Sierra Vista and Carter HS: Deciphering Financial Aid Packages

May 1 is decision day for southern California high school seniors who are choosing where they will attend college after months and sometimes years of preparation. Given that the average student loan debt for 2016 graduates was $37,172, with an average monthly student loan payment of $351, it is important that students and their families understand the complete cost of college before signing on the dotted line.

“College is one of the biggest financial investments you will make in your lifetime, and yet the total costs aren’t always clear from the outset,” said Monique Adorno-Jimenez, who manages The College Place – California and also counsels students and families about the cost of college. “When it comes to financial aid award letters, there are several things you should consider when determining whether a school is the right financial fit for your family.”

The College Place is partnering with area high schools including Baldwin Park, North Park, Sierra Vista, and Carter High School this month to talk with students and families about what to consider as they review and compare their financial aid award letters. Here are some of the guidelines that advisors will share:

1. Know Your Bottom Line

Not all colleges include both direct and indirect expenses in the total “Cost of Attendance” (COA) in Financial Aid Award Letters. While most schools outline baseline tuition and fees, some omit certain “indirect expenses” like room and board, textbooks, meals and transportation. Not knowing the true cost of a full year of college makes it difficult to put an aid letter in context. So if yours doesn’t include an itemized expense breakdown or excludes the COA altogether, don’t hesitate to call the school’s financial aid office.

2. Fact Check “Cost of Living” Estimates

Many schools omit certain indirect expenses when calculating the COA, but even when they do factor in costs for things like textbooks, meal plans, transportation and health care, keep in mind that these figures are only estimates and not necessarily accurate projections of what your unique costs will be. It’s also worth noting that “Cost of Living” (COL) estimates can vary dramatically from one college to the next, even for schools located within mere blocks of one another. While the COL estimates in your award letter can be a helpful starting point, make sure to do your own calculations when budgeting for things like trips home, meals and rent if you plan to live off campus.

3. Read Between the Lines to Discern Loans from Grants

In most award letters, schools outline a few types of financial aid, including grants, scholarships, work-study opportunities and student loans. Be aware that if student loans are listed, they will appear to reduce the total cost of attendance. But the reality is that loans always need to be repaid – with interest (more on that in Tip 4). If you’re having trouble telling the difference between gift aid and loans that will need to be repaid, look for terms like “grant,” “scholarship” and “fellowship” – as you can probably guess, these are free. Anything else is most likely a loan.

4. Do the Math on Loans and Interest

A recent study found that more than half of millennials take on student loans without understanding what their monthly payments will be. This is a big deal, because paying off a loan always means paying it off with interest. And yet award letters rarely offer details about the interest rates and repayment options of the loans listed, even though those details significantly impact what students owe down the road. For example, a $10,000 loan with a 6 percent interest rate and a 10-year repayment period will rack up an additional $3,300 in interest alone. If you’ll need loans to pay for college, make sure you understand the full costs of your options and borrow only what is absolutely necessary.

5. Beware of Scholarship “Frontloading”

Not all grants and scholarships automatically renew, so that generous freshman-year award package may not be available past your first year. This enrollment practice is known as “frontloading,” and unfortunately it’s pretty common. 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. If you’re offered an institutional grant or scholarship, make sure to ask the school’s financial aid office if it will automatically renew. If it won’t, know the criteria you’ll need to qualify again next year. Also, be sure to notify your financial aid office of any outside scholarships you win. The rules require your school to account for all aid received. Asking your school about its outside scholarship policy ahead of time can help to eliminate adjustments (and surprises) to your aid package down the road.

The College Place – California helps students of all ages pursue opportunities beyond high school by providing free information, assistance and encouragement through in-person, telephone and online support. The College Place also offers individual assistance completing applications for admission, financial aid and scholarships.

To learn more, call 866-326-2827 or email northerncatcp@ecmc.org.