Tips for Understanding and Comparing Financial Aid Offers

tips for financial aid offersCongratulations! You’ve been accepted to multiple schools. Now you need to determine which schools are most affordable so you can factor school cost into your decision. If you listed a school on your Free Application for Federal Student Aid (FAFSA®) form and have been offered admission by that school, the school’s financial aid office will send you a financial aid offer. The amounts and types of aid you’re offered will likely vary from school to school, so it’s important to compare your financial aid offers. Here are a few tips and resources to make understanding and comparing your financial aid offers easier.


1. Know the different types of aid

The financial aid offer includes the types and amounts of aid you may receive from federal, state, private, and school sources. Types of aid include free money that does not have to be paid back (grants and scholarships), money you borrow and must pay back with interest (loans), and money you can earn working a part-time job to help pay for education expenses (work-study). You may see any combination of these types of aid in your financial aid offer. Learn more about the different types of aid. If you’re curious, you can also learn how schools calculate the amounts of aid they offer you.


2. Understand each school’s net cost

Net cost is an estimate of the actual cost that you and your family need to pay in a given year to cover education expenses for you to attend a particular school. It is calculated by taking the school’s cost of attendance and subtracting any grants and scholarships you’ve been awarded. The net cost is the amount you will have to pay out of pocket. The net cost is the dollar amount you’ll want to compare across different schools to determine which school is most affordable.

Thousands of schools use the Financial Aid Shopping Sheet to present financial aid offers. But, some schools use a different format to present financial aid offers, making it difficult to compare net costs across schools. To help with this, the Consumer Financial Protection Bureau (CFPB) developed an interactive comparison tool to help you compare your financial aid offers.


3. Make sure you can cover the net cost

Because the net cost is the amount of money you’ll have to pay out of pocket, it is important to make sure that you have resources to cover the net cost. Scholarships, earnings from work-study or a part-time job, personal savings, gifts, and loans are resources you can use to help cover the net cost.

While loans can help cover your net cost, you should borrow only what you need. You don’t have to accept all of the loans you’re offered—and you don’t have to accept the full amount of any particular loan.

You may also be interested in 7 options to consider if you didn’t receive enough financial aid.


Things to remember when understanding and comparing your financial aid offers:

  • There are different types of aid—grants, scholarships, loans, and work-study.
  • The amounts and types of aid you’re offered may vary from school to school.
  • Calculate your net cost by subtracting the grants and scholarships you’ve been awarded from the school’s cost of attendance.

Mia Johnson is a Management and Program Analyst for the U.S. Department of Education’s office of Federal Student Aid.

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