College costs range from FREE (really!) to just over $40,000 per year. In an effort to make attending college affordable, most colleges and universities (as well as state and federal governments) offer a variety of financial aid programs. In the best of all worlds, the college and university would offer a student all of the assistance necessary to fund the difference between what the family can afford to pay and the cost of attending. Often, however, the college can only supply some of the needed funds. This sometimes results in a situation in which there is a gap between the sum of the family contribution and financial aid offered and the cost of attending.  Adding to the confusion, financial aid packages offered by different colleges may contain different kinds of financial aid like grants, scholarships, loans or college work-study. A student who applies to several colleges is likely to receive financial aid awards that look very different. This leads to the obvious question, "How do I know which financial aid offer is the best?"

What important things do I need to know to make a fair comparison of financial aid offers?

The first thing you need to know in order to make a comparison is the actual cost of attendance budget for each school. This is the total cost of tuition and fees, room and board (or home maintenance allowance if living at home), transportation, books and miscellaneous [personal] expenses. This budget is usually published in the financial aid section of a college's Web site. If you cannot find the budget on the financial aid Web site, call the financial aid office at the school and ask them what the cost of attendance budget is. 

In gathering the data on cost of attendance, it is important to collect these budgets for the same year from all institutions. Since this budget changes annually, you don't want to be comparing the 2004 budget from one institution with the 2005 budget from another. Make sure that each school's budget includes what that school uses as estimates for the cost of books, transportation and miscellaneous expenses. The objective is to collect consistent data for all schools so that you are making an apples-to-apples comparison.

Once you have the cost data in hand, you need to know how much of the award from each college is in the form of scholarships or grants (these carry no repayment obligation), loans and college work-study. 

What do I do next?

The next step in the process is to conduct the analysis. The worksheet that follows will help in this assessment. Start by filling in the data and making some simple calculations. The differences in the quality of the different financial aid offers will become apparent. Remember, however, that the quality of the aid package is only one factor in your final choice. You may ultimately decide that the least attractive financial aid offer comes from the school that is the one you really want to attend.

Comparing College Financial Aid Offers

So which offer is best?

The worksheet shows some important answers that families need in order to make an informed decision about college. It does not give you an answer to the question, "what college should I attend?" Line 13 shows how much your family would have to fund each year - the total dollars that would be required out-of-pocket. Many families determine that the amount required is greater than what they can reasonably pay from earnings and/or savings. In these cases some families decide to negotiate additional loans thereby spreading out the annual payments over a longer period of time. Line 15 shows whether or not the school met all of your demonstrated need. If the number is positive, the school has met all of the need except for the amount on line 15. If the number is negative, the school has met more than your demonstrated need.

Ultimately, your decision will be based on a determination of which college offers the best value for the cost. In this regard, you will be judging whether or not the opportunity to attend the college is worth the cost shown on line 11. While the loans listed on line 12 may reduce annual out-of-pocket costs, these funds do not reduce your overall cost. The funds shown on line 12 will eventually have to be repaid, with interest, over time.