Decoding the Financial Aid Award Letter

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Parents and students often find it challenging to understand the financial aid award letters they receive from each college. PayForED has developed student loan solutions that include a combination of blog articles, videos, and webinars that will begin in February and will run through May. Our program will review the different aspects of the financial aid award letter. We believe the best way to solve the student debt problem is to avoid excessive student loans and that begins with making the right college decision.

Need for Financial Aid Transparency

The Department of Education has been trying to get colleges to use a standard award letter format for a year without much success. This lack of financial aid transparency and literacy is a driving force for our Decoding the Financial Award Letter Program.

The government has a very basic tool called the College Financial Plan.  It was formally called the College Shopping List.  The form is helpful but does not help you compare colleges side by side in one place.  It also only projects one year of cost.  To avoid excessive student debt you need to have a four-year view.  The PayForED College Cost Analyzer helps families project the debt and easily compares colleges side by side based on the financial award letter.

Understanding Financial Award Terminology

The financial aid process has its own unique terms.  This can be frustrating for both students and parents.  Adding to this complexity is that the award letter may not always be universal or in the same format as you compare colleges on your list.  It is important to organize your award information in a consistent method.

As an example, some colleges will list an item as a scholarship.  For proper planning, the family will need to know if this is a need-based scholarship or a merit scholarship.  A need-based scholarship is not guaranteed in future years.  This could have a big impact on the total cost and debt in future years.

Understanding the Loan Listed

Most financial award letters will have a Federal Direct Subsidized Loan and Federal Direct Unsubsidized Loan listed.  Sometimes a Stafford name will be added to that loan.  To get this loan the student must complete the FAFSA.

Parents often get confused because on one college award it may list both loan types and on another award letter, it will only list the Unsubsidized.  The difference is at one college the student qualifies for need-based financial aid and at the other, they do not.

You should ignore the Parent PLUS loan that is listed on the award letter.  Some colleges include the Parent PLUS Loan to distort the net cost.  This loan is available to parents if they have completed the FAFSA and have fair credit.

Appealing the Financial Award

Covid impacted many families’ financials.  I recommend that everyone submit the FAFSA form. If there is a financial change and you need to appeal the financial award, the college financial aid office will need that completed.  The FAFSA also allows the student to structure the debt the best way.

The FAFSA used a timing process called Prior Prior.  This means the FAFSA used a family’s income from 2020.  If your financial situation has changed then this would be a reason for an appeal.  There could be other reasons to appeal but this is the most common.

Financial Aid Award Letter Webinar

PayForED will be hosting a webinar titled “Understanding the Financial Aid Award Letter,” to give clarity to families.  The event will help families better understand the details found on their financial aid award letters such as need-based aid, merit aid, and student loans. College selection is one of the most critical decisions made by parents and students. Breaking down the award letter and understanding merit aid versus need aid is vital. This program provides insights that go beyond the financial aid process and helps families understand and compare their award letters.

Listed below are just a few items that we will cover in the upcoming webinar:

  • Analyze the college financial aid award letter and the terminology
  • Learn and apply for student loans and financing options
  • Ways to have the money discussion with your child
  • Appealing the Financial Aid Award Letter
  • Structuring the student loans the best way
  • Other cost-saving strategies

The presenter is Fred Amreina recognized expert in financial aid, college funding, and student loans.  Fred brings personal financial expertise to the college financial decisions.  The PayForED’s College Cost Analyzer is a college financial software tool that allows families to easily view a side-by-side comparison of their actual award letters.  This tool projects the total net cost of college and debt at graduation so parents and students can make informed decisions.

PayForED has scheduled a webinar to help families understand the Financial Aid Award Letter.  The webinar date and time is listed below:

Wednesday, 2/9/20 @ 8:00 PM EST

Click here to register 

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