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Knowledge Hub / Comparing Financial Aid Packages: 5 Factors to Consider
Comparing Financial Aid Packages: 5 Factors to Consider

Comparing Financial Aid Packages: 5 Factors to Consider

Paying for College
ELFI | April 27, 2022
Comparing Financial Aid Packages: 5 Factors to Consider

While the cost of college can be scary, there is a significant amount of financial aid available that can make it more affordable. The National Center for Education Statistics reported that approximately 85% of full-time, first-year students received financial aid.  How do you know which school is giving you the best deal? College award letters can be confusing, so it may be harder than you’d expect to compare financial aid offers. But by understanding the key components of an award letter, comparing financial aid packages is a lot easier. 

How to Compare Financial Aid Offers

When you get accepted into a college, the school will send you a financial aid offer letter. It details your costs and what aid you can use, including grants, scholarships, and student loans.  The letters can be confusing, especially when comparing letters from different schools. There isn’t one simple template that all schools use; they all have their own unique format, so it may not be immediately clear which school is giving you the most aid.  To better understand your letter, look for the following components: 

1. Expected Family Contribution (EFC)

Your EFC is a calculation the colleges use to determine how much money you and your family can contribute to your education. The EFC is used to decide how much financial aid you’re eligible for and how much assistance you’ll need. 

2. Total Cost of Attendance

The total cost of attendance is the overall cost of attending that particular college for one year. It covers more than just tuition; it also includes room and board, fees, textbooks, transportation, and other essential expenses.  According to The College Board, the average total cost of attendance for an in-state student attending a four-year public university was $27,330 for the 2021-2022 academic year, while the average total cost of attending a private school was $55,800. 

3. Gift Aid

Gift aid is financial aid that doesn’t have to be repaid, such as grants or scholarships. Your college financial aid award letter will detail what federal, state, or institutional gift aid you qualify for and the amount of aid you can receive.  Since gift aid doesn’t have to be repaid, it’s one of the most significant factors to consider when comparing financial aid packages. A school can be more expensive, but if it offers more financial aid, it could be cheaper than less pricey schools.  [Tip: With private colleges costing so much more than public universities, you may be wondering, “do private colleges offer more financial aid?” The answer is yes! While private schools are more expensive, they usually have more generous financial aid packages. On average, private schools provided students with an average of $23,080 of gift aid support, significantly higher than the $8,100 of gift aid provided by public schools. 

4. Net Cost

The net cost is the school’s total cost of attendance minus available gift aid. The resulting total is the cost you have to cover, either with your savings, earnings from a job, or student loans. Since the net cost comes out of your pocket, it’s a key differentiator when comparing financial aid packages.  For example, consider these two offers: 

Public UniversityPrivate University
Total Cost of Attendance$25,000$43,000
Scholarships$1,000$20,000
Grants$2,500$5,000
Net Cost$21,500$18,000

Even though the private university is significantly more expensive, its net cost is lower because it offers much more gift aid in the form of scholarships and grants. 

5. Other Financial Aid

To cover your portion of the costs, the award letter will detail your other financial aid options, such as federal student loans and work-study programs.  If you’re eligible for federal loans, it will list what loans you can get and how much money you can borrow.  For work-study programs, keep in mind that the numbers listed aren’t guaranteed; it’s simply how many hours you’re eligible to work. With work-study programs, you’re responsible for finding an employer and putting your earnings toward school; if you cannot find an appropriate job, you’ll need to find another source of financing.  If you need help evaluating your offer letters, use Offer Decoder, a free tool provided by The Hechinger Report. 

What to Do If You Need Additional Financing

If your net cost is too high to cover with savings — and you use up all of the available federal aid — you may need help maximizing financial aid options. Depending on your circumstances, the following options can help pay for your remaining costs. 

Contact the Financial Aid Office

If your financial aid isn’t enough to cover the total cost of attendance, reach out to the college financial aid office. You may be eligible for an adjustment to your aid package if your finances have changed. For example, if your family member lost a job, became seriously ill, or had major expenses after a natural disaster, the college could give you additional grants or student loans. 

Apply for Scholarships and Grants

Besides government and school gift aid; there are thousands of grants and scholarships available from non-profit organizations and private companies. You can search for available awards on FastWeb, Unigo, or Scholarships.com

Research Private Student Loan Options

If you still don’t have enough money to pay for your education, a private student loan could be a smart option.  With ELFI, you can borrow up to 100% of the school-certified cost of attendance and have up to 15 years to repay the loan.* Plus, interest rates are still very low; variable-rate loans start at just 1.20%, while fixed-rate loans start at 3.20%.  You can get a rate quote and view your loan options without affecting your credit score. Once you find the right loan for you, you can complete the application online.