How to make smart financial decisions when offers arrive
This panic hits thousands of families every April. You've done the hard work - applications, FAFSA, scholarships. Now you're staring at financial aid letters that look like they're written in code.
Here's how to decode those letters and make decisions that won't leave you drowning in debt four years from now.
Total cost for one year
What you're expected to pay
COA minus EFC
Breakdown of grants, scholarships, loans, and work-study
What you'll actually pay after aid
Red flag: If any of these numbers are missing or unclear, call the financial aid office immediately.
$60,000 cost, $40,000 aid
"Wow, $40,000 in aid!"
$45,000 cost, $25,000 aid
"Only $25,000 in aid"
$60,000 cost, $40,000 aid
$20,000 net cost
$45,000 cost, $25,000 aid
$20,000 net cost
They cost the same despite different aid amounts.
Total Cost - Grants - Scholarships = Your Real Cost
Don't subtract loans from cost - you'll pay those back with interest.
• Total Cost: $50,000
• Grants: $15,000
• Scholarships: $10,000
• Loans offered: $8,000 (don't subtract)
• Work-study: $2,000 (don't subtract)
Your real cost: $50,000 - $15,000 - $10,000 = $25,000
Columns you need:
School name
Total cost of attendance
Grants (free money)
Scholarships (free money)
Total free money
Loans offered
Work-study offered
Net cost (cost minus free money only)
Four-year total cost
Four-year projection example:
Total: $132,000 over four years
Interest: Government pays while you're in school
Limits: $3,500-$5,500 per year depending on year in school
Who qualifies: Students with financial need
Interest: Accrues while you're in school
Limits: $5,500-$12,500 per year (includes subsidized amount)
Who qualifies: All students regardless of need
Interest rate: Higher than student loans (7.28% for 2024-25)
Credit check required
Borrowing limit: Up to full cost of attendance
Red flag: If packages rely heavily on PLUS loans
More than $8,000 in loans for freshmen
Heavy reliance on Parent PLUS loans
Private loans included in aid packages
Total debt projection over $40,000 for four years
Vague language about aid renewal
"Estimated" aid amounts without clear criteria
Inclusion of outside scholarships you haven't won yet
Work-study counted as automatic income
Aid that decreases over four years
Scholarships with impossible renewal requirements (3.8 GPA to keep)
Aid tied to maintaining specific majors you're not sure about
Packages that assume unrealistic family contribution increases
• Change in family financial circumstances (job loss, medical bills, divorce)
• Better offer from comparable school
• Error in FAFSA or institutional aid calculation
• Special circumstances not reflected in aid formula
• "We can't afford this" without documentation
• Comparing offers from very different schools
• Wanting more aid without justification
• Last-minute requests without good reason
"Due to my father's job loss in January 2024, our family income has decreased significantly from what was reported on our FAFSA. I'm requesting a professional judgment review based on our current financial situation."
Can your family afford the net cost without devastating consequences?
Is total debt reasonable for your likely post-graduation income?
Are there backup plans if financial circumstances change?
Does the school offer strong programs in your areas of interest?
Are there research and internship opportunities?
What are graduation and job placement rates?
Do you feel comfortable and excited about attending?
Is the campus culture a good match for your personality?
Are there support systems you'll need to be successful?
The error:
Choosing based on freshman year aid without considering four-year costs
The cost:
Thousands in unexpected expenses in later years
The fix:
Project four-year costs and aid carefully
The error:
Thinking a $30,000 "aid" package with $20,000 in loans is generous
The cost:
Unnecessary debt that could have been avoided
The fix:
Focus on grants and scholarships only when comparing
The error:
Accepting initial aid offers without question
The cost:
Missing opportunities for additional aid
The fix:
Appeal when you have valid reasons and documentation
The error:
Taking on excessive debt for a "name brand" school
The cost:
Years of loan payments that limit future opportunities
The fix:
Choose the best value among schools that meet your needs
🏆 Winner: State school saves $32,000 over four years
🏆 Winner: Private college despite higher sticker price
🏆 Winner: Regional university with strong merit aid
The cheapest sticker price doesn't always mean the lowest cost. The most generous aid package isn't always the best deal. What matters is your net cost after free money, and whether you can afford it without taking on crushing debt.
Remember: College is an investment in your future, but it shouldn't financially cripple your family. Choose the option that gives you the best education you can afford, not just the most prestigious name.
Most important insight: The "best" financial aid package is the one that lets you graduate with the least debt while getting the education you need to achieve your goals.
CollegeCompass provides personalized aid package analysis, net cost calculations, and guidance on making the best financial decision for your family.
Get expert help navigating aid offers and choosing the most affordable path to your degree.