THE BLOG
03/17/2015 09:16 am ET Updated May 17, 2015

Paying for College: 5 Things to Know About College Financial Aid Letters

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College acceptance season is now upon us, and hundreds of thousands of high school seniors across the country are eagerly awaiting their fate at the hands of the Admissions Gods. Perhaps the only thing more nerve-racking than waiting for those letters and emails is figuring out how to cover the cost of attendance. With the average sticker price of public four-year colleges hovering above $18,000 per year, students are more reliant than ever on grants, scholarships and other forms of aid when financing their degrees.

At College Abacus, we take some of the guesswork out of college costs at the front end of the process, by allowing students to calculate their projected net prices across a broad range of schools and compare them in an apples-to-apples format. But the process of comparing financial aid offers is a different story entirely. Regrettably, college financial aid award letters are often inconsistent in format, ambiguously worded and missing vital information.

Given the growing demand for financial aid and the sizable investment involved, you'd think schools would be working to make their financial aid information more accessible and transparent. Roughly 44 percent of colleges have voluntarily adopted the U.S. Department of Education's Financial Aid Shopping Sheet , a standardized form introduced in 2011 with a goal of simplifying and streamlining the process. But the remaining majority of schools still use their own, often very confusing formats.

Don't let the headache of untangling financial aid letters spoil the thrill of getting into college. Here are five things to keep in mind as you evaluate your options for attending and paying for school:

1. Know Your Bottom Line

Believe it or not, many schools don't include the total cost of attendance on financial aid letters. Without knowing how much a full year of tuition and fees will run you, it's difficult to put your aid award in context. That dollar amount may look generous on its own, but how much will be left over for you to pay out-of-pocket? If your letter doesn't include the cost of attendance, call the school's financial aid office--they are required to provide it when asked.

Another thing to keep in mind is how much you'll need to spend outside of tuition and fees. Some letters include estimates of indirect costs, which include everything from textbooks and meal plans to transportation and health insurance. But remember, even when schools do include that information it's only an estimate and may not be an accurate projection of what you'll eventually pay. You should do your own calculations and make sure to budget for trips home and extracurricular activities.

2. There's No Such Thing as a Free Lunch

Most financial aid packages include a mix of "gift aid" and "self-help aid." Gift aid -- normally in the form of scholarships and grants -- is free money that you don't have to pay back. Self-help aid is money that you either have to pay back over time, like loans, or that you have to earn, through work-study. The difference between free money and loan money may seem simple enough in theory, but many schools lump them together in a way that can be difficult to untangle. It's not uncommon for an award letter to list loans in the gift aid column (mixed in with grants and scholarships) and to then factor them into the total dollar amount "offered."

If you're having trouble telling the difference between loans and gift-aid, look for terms like 'grant', 'scholarship' and 'fellowship' -- as you could probably guess, these are free. Anything else is most likely a loan, the most common of which are Stafford loans (subsidized and unsubsidized federal loans) and Parent PLUS loans, which allow parents to borrow on behalf of their children .

3. Work-Study: First Come, First Served

If you qualified for federal work-study funds through your FAFSA, then you may see your projected earnings factored into your total aid package. Work-study can be a great way to earn extra cash while you're in school because, unlike the dollars you'd earn in an outside job, they won't be counted against your eligibility when applying for financial aid next year. But just like in the real world, you need to actually apply for the job to get it, and the number of spots on each campus is limited. Funds are assigned on a first-come first-served basis.

Another thing to keep in mind: there's no overtime in the Federal work-study program. Your hours were calculated based on your level of financial need and the funds available, and your earnings can't surpass that amount. By the same token, you're not required to work all of the hours allotted to you, but understand you won't get paid for work you don't do or be offered an alternative form of aid to fill the gap .

4. Know Your Scholarship's Shelf Life

Remember when I said everything with the word 'grant' or 'scholarship' is free money? Sometimes there's a catch: not all grants and scholarships automatically renew, so that exceptionally generous freshman-year award package you're holding may not be available for your sophomore, junior and senior years. This enrollment practice is known as "frontloading," and unfortunately it's pretty common. One analysis estimates that nearly half of all colleges do it .

College is a multi-year financial commitment, so the loss or reduction of grants and scholarships can mean tens of thousands of dollars in extra tuition costs over the course of your degree. Bottom line: if you were offered an institutional grant or scholarship, make sure you know if it will automatically renew. And if it won't, know the criteria you will need to meet in order to qualify again next year.

5. Your Number Is Not the Final Word

Finally, don't despair if an aid award falls well below your financial need. It's true you can't haggle over tuition prices like you would with a car or a house and, with the exception of a very small handful of elite schools such as Cornell and Carnegie Mellon, colleges won't negotiate a better deal simply because another school offered you more money. They will, however, accept appeals from students and families whose financial situations have changed considerably as a result of factors like major illness and high medical bills, job loss or a death in family. Even if nothing has changed dramatically since you filled out your FAFSA, you may feel that a school overlooked certain elements of your financial aid profile, such as the fact that your family cares for an aging loved one or a child with special needs. These are circumstances that financial aid officers consider, and you should absolutely bring them to their attention.

While there are no official figures on the number of financial aid cases that are successfully appealed, a 2014 New York Times column by Ron Lieber suggests the rate can range between 33 and 57 percent. Most schools require written documentation, so if you do chose to appeal your financial aid award, be prepared to provide the necessary records and materials.

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