Help interpreting financial aid

Hello! I am a first-gen and I received financial aid information from two colleges. Can someone experienced with this help me understand what they mean? I have questions about interest rates on loans, the actual cost of attendance, and more!

Can you post the contents of your award letter to give us an idea as to what you have been offered?

@sybbie719 Of course! I wasn’t sure if that was encouraged/allowed so I didn’t in my original post:

College 1
Scholarship - $20,000.00

Grant - $21,406.00

Federal Pell Grant - $5,815.00
Work-Study - $2,200.00

Federal Subsidized Direct Loan - $3500.00
Total awards: $52,921.00
The COA listed on the website is $60k. Would I have to pay the rest out-of-pocket? My parents make <$30k/year.

College 2
Scholarship - $30,000
Grant - $19,770.00
Federal Pell Grant - $5,815.00
FSEOG Grant - $1000.00
Federal Work Study - $3000.00
Direct Subsidized Stafford - $3,500.00
Direct Unsub Stafford Loan - $2000.00
Direct PLUS Loan 1 - $4,267.00
Total: $69,352.00
The COA listed on the website is around $69K.

How does everything work? My parents and I know almost nothing about how and when repayment happens, how much interest there is, what would be a reasonable amount for loans, etc.

Work study money has to be earned, it doesn’t come off of the bill, if/when you find a WS job

These are pretty good offers, but there is still a gap (difference between COA and your package), and it doesn’t appear that your parents will be able to cover that gap. Do you have any other options? The direct loans will not become due until shortly after you graduate, but the unsubsidized portion of those loans will accrue interest while you are in school. The Plus loan is a loan that your parents would have to take out, and is not recommended given their financial circumstances. Also note that as to the work study, $3000 seems rather high to me (meaning you’re unlikely to get enough work to make that amount).

What are the direct cost (tuition, room board fees) to attend the schools in question?

The first is just a stafford loan to you, the student. Interest will be paid by the government until 6 months after you graduate or leave . Interestablished rate for last year was 4.29% and should be about the same this year. Everything else in School A is a grant and you won’t have to repay, except work study that you’ll work and get paid just like every other job. You’ll need to know what the billed costs are (tuition, fees, room and board) to know if you’ll have to pay the school anything out of pocket on the first day of school. It looks like you wont.

For school 2, you have higher loans included in the package. Same $3500 with interest paid by government, but also $2000 to the student and the interest will start accruing on that while you are still in school. There is a Plus for your parents. This is a higher rate, I think about 6.8%, and while they don’t have to make payments while you are in school, interest does start accruing immediately.

Overall, the first offer is better financially. If you need to, you can borrow that extra $2000 at the first school too.

@sybbie719

Edit: I don’t know why I’m trying to keep the colleges anonymous.

College 1: https://www.grinnell.edu/financial-aid/tution-fees
$60,738
Tuition: $48,322
Fees: $436
Room: $5,658
Board: $6,322

College 2: http://seaver.pepperdine.edu/admission/financial-aid/undergraduate/costs/budget-costs.htm
Flat-rate tuition $48,090
Room & Board (double occupancy half-room, meal plan) $13,810
SGA Fee (student government activity fund) $252
Books and Supplies $1,500
Loan Fees $1,000
Transportation $1,000
Personal Expenses $1,500
TOTAL $67,152

it looks like almost all of your direct cost are covered at Pepperdine

Cost

Flat-rate tuition $48,090
Room & Board (double occupancy half-room, meal plan) $13,810
SGA Fee (student government activity fund) $252

total $ $62, 152

Financial aid package

Scholarship - $30,000
Grant - $19,770.00
Federal Pell Grant - $5,815.00
FSEOG Grant - $1000.00
Direct Subsidized Stafford - $3,500.00
Direct Unsub Stafford Loan - $2000.00

total aid $ 62, 085

Amount needed to meet direct costs: $67

Don’t take the Plus Loan (why are they charging a $1000 loan fee? Double check this number)

Yes, you need a part-time job now, so that will turn in to a full time summer job (to meet your start p cost: getting yourself to campus, sheets, blankets, pillows, etc and books).

You can look for cheap ways to get books; renting vs, purchasing, used books, amazon, half.dom

You need to look at how easy (hard) it is to get work study. You can use your work study funds to purchase your books for the spring semester, travel home at the end of the year/break

Too lazy to do math here but add up anything that says grant or scholarship and subtract it from COA and what do you end up with? Whichever is less is your better deal. However, assuming you are planning to go into a well paying job after (always an assumption and not a given), the SUBSIDIZED loans are not a bad deal since there is no interest to YOU while you are in school. Unsubsizied loans generate interest from the first day and compound that interest so are more than you think. As for work study, find out how much those jobs pay per hour and you will see how many hours per month you will have to work to earn that 2200-3000.

