Once you have done all the hard work of applying to college and have received acceptance letters, you may think that the hard part is over. But when you hold your financial aid letter in your hands, you may feel differently. Financial aid package letters are often confusing and filled with numbers and information that may look foreign to you. Here are some things that you will probably see in your financial aid package letter.

A list of the aid that you will be awarded

This list will include any grants and scholarships that you received and any federal aid that you qualify for. Grants and scholarships are the best form of financial aid, because you do not need to pay them back. Some are need-based and some are merit-based. Federal aid includes Federal Work Study, unsubsidized Stafford loans, and subsidized Stafford loans. You do not need to pay interest on a subsidized loan until after you graduate from college.

The total amount of financial awards

You will probably see a total cost of attendance listed on the letter, and there will be a total amount of aid awarded. Many times, these numbers will be the same. This may seem exciting, and on first glance it may seem like the college is giving you a great deal. But if half of the awards listed are loans, it is still money that you will need to pay back. When comparing financial aid packages, look at the total amount that you will have to pay out of pocket (including loans and your EFC) to determine which college is giving you the best deal.

Parent PLUS loans

If the grants, scholarships, Federal Work Study, and Stafford loans don’t cover the entire cost of the college, the letter may specify that the rest can be covered through a parent PLUS loan. A parent PLUS loan is not need-based, so any parent is eligible (after passing a credit check). Parents may borrow up to the total cost of the undergraduate education, minus any financial aid (grants, scholarships, work study, Stafford loans) that the student is receiving. All parent PLUS loan money must be used toward education expenses.

How to accept or decline the aid agreement

You will need to indicate which financial aid awards you want to accept and which you want to decline. You are not required to accept all of the awards listed in the letter. If there is an item you don’t want to accept, put a line through it or mark the letter however it indicates that you should. Pay close attention to the deadline for returning the letter. If you miss it, you will risk losing your financial aid.

If you have specific questions about your financial aid package letter, it is best to call your CAPlus representative or the college’s office of financial aid directly.

This entry was posted on Tuesday, February 1st, 2011 and is filed under Paying for college.