Online tools help sort out financial aid confusion

Yippee. Your child got into his or her college of choice, several in fact. Now what?

Usually, the jubilation turns into frustration as you try to compare the financial aid the various schools are offering.

After the acceptance letters come the financial aid award letters providing information about grants, scholarships, loans and student employment.

Here’s the problem with these letters — there’s no standard format, so it’s hard to compare what’s on the table. And you’ll need to start deciding soon since, generally, schools want to know what you’re going to do by May 1.

The scary truth of what college is going to cost may have you wanting to shout, “Mayday! Mayday! Mayday!”

Well, there is help available.

True to his commitment to make college financial aid easier to understand, Mark Kantrowitz, publisher of the financial aid sites FinAid.org and Fastweb.com, has compiled both an online calculator (bit.ly/fzcx1n) and a six-page reference guide (bit.ly/g8UUn5) to assist in evaluating financial aid award letters.

If you want your comparison to include issues other than money, use the advanced award letter calculator (bit.ly/euVstf). It compares college characteristics such as prestige, distance from home, weather, student and faculty ratios, and type of area where the school is situated.

As Kantrowitz told me, the new tools are “part of my ongoing efforts to make financial aid, an inherently complicated topic, more accessible to families.”

I watched a friend go through the process of comparing aid after her son was accepted at three schools last year. Her chief complaint: “While the award letter tells you the amount of the award and type of award, it would still be helpful if they would tell you the cost of tuition, fees and housing on the same document so that you can see how much more you may have to pay.”

Last year, Fastweb surveyed about 580,000 college freshmen and sophomores and their parents about financial aid award letters. More than half of respondents said that it was difficult to compare award letters from different colleges.

Here are some of the problems many respondents reported about their letters:

•The college’s total cost of attendance was not mentioned. This would include everything from tuition and fees to room and board to textbooks to discretionary costs such as personal expenses, and travel and transportation. “Some colleges will underestimate these figures to make their costs look less expensive,” Kantrowitz says in his guide.

Even when letters had cost-of-attendance information, only about two-fifths included a detailed breakdown.

•The dollar amount estimates for transportation were not realistic.

The dollar amounts listed for books and supplies were not realistic.

Letters didn’t include basic information about loan terms, such as the difference between federal subsidized and unsubsidized loans.

The total amount of loan payments was not mentioned, nor was the total interest to be paid over the life of the loan.

There was no mention of a net cost or an out-of-pocket cost figure. Net cost is the difference between the cost of attendance and all need-based aid. Out-of-pocket cost is the difference between the cost of attendance and total gift aid, which does not have to be repaid and includes grants and scholarships. The out-of-pocket cost is sometimes called the net price. To compare financial aid award letters from different colleges, base them on the out-of-pocket costs, Kantrowitz advises.

He also says to be aware that colleges front loan grants. Some schools award more grants during the freshman year and fewer in subsequent years. As he writes in the guide: “The intention is partly to ensure that students who drop out have fewer loans to repay, since students who drop out are three times as likely to default as students who graduate. But it also makes the college seem more generous than it really is.”

Be mindful that the financial aid award letter may only provide cost and financial aid information for one year. The cost of attendance may be 20 percent to 25 percent higher by the senior year in college, Kantrowitz warns. His guide includes a list of questions you should be clear on, such as: Does the college meet the full demonstrated financial need for all four years, or is there a gap? What percentage of students graduate with debt, and what is the average cumulative debt at graduation?

Also useful is the guide’s two-page glossary, which includes terms you might see in award letters.

Take the time to use the tools Kantrowitz has put together. It could save you a lot of financial heartache in the future.

Washington Post Writers Group