Are you a bargain shopper? Do you compare prices between stores? Growing up, I lived out in the middle of nowhere. The nearest big city was an hour and half away. The nearest grocery store was twenty minutes away. I remember going grocery shopping with my mom and we didn't just go to one store like most people do now. We went to whatever store had the best deal at the time. We would go to one store for milk and the other store for meat but it all depended on what store had the best bargain. Now, I mainly grocery shop at one store but I still try to find the best bargain. I always like to look at the price per unit on items like spaghetti sauce and apple juice to see if it is better to buy a larger size or two smaller sizes.
Now I’m not saying that you should shop around and find the best bargain in colleges but it is good to know what each college or university will cost to attend. Comparing college cost will help you and your student make a wise decision on how to pay. Also, I’ll let you in on a little secret. Sometimes you can use this information to leverage a college or university to offer your student more money. The best way to compare college cost is to compare award letters.
This is our fourth and final post in our series about understanding award letters. We have discussed the anatomy of the award letter, cost of attendance vs. direct cost, four types of aid, and now we will finish with how to compare award letters from each college or university.
RELATED POST: How Understanding Your Award Letter Can Save You Money
Compare College Cost Using Award Letters
Before we get started, I recommend you open a spreadsheet or get a separate sheet of paper where you can enter or write down all the data. When consulting with our clients we use our College Cost Comparison Calculator which compares up to five institutions at one time. Here are the four easy steps to comparing your award letters.
1. Gather all award letters
The award letter is an offer of financial aid from a school in which you have applied. Listed on the award letter will be scholarships, grants, and loans you may be eligible to receive. This information has been calculated by the financial aid office based on the information you provided on the FAFSA and other required financial aid documents.
2. Determine the direct cost
Often schools will publish the cost of attendance on the award letter rather than the direct cost. The cost of attendance is not the true cost to attend. Cost of attendance is used by the financial aid office to determine the amount of aid in which a student is eligible. Most often cost of attendance includes line items such as transportation, books, and miscellaneous fees. What you really need in order to estimate your bill is the direct cost. The direct cost consists of tuition and fees, housing cost (room), and meal plan (board). If you are not living on campus take out the housing and meal plan.
3. Calculate scholarships and grants
Scholarships and grants are funds in which you do not have to borrow. Essentially scholarships and grants are free money. So, to know what you really owe before having to get a Federal Work Study job, borrow money and/or cash in your savings, calculate scholarships and grants from each school.
4. Subtract scholarships and grants from direct cost
At this point results of the formula for each school should be:
Direct Cost – Scholarships and Grants. This will give you a better idea of the actual cost to attend each institution.
Now That You Have Compared College Cost
Now that you have the facts of what it will actually cost to attend each institution, you and your child can make an informed decision. Here are some ways you can use the comparison information.
- Eliminate colleges that are too expensive
- Determine what college to attend
- Create a plan of action about how to pay for the institution wanting to attend
- See the amount of free aid from each institution and use it to try and get more aid
These are the exact steps we take when helping a client determine what institution to attend and how they want to pay for it. There are many factors when deciding to attend college however it is really important to know the cost and how you and your child plan to pay for it. Do these steps now so you all have more time to make a financial plan.
If you want to learn more about how we negotiate price and financial aid, let’s talk. Sign up for a 30 minute consultation at no cost to you. We will be happy to answer any questions you may have.