I would try to negotiate with both schools and see where you get, if you have a preference let that school know.

Also, C2 included more items in their COA, I assume you do not live next door to C1 so will have costs of transportation too. What is the loan fees? I would ask about that and whether C1 has that.

Whatever is not covered is out of pocket.

Interest doesn’t compound on student loans. There is a sort of compounding when the loan goes from deferral to payment status and they take the amount owed, including deferred interest, and set payments based on the principal and deferred interest, but it is not a constantly compounding situation.

Thank you all for your replies! I’m still trying to get used to the lingo and what it means. Is the interest compounded annually? How can I calculate how much I will have to pay once I graduate?

For Grinnell, is my price ~$8K (not including work-study and subsidized loans)? Is this the better choice for my situation?

Direct cost of attending Grinnell

$60,738
Tuition: $48,322
Fees: $436
Room: $5,658
Board: $6,322

Financial aid package

Scholarship - $20,000.00
Grant - $21,406.00
Federal Pell Grant - $5,815.00
Federal Subsidized Direct Loan - $3500.00
Total awards: $50,721.00

Removed the work study because you have not earned that yet.

You will need $10,017, just to step foot on Grinnell’s campus ($5k for the fall and k for the spring). This does not include getting your self to school, start up costs,books. How are you going to meet this gap?

Pepperdine looks like the only affordable option. At Grinnell you are about $8-10 k short (depending if you take the un sub loan) since direct billed costs $60k- aid including sub loan (but not workstudy) $50 k = $10k

@aralis Can’t add much to sybbie’s excellent post, but will clarify some things I had to learn back when :

Direct costs are billed by the school and have to be paid before you can begin school. Probably by July or something. They include tuition, fees, room and board. Which is why sybbie pulled them out separately.

Then you have books, travel, dorm bedding, etc etc. Not a set amount and can be adjusted by you if you buy used or rent books, take stuff from home instead of buying new for your dorm room, travel home less, etc etc.

So Grinnell direct cost is $60,738

Pepperdine is $62,152

Then grants - money you do not borrow or pay back:

Grinnell:
Scholarship - $20,000.00
Grant - $21,406.00
Federal Pell Grant - $5,815.00
Total: $47,221

Pepperdine:
Scholarship - $30,000
Grant - $19,770.00
Federal Pell Grant - $5,815.00
FSEOG Grant - $1000.00
$56,585

Grinnell net price (before loans or books or misc expenses) is $13,517
Pepperdine net price (before loans or books or misc expenses) is $5567

Now you can take loans - subsidized (no interest accrues and payments not due until after you graduate) for $3500 and unsubsidized (interest accrues but you still don’t have to pay until after you graduate) of $2000. Interest rates are 4.29% right now (but the sub loan is better because you won’t accrue that interest over the 4 years you are in college). That’s up to $5500 for any school you go to. You can take them or not, or just take $3500, up to you.

I’d ignore PLUS loans completely - that’s your parents borrowing money to pay.

Grinnell is also offering $2200 in work-study, and Pepp $3000. This is not usually guaranteed. And it’s a job - you get paid every week or two, not before you get to campus and start working though. So it’s good for spending money, maybe travel home for a holiday, second semester books.

I’d ask Pepp about what they list as “loan fees” too,I’ve never seen that.

Unless I’m missing something, you’re comparing apples and oranges here. Where are your costs for books, transportation, and personal expenses at Grinnell? You’ve included them for Pepperdine, but not for Grinnell.

Treat the Pepperdine PLUS loan as money out of pocket that you are going to have to come up with . . . unless you really want your parents to be taking out loans to pay for college for you.

@sybbie719 I’m not sure… I am looking for scholarships, but that it is not guaranteed that I will receive them. Thank you for clearing up exactly how much I need. I was very confused on that.

@dodgersmom
Oh no, I would never want to do that to my parents. I am a US citizen living abroad, so getting to Pepperdine will be cheaper than getting to Grinnell. Furthermore, I have extended family near Pepperdine so that I do not have to fly back to where my family resides every break.

Grinnell estimates $900 for books, $1100 for personal expense, and up to $1100 for transportation.

I think you should negotiate with both and find out more about the costs that Grinnell did not list that Pepperdine did such as transportation. So far you do not have enough information. Also what is the loan fee at Pepperdine $1000?

The two unsubsidized loans you can get at Grinnell also (I think, anyone?) so that is not real aid.

Once you figure the real total cost, line item by line item, and your real gap which is ANYTHING not covered by a scholarship or a grant, then start negotiating with both. Did you get any other offers that are better that you are not considering? Maybe you can use those to negotiate.

@SeekingPam Thank you for your help. When you say loan fee, what do you mean? I don’t see it included in the financial aid list.

Edit: I found it!