College Financial Aid Letters: Expect Confusion, Read Carefully, and Do Your Homework

By: Jason Robinovitz | Last Updated: April 30, 2018

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Given the upcoming deposit deadlines for many colleges, high school seniors and their families face important financial decisions. Colleges don’t always make that an easy task.

As an example, one of our colleagues, Peter Van Buskirk, recently blogged about a student who’d shared with him 

…the financial aid awards he had received from ten different colleges. They were so strikingly different that, if one were to “white out” his name on each award letter, you would think that each letter was being addressed to a different student! Some had very generous grants and scholarships while others were front-loaded with sizeable loans. In each case, the institutions had chosen to assess and meet his financial need according to the manner in which they regarded him as a candidate.

Van Buskirk says that many private institutions utilize both the College Scholarship Service Profile and the Free Application for Federal Student Aid (FAFSA) to arrive at an EFC (Expected Family Contribution) for a student, and that the results of those two methods not only rarely agree, but can result in EFCs that differ by as much as $10,000. Further, he states  that   

In a practice known as “differential need analysis,” institutions that utilize both methodologies can then choose, on a case-by-case basis, the one that allows it to respond to the student in a manner consistent with the value it attaches to that student. By doing so, the institution can claim to meet the demonstrated needs of its admitted students without ever having to reconcile the differential in the respective need analyses to the families involved.

And the above holds true only for those few schools that make an effort to meet whatever they interpret to be 100% of the student’s “demonstrated need.”

In addition to the differing ways in which EFCs can be calculated, the manner in which schools present aid “awards” in their financial aid letters isn’t standardized, often varies widely, and might emphasize the amount of aid “awarded” instead of the actual cost of attending a school. We’ve put the quotation marks around the word “awarded” because some of the aid “awarded” might be in the form of loans, so that “awarded to” might more clearly be expressed as “saddled with.”

For example, The Institute for College Access and Success (TICAS), a nonprofit group, recently analyzed just under 200 financial aid letters from public and private four-year colleges. According to Diane Cheng, a TICAS associate research director, the analysis showed that “Most [of the letters] were not clear, comprehensive or consumer friendly,” many of them didn’t communicate critical information — with a “disproportionate share” not showing the full cost of attending the school. That’s perhaps in part because less than 25% of those schools used the federal government’s suggested financial aid “shopping sheet” format, which clearly outlines all the costs of attending school and then subtracts financial aid to show a net cost of attending. Further, some of the letters seemed to blur the lines between grants and scholarships, which don’t have to be repaid, and loans that do have to be repaid.

A recent article on says that even promised grants and scholarships should be viewed with caution, because, according to Jackie Bright, executive director of the National Scholarship Providers Association, about half of the colleges “front load” aid to entice incoming freshmen to accept admittance, and then award fewer grants to upperclassmen. That article also cautions that “even if the aid level stays the same, it won’t go as far if the cost of attending the school increases.”

One of the critical points here is that regardless of what financial aid award letters might say, nobody can make a rational financial decision about which school a student should attend without knowing the net cost of attending those schools. If financial aid letters don’t make net cost clear, it’s up to parents to find out unless they willing to risk a very unpleasant surprise. And, as we said in a recent blog, almost every college has a net cost calculator (or a link to one) somewhere on its website, or you can turn to College Abacus, which advertises itself as “a one-stop, secure search site that helps students and families compare the net price estimates of 5,000+ colleges.”

Another very important consideration is how much, if any, of the financial aid “award” is in the form of loans. If that’s not made clear in the financial aid letter or the college’s net cost calculator, it’s up to parents to contact the school, find out, and get it in writing.

Last, how grants and scholarships will be handled after the freshman year is important, and financial aid letters may well not contain that information. Because net cost calculators focus on only the freshman year, here, too, we strongly recommend obtaining that information from the school in writing. 

Topics: Financial Aid


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