Analyzing College Aid Opportunities

Comparing financial aid packages from different colleges isn't as easy as it sounds. Learn the tools and tricks to identify which offer brings you the most value.

If someone offered you a 10-pound bag of pennies or a two-pound bag of nickels, would you immediately know which one to take? Finding the right answer takes a little research and a few calculations, just as you'd have to do to evaluate two or more college financial aid packages.

You're likely to need some form of financial aid to manage the expenses associated with sending your kids to college. There are many programs and options available to you, but sorting through these choices is anything but straightforward. Aid packages can be tough to decipher and even tougher to compare. Here's why:

• The summary page is friendly enough, but it lacks the information you need for thorough evaluation of the offers.
• There's no standard definition for cost of attendance. Some schools might include the cost of books, while others may not.
• Not all aid is actually aid. Sometimes, loans that are available to everyone might be listed in your student's financial aid package.

Plan of attack

The most attractive financial aid package is the one that results in the lowest amount of borrowing. Use these strategies to sort out which school ultimately keeps your student's and your household's debt to a minimum.

1. Review the details. The meat of the aid package is how much your student is being offered in each of these categories: gift aid, subsidized loans, work-study, and unsubsidized loans. Gift aid doesn't have to be repaid, so this one is most important. Subsidized loans and work-study programs are valuable, too, because these cost less than typical student loans. Watch for unsubsidized loan programs like PLUS; these are less expensive than private loans, but they're also readily available no matter what school your student attends. An aid package consisting entirely of unsubsidized loans isn't offering you anything you can't get elsewhere.
2. Rewrite your aid offers. To keep your offers straight, create a spreadsheet that lists all the details. Make a heading for each school, and break out each offer by the amounts coming from gift aid, subsidized loans, and unsubsidized loans.
3. Double check the cost of attendance. Your spreadsheet should also show the cost of attendance at each school. Review the numbers carefully to ensure that all of them include tuition, fees, room, board, books, transportation, and personal expenses. If they don't, make estimates and add them in yourself. When considering out-of-state schools, include the costs of traveling between school and home during school breaks.
4. Add up the borrowings. Once you're sure that you have complete expense estimates, evaluate your packages based on the total borrowing burden each one places on your child.

By the way, the nickel weighs twice as much as the penny. Take the bag of pennies and you'll come out ahead.