Paying for College

Decoding Financial Aid Letters

Those of you who were honored with Early Decision or Early Action acceptances last month have already received (or will be receiving) your preliminary financial aid packages.  These exciting and much anticipated documents usually take the form of a letter. Sounds simple, right? Not so fast there . . .

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For the uninitiated, these letters can be not only confusing but also sometimes deceptive. If you have received your financial aid letter and are still wondering what all of it means to you and you bank account, there's good news for you. A very helpful public-affairs-related site, aptly named FinancialAidLetter.com, is available to help.


According to the site's "About Us" narrative, "This website is an experiment developed by Kim Clark and Peter Jaegersen under the auspices of Ohio State University's Kiplinger Program in Public Affairs. It is solely designed for informational purposes. Students and parents should consult with their own financial advisers before making any important decisions."

I like that phrase "solely designed for informational purposes." I was a bit cautious when I first found FinancialAidLetter.com because I suspected that it might be a for-profit venture disguised as a do-good site. We've all seen those. However, as far as I can tell, there's a lot of do-good information here. For example, in there own words, here are the topics covered:

Confused about how to pay for college?

Get help here at the only site on the web where you can:

* Read real college financial aid award letters.

* Decode confusing (and sometimes misleading) loan and scholarship information.

* Translate financial aid jargon and acronyms into plain English.

* Get great tips on raising extra college cash, cutting costs, and making that degree more affordable.

* Find out why you deserve clear and complete cost information, and why colleges aren't delivering it.

This is just the beginning. Please keep coming back, as we plan to add more letters, more financial aid information and more advice.

Perhaps the most intriguing aspect of the site is their "decoder." This section contains actual financial aid letters from a group of schools, currently:

- American University

- University of Arizona

- Hendrix College

- Monmouth University

- University of Pittsburgh

- University of California-Davis

As they mention, "we plan to add more letters, more financial aid information and more advice." Sounds great.

I clicked on the University of Pittsburgh's letter's link, which took me to a page containing a scan of an actual finaid letter from that school. It was introduced with an explanatory narrative:

Dear Student,

This letter was accompanied by a packet and web links with details about scholarships, loans and costs. But many educational and consumer experts think students should not have to wade through lots of papers and websites to get the information they need to make wise decisions. They say colleges can and should provide one complete, jargon-free and easy-to-compare page with realistic cost estimates. To read about why you deserve better, how we evaluated these letters, and how you can evaluate your own letters, click here. Of course, we hope anyone making important life decisions will check with their own trusted financial and personal advisors, not just websites - not even this one!

Then, I clicked the "Decode Now" link. That made the following information appear: "True Cost: $23,000+ . . . B-" in big red letters.  Along with that, helpful callouts (also in red) showed me to what I should be paying attention. Very helpful.

Finally, at the bottom of the page, there was an explanation of what the various terms of the letter meant. This information came from a Univerity of Pittsburgh financial aid official:

Explanation

From the University of Pittsburgh's Director of Admissions and Financial Aid, Betsy Porter:

Cost of Attendance: As a state-funded school, Pitt can't set its tuition until the state legislature determines its budget. And this year, as usual, the legislature hasn't done that yet. Pitt sends students additional material and provides weblinks to information about last year's costs, and warnings to expect an increase of about 5 to 6 percent.

Jargon and acronyms: Porter believes most Pennsylvania students would know that PHEAA stands for Pennsylvania Higher Education Assistance Agency, and that the dollar amount is a grant. Accompanying notices and weblinks explain the details of the award.

From Financialaidletter.com:

Clarity:

* No information about costs at all, notes Mark Kantrowitz, founder of Finaid.org.

* "No explanation of what PHEAA is....Not clear if any of that is 'free'"; says Dana Rosenfeld, a former Federal Trade Commission official .

Cost:

* The federal government calculated that this family could afford to pay all of Pitt's costs. But the student still received $1,200 in scholarships. So the student's need was more than met.

* When estimating how much it will cost to get a degree from this school, consider that just 46 percent of University of Pittsburgh students graduate in 4 years.

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This is superior insight, in my opinion. I was a rookie college parent once. If this information had been available to me back then, I would have slept better some nights.

Thus, FinancialAid Letter.com should be your first stop during your journey through the college financial aid process. If your college's aid letter is not on display there, then your second stop should be that college's financial aid office. In fact, checking both might be your most comprehensive approach. Sleep well!

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Don’t forget to check out all my admissions-related articles and book reviews at College Confidential.