they won a merit scholarship in their letters of acceptance. The acceptance letter could arrive weeks before the financial aid package shows up.

When the financial aid letter arrives….

You want to see if the school is providing any additional grant money. The schools dispense this extra grant money based on need. How generous the school is with the second round of grants will not just depend on the family’s income. The grant awards will also depend on whether a college really wants a child.

A student who has barely gotten into a reach school will often get a package loaded with loans rather than grants. In contrast, a student, whose parents make the same income as the reach applicant, could receive a big need-based grant if he or she is someone who the admission office wants to entice to its campus.

Obviously, you want a financial aid package that’s stuffed mostly or exclusively with grants because these don’t have to be repaid.

Financial aid award mistake….

Sometimes parents mistakenly believe that a financial aid award is more generous than it really is because plenty of schools don’t do a good job of differentiating the grants from the loans.

If you aren’t sure what your financial aid award contains, call the school’s financial aid office. Ask how much grant money is in the package versus loans. Only then will you begin to understand whether the school is affordable.

If the package doesn’t contain enough grants, you can always appeal.

Lynn O’Shaughnessy is the author of The College Solution and she also writes a college blog for CBSMoneyWatch. Follow her on Twitter.

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