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Go Ask Mom

College Bound: Sifting through financial aid award offers

Posted March 21, 2013

Editor's Note: This is the second of a three-part article that provides steps to determine your families out-of-pocket expenses for a college once you have viewed that school's financial aid award offer. Click here to read the first post. Check for the next post on Monday.

There is no standard format to a financial aid award letter. Schools may or may not include the Cost of Attendance. They may also not spell out exactly what the particular award is, whether or not it is renewable, or whether it must be repaid. Fortunately, the most common awards can be broken down into four categories: grants, scholarships, loans, and work study. It is now up to you to make sure you understand what each one is.

Grants: Grants can be federal, state or institutional. They do not have to be repaid. Federal grants, such as the PELL, FSEOG, and other state grants are based strictly on need. Some grants may also be based on special student status or intended major. Institutions may award private grant money based on their endowment. Federal grants must be reapplied for each year and will be based on your current need.

Scholarships: Scholarships are usually awarded on merit, however, there are scholarships specifically for students who demonstrate both merit and need. Scholarships do not need to be repaid and can come from federal, state, institutions, or outside sources. Scholarships are often renewable, many for all four years providing you maintain a prescribed GPA. However, outside scholarships are often for one year.

Loans: Loans can be federally backed or private. Every loan carries its own repayment terms and interest rates. Federal Stafford Loans are limited to the amount borrowed based on your year in school. Parent Plus loans are also available, but require credit checks and appropriate income from the family.

Work Study: Work study is money provided to students who exhibit financial need. Students are provided opportunities to obtain jobs on campus, or if available, work at a non-profit or public agency. Work study money may or may not be counted in your award, although it will be listed there. Students are awarded a specific dollar amount and must work a minimum wage paying job to obtain the award. If the hours are not worked, the student does not get the money.

Now that you know the four major award categories, you can begin going through each of the award letters to see exactly how much money is being offered. Be sure to separate the awards by total in scholarships, grants, loans and work study.

Christine M. Hall, Ed.D., is owner of CMH College Consulting in Cary. Hall, who has children of her own, offers advice on the college application and decision process here on Go Ask Mom from time to time.


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