Comparing Financial Aid Offers: Your Questions Answered

Families with a college-bound student may be wondering how to compare the financial aid offers received from each college. This time can be an emotional roller coaster for families. They are proud of their students' acceptance letters but anxious about how they are going to pay for college. They're often confused about the financial aid that they've received from schools, with each school's offer looking different than the last. It's not always clear what a family received in aid and what they will ultimately owe to each college.

Our goal is to help families break down the information in front of them, so that they can make the best decision for their students and lay out some options for financing. Below we answer frequently asked questions about comparing financial aid offers.

Q: I have loans in my financial aid package. Is this really financial aid?

A: That depends. If you see a Federal Direct Loan (Subsidized or Unsubsidized) on your offer, this loan is considered financial aid. Federal Direct Loans are considered financial aid because they are awarded without credit checks solely to the student and have low interest rates and generous repayment terms. Some may even be subsidized by the government (meaning they don't accrue interest) while the student is in school.

Some schools may list a Federal PLUS Loan on your offer. This is not financial aid. It is a loan that a parent must apply and be credit approved for. The presence of a PLUS Loan on an offer is merely a suggestion of how you may fill the gap in your offer.

Q: Will I receive more financial aid when I have more than one child in college?

A: While the financial aid applications do ask how many children you will have in college at one time, the federal formula for financial aid doesn't provide any benefit for families that have more than one child in college at once. Some schools that require the CSS Profile^® may take that information into consideration when determining financial aid. You can contact each college to find out their policy.

Q: Will my financial aid be the same next year?

A: Again, it is difficult to predict the future, but if your financial picture generally remains the same, your award shouldn't vary too much from year to year. This is something to confirm with the college's financial aid office. If your student received a scholarship that was based on merit, the student may need to maintain a certain GPA in order to receive the scholarship the following year. So make sure you are aware of any renewal requirements.

Q: How do I compare costs from different schools?

A: Comparing the financial aid offers from different schools can get confusing. One school may look more expensive, but it may end up costing your family less than other schools due to a generous financial aid package. Some schools also list large Federal PLUS Loans to increase the total number on the financial aid offer, but remember that a PLUS Loan is not financial aid, but merely a borrowing suggestion from the financial aid office. You can use our College Cost Calculator to compare your financial aid offers and find out the balance due at each school.

If you have a child starting college in the fall, and you're feeling a little overwhelmed, please check out our Understanding Financial Aid Offers & Paying the College Bill webinar recording. You may also contact us with questions at (800) 449-MEFA (6332) or collegeplanning@mefa.org. 

Watch the How to Pay for College webinar