<p>Help. Just got financial aid letter today and having trouble understanding it and digest the cost. It is a private college in VA. First it lists 3 types of loans: unsubsidized stafford loans, subsidized loans and Parent PLUS. Those together are way more than I expected to pay. I'm confused about how my EFC figures in this? And while I thought we could comfortably afford our EFC, these loans to make up gap are so high, confused why even have an EFC if we have to go into bigger debt with these loans they think we can handle. Also, there is a work study figure - is this really pockent money to my son, or does this really go to his loan amount? Help.</p>
<p>Lots of schools package a large amount in loans. The EFC is really just a number the federal government uses to determine whether you’re eligible for gov’t aid. Colleges are not bound to meet costs above the EFC, or even to factor your EFC into their aid package at all.</p>
<p>Unfortunately it sounds like you fell in the trap of thinking the EFC is all you would have to pay. The vast majority of schools do not promise to meet full need, and those that do mostly include loans. Only a very small number of schools promise to meet full need without loans. As 'rentof2 said, for federal aid the EFC is used to determine eligibility for federal grant aid and for loans and WS. These are very limited. For instance the maximum EFC for the main federal grant, the Pell, is 4617. A student with a 4617 EFC would be eligible for about $1000 Pell while a student with a 0 EFC would be eligible for a maximum of $5550 Pell. Other than that federal aid is mainly loans and WS. So unless a school offers large need based grants out of their own funds (most do not) then aid packages may include loans and/or will not meet full need…</p>
<p>The work-study is pocket money for your son but there is no guarantee that there is a job on-campus for him. Call and find out how possible it is to get a job.</p>
<p>The other thing about work study jobs is to get a jump on them early. In the first few days a student is on campus – often during freshman orientation days – start hitting the campus employers; the library, food service, academic department offices, the athletic facilities, etc. There will be a student employment office that can help direct the student, but it’s the student’s job to find the work. Early is always best. Not only do the best jobs get taken early, but sometimes all the jobs get taken. It depends on the school. In some places food service will always have openings available even though the more desireable jobs are gone early. In other places even the food service jobs get scarce. My kids have always had good fortune in getting good workstudy jobs, and my daughter actually even enjoys her job very much (she’s a research assistant to a professor) – but they both went after those jobs very quickly upon arriving on campus. That can be a real key, and not something new students are often inclined to do. Give your student a heads-up on that, and before they leave home help them devise a good resume, make copies of it, and all so they’re ready to go look for those good jobs right away. Workstudy can be a really great thing. The schedules tend to be flexible and having a job right on campus is really convenient, and some of them can be excellent work experience too.</p>
<p>Many schools list the Parent PLUS loan in the award letter because it is an option for paying any gap as well as the EFC. I also caution that the Cost of Attendance (COA) may be padded a bit, so you may not actually end up paying the entire COA.</p>
<p>Here is how I always suggest looking at award packages:
Add up tuition, fees, room, and board based on published rates (+6% if 2010-11 not finalized). This is Real Cost.
Add up the “free money” (scholarships & grants). This is Free Money.
Real Cost - Free Money = What You Really Have to Pay.</p>
<p>Now … subtract the Stafford loans from What You Really Have to Pay. This leaves the amount that you will be billed. Can you pay it?</p>
<p>As for subsidized & unsubsidized loans … both are student loans, and the total cannot exceed $5500 for a freshman student. Neither must be repaid until 6 months after the student graduates/leaves school/drops below half time. Sub loans are 5% interest, and interest does not begin to accumulate until repayment begins. Unsub loans are 6.8% interest, and interest begins to accumulate when the loan money is paid to the school. You can repay interest as you go if you wish … but that is not required … meaning that if the student chooses to capitalize the interest she will end up owing interest on the interest from the time the loan is disbursed. In other words: sub is free to student while in school; unsub is not free during school due to the accumulation of interest during the in school and grace periods.</p>
<p>The way I think of it is this: The EFC is what they expect you to be able to pay. The award letter shows what they expect THEY can pay. The two don’t necessarily meet in the middle.</p>
<p>The feds have got to come up with a different name and acronym for EFC.</p>
<p>A financial aid award from a college doesn’t bear any necessary relationship the federal methodology EFC, and there was no mention of the EFC at all on the first financial aid offer letter our family received.</p>
<p>Families with higher incomes often look at their EFC and think, “I can’t pay that! Are they crazy?” And middle and lower income families see their EFC and think, “I can maybe figure out a way to manage that, but the college aid offer still has a big gap in unmet need and Parent Plus loans that we wouldn’t be able to make the payments on.”</p>
<p>But… worst case scenario, most families who are trying to help their kid go to college can either swing the local community college or a commutable regional state univ. with any aid that might be available and perhaps some modest student loans, or they are more affluent than that and can afford to let their child go away to college at a 4yr in-state public university.</p>
<p>There are lots of other scenarios that involve great need-based aid at well-endowed schools, great merit aid at other private schools, etc. that might be options for some.</p>
<p>But the bottom line is most people have some kind of viable option. Lots of time on College Confidential they don’t like their viable option for one reason or another, or don’t think it’s good enough for them, but it is usually doable with some sacrifice and effort.</p>
<p>*The feds have got to come up with a different name and acronym for EFC. *</p>
<p>I agree…it’s is soooo misleading to so many people.</p>
<p>'rentof2 is right. (Speaking as a student and as a parent.) </p>
<p>Even in our financial situation (both unemployed, the unemployment rate around here is 13%), we live within commuting distance to the Flagship In-State Public University and close by to an excellent CC. My husband will begin going towards his AA this fall and I’ll be finishing up mine at end of the fall semester. We will be receiving enough in Pell Grants to cover books and tuition at the local CC if I am not accepted or find it financially unfeasible to attend the dream private that I applied to. I have been awarded a small scholarship that will cover my books at the CC if I buy used and in all likelihood we will both have FWS jobs.</p>
<p>I might not be able to pursue my dream major and may be headed in Fall 2011 to a school that I feel that I can’t stand, but in all honesty, a degree is a degree. A school is a school. I’d take slogging through a major that I can tolerate, even if I’m not enthused with it and attend a school that I don’t want to spend time at outside of class and studying if it would mean graduating with a small amount of debt. These are the choices that we must make. </p>
<p>Hopefully, things will improve eventually as we finish our education and begin our respective careers and we can set up a college fund for our young daughter so that she may have the chance to CHOOSE to go wherever she likes for school and we’ll be able to make it happen. We don’t want her to have to choose between the rock and the hard place. We may not be able to live out our own dreams, but we’ll try our hardest to make sure that our little one will be able to live out her own.</p>