COA - EFC = ??? The Financial Aid Award Letter

This is the season for college acceptances--which means it’s also time when financial aid awards are made.  If you’re like me, the whole financial aid process remains pretty obtuse. 

First of all, there are so many terms and forms to consider from COA (Cost of Attendance) to EFC (Expected Family Contribution) from FAFSA (Free Application for Federal Student Aid) to the CSS Profile (a not-free application for aid requested by many private schools). 

Then there is the application process itself, followed months later by sending in (before April 15) tax forms. Finally, a financial aid letter appears alongside the acceptance letter.   Now it’s time to sort out what is actually aid or grant money and what parts of the award are loans, both subsidized and unsubsidized.

I’m not a numbers whiz or a financial expert, so I’m not giving advice here.  I’m just empathizing with students and families who not only have to determine the best-fit college in these coming weeks, but

they also need to analyze their financial aid offers carefully.

Just a few observations about interpreting financial aid awards gleaned from my financial aid expert friends and workshops I’ve attended:

--Merit Aid is not Financial Aid.  Some schools, often in an attempt to raise their academic profile, offer aid or “discounts” to students with strong academic records.  This type of aid is not dependent of financial circumstances.  It can be a boon to middle class families whose children would like to attend liberal arts colleges but find them too expensive compared with state universities.

--Different schools offer widely different packages and combinations of grants and loans, as they base their decision on a variety of criteria.  And some schools have larger endowments to give from!

--The award contains aid from various “sources,” that is part of it may be federal and state grants, which aren’t repaid, part of it may be subsidized loans, which are repaid with interest after graduation, and part of it may be unsubsidized or private loans, which accumulate interest while the student is attending school.  Work-study, or the student’s on campus job, will also be included.

One example of an financial aid letter: I volunteer with a low income student through College Track, a college preparatory program that helps students from under-resourced schools perform well and apply for college.  My advisee has applied to California State University Schools as well as some local private universities.  Last week she was overjoyed to receive an acceptance from Notre Dame de Namur University until I pointed out that over $17K of her financial aid award consisted of unsubsidized loans.  For a student with an EFC (Estimated Family Contribution) of 0, that amount is untenable.

--If your student is awarded a scholarship, the amount of aid will be adjusted.  Some schools reduce the self-help (work-study) level before replacing institutional aid or grants; others don’t.

--If the financial aid letter truly doesn’t meet your student’s financial need, you can appeal.  It

helps to have offers of aid from other schools for a comparison basis.

If you need help figuring out how to finance your child’s college education, there are experts out there who can guide you.  I highly recommend my colleague Beatrice Schultz at Westface College Planning, who will not only explain award letters much better than I, but she can lead you through a step-by-step process of preparing a budget for college costs, applying for aid, and maximizing your tax savings.

When it’s time to fill out the FAFSA and CSS Profile in January, (which you/your student will need to do every year while attending college), there are also online resources to help including:

--Studentaid.ed.gov (U.S. Department of Education)

--Finaid.org (a private, non-profit website offering information on loans and scholarships)

--Bigfuture.collegeboard.org (the College Board website, the organization that administers the CSS Profile)