By May 1, many high school seniors will have to plunk down a deposit on the college of their choice. As they make their decisions, an important factor is the school’s financial aid offer. Consumer Reports has advice on how to understand your student’s financial aid package and avoid excessive debt.
High school senior Fiona Quinn is fortunate to have several college acceptances from both public and private schools. After comparing their financial aid packages, she picked a state school.
“The tuition was a huge factor in my decision,” Fiona said.
“We knew that Fiona would come out with less debt, and so would we,”Debbie Quinn, Fiona's mother, said.
The financial aid offer letter is key to making the college decision. First, check what’s being offered in grants and scholarships, which don’t need to be paid back. A caution -- the letter often only covers the first year.
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“Contact the financial aid office and ask questions like, 'Is a grant renewable? Does a scholarship require a certain GPA for it to continue into another year?'” said Donna Roasato, money editor with Consumer Reports.
The letter also details how much money students can get in federal loans. For the rest, students may have to look to private loans, which you borrow from a traditional lender.
“You want to make sure you start with federal loans. They have a lot of advantages over private loans. They have fixed interest rates, also more flexible repayment options,” Rosato said.
Also check whether the federal loans are subsidized. Those are preferable because students are not responsible for any interest that accrues until they leave school.
There’s a helpful tool Consumer Reports recommended where that allows users to compare costs and financial aid at each of the schools they're considering. The direct link is: www.consumerfinance.gov/paying-for-college.
Like many students, Fiona found out that figuring out how to pay for college has been an eye-opener.
“There’s no class on loans in high school. I have no perception of, like, how much in debt I’m going to be,” Fiona said.
Occasionally, it can be worth negotiating with a school for a better financial aid package, especially if family circumstances have changed because of events like a job loss or a divorce.
Get more free information from Consumer Reports on interpreting college financial aid offers.