How To Weigh Student-Aid Offers

"College acceptance letters are now rolling in—as are financial-aid award letters. You might be tempted to choose the school that offers you the most financial-aid dollars. Not so fast. ... 'The largest aid offer might not be the least-expensive option for a student,' says Justin Draeger, president of [NASFAA], a nonprofit professional organization," The Wall Street Journal reports

"Look beyond the amount a given school offers you in grants or scholarships to evaluate the total cost of attending, Mr. Draeger says. This includes costs paid directly to the school, like tuition, as well as indirect costs, such as materials and living expenses, Mr. Draeger says. (If the letter doesn't provide tuition costs and an estimate of indirect costs, ask the school's financial-aid office.)

Next, evaluate any 'gift aid' offered, Mr. Draeger says—that is, grants and scholarships you don't have to pay back or work for. Subtract your gift aid amount from the total cost to determine your out-of-pocket or net cost for a given school. You should compare school offerings based on net costs, Mr. Draeger says. ...

As part of your net-cost evaluation, consider the 'self-help' aid available, Mr. Draeger says, or work-study programs and/or loans that will allow you to satisfy out-of-pocket costs. The most desirable type of self-help aid is work-study, he says, since you are essentially earning your keep and will not have to pay interest.

After work-study, opt for federal student loans, which typically have the lowest interest rates and/or best terms of repayment; then, state government loans, college loans, and lastly, private loans, as they tend to have the highest interest rates. ...

Federal student loans typically come with restrictions, for example, that a student must be enrolled at least halftime, Mr. Draeger says. Scholarships and grants, as well as other categories of loan, might also come with requirements. Make sure you understand exactly what to do to remain eligible for continued financial aid in the coming years, he says.

Furthermore, your financial-aid package is based on last year's tax returns, Mr. Draeger says, so it's helpful to keep in mind that if you've had a significant change in circumstances since you filled out last year's forms—say, a parent lost his or her job—you can typically petition a school's financial-aid office to adjust your aid package to reflect your new circumstances."

NASFAA's "Financial Aid in the News" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.