If a student in your household applied for college financial aid for the 2022-2023 year, financial aid offers should arrive soon.
You may receive a standardized College Financial Plan, which can help your family understand the different types of aid offered.
Understand what makes up the cost of attendance. You will generally see combined or separated costs listed for tuition, fees, housing, meals and other direct costs charged by the college. In addition, you may see estimated costs for materials, transportation, personal and miscellaneous expenses that will not be paid to the institution. To compare financial aid offers from multiple institutions, line up similar costs and calculate estimated expenses, depending on each program and the institution’s location.
Know how to count grants and scholarships. Grants and scholarships do not need to be repaid. Know which grants and scholarships are for one year only, automatically renewed for multiple years, and require action or qualification to receive in future years.
Review the expected family contribution. Each institution determines an expected family contribution from the information reported on the FAFSA (Free Application for Federal Student Aid) or other financial aid application. While this amount may be reviewed under certain circumstances, such as dramatically changed income, your family is generally expected to contribute the listed amount toward expenses.
Consider work options carefully. Like federal work-study programs, work options require the student to obtain a qualifying job and work a certain number of hours to earn money, which will be paid to the student instead of the college. Therefore, it may benefit the student to pursue these options and apply the earnings to their expenses. Alternatively, a student may prefer to find other employment.
Know the difference between the types of loans offered. When earnings, savings, scholarships and grants don’t cover the total expected cost of attendance, the financial aid offer includes federal loans for students. It may consist of federal loans for parents and institutional or private student loans. Federal student loans are the best option if your student will need to borrow.
Decline unneeded loans. A financial aid offer may include the maximum federal student and parent loans available. Remember that any type of loan will need to be repaid, with interest, over time. Therefore, a student may decline an offered loan or accept only some of the loan amount.
Explore payment options. The college or university may offer payment plans or other financing options. Be aware of any fees for using this type of plan and consider the flexibility gained by delaying part of a bill payment.
Meet deadlines. Review any deadlines to accept the financial aid offer or individual components, apply for a payment plan, or make payment.
Laurie Hempen is on the Iowa Student Liquidity Corporation Board.