How to make sense of a college financial aid package

There’s been a lot of drama this spring for families seeking college financial aid.

The trouble stems from a revamp of the Free Application for Federal Student Aid (FAFSA), where changes and technology glitches have been an ongoing source of frustration for families.

The federal government, meanwhile, was significantly delayed in relaying data collected on the new form to schools, which means many colleges and universities have been scrambling to send financial aid packages. May 1 is typically the primary decision date for students to accept an offer of admission, but many schools have pushed deadlines to mid-May or the beginning of June.

If students don’t yet have all the information they need to make a decision, they should reach out to admissions offices and ask for further extensions, said BG Tucker, senior director of programs for College Possible Minnesota, which helps students from underinvested communities access higher education.

Financial aid offers are now arriving and that means families will need smart strategies for quickly making comparisons between what different schools are offering, a task that can be difficult even in a normal year when there’s less time pressure.

“The No. 1 thing that’s challenging is that the letters are complex,” Tucker said. “Every letter looks different. The format is different. How schools talk about when they are awarding the money — whether it’s on a semester basis or a quarter basis or an annual basis — is confusing.

“And so families really need to understand what they’re looking for in a letter.”

Here’s what you need to know about comparing financial aid offers during this unusually difficult season for picking between schools.

Financial aid offers typically come in letters that span one to three pages.

Experts recommend families first zero in on a section of these letters called the cost of attendance (COA). This sum is typically broken down into two parts: direct costs paid to the college (for tuition and fees, room and board) and indirect costs (like travel, books and incidentals). With the possible exception of book expenses, indirect costs don’t go directly to the school. Even so, colleges and universities usually include an estimate for these expenses and build financial aid packages with these costs in mind.

Next, families should scan financial aid letters to find all the grants and scholarships offered to students as “free money,” said Tucker of College Possible Minnesota.

The goal is to complete a math problem. Subtract the free money from the COA to arrive at what’s called the net price, which is the best figure for making comparisons between schools, said Megan Walter, policy analyst for the National Association of Student Financial Aid Administrators (NASFAA).

The net price is key because it doesn’t factor loans or sums earned through work-study arrangements, funds that can add complexity to comparisons while coming with significant asterisks.

“Any school can look affordable if you’re willing to take out a private loan for $30,000,” Walter said. “But you really should be making a decision comparing the net price of the institution, which is just the free money you have to go toward the direct and indirect costs.”

Tucker said she also focuses on the net price. Families must be cautious with loans, she said, to make sure students aren’t signing up for years of unaffordable debt. With work-study, the sums listed on financial aid letters aren’t guaranteed, she said.

Also, work-study funds typically go directly to the student, not the bursar’s office to pay tuition, said Todd Weaver, a college counselor who is treasurer for the Higher Education Consultants Association.

“So you still have to come up with that money,” Weaver said.

NASFAA has a free worksheet to help families take numbers from the letters and make comparisons. In general, families need to be cautious, Weaver said, with how the financial aid offers present data.

“They’re trying to make it so when you look at the bottom line, you say: ‘Oh, yes, we can afford that. We can make that work,’” he said.

A key variable when comparing offers is both simple and critical: Families must be very clear, Tucker said, if expenses and financial aid are listed per quarter, per semester or per year. Different schools present numbers differently.

Also, financial aid offers typically look at just costs in the coming year, rather than expenses through graduation. It’s good to try estimating costs for the long haul, paying close attention to what happens to school-based grants and scholarships — the free money — in years two, three and four.

Federal Pell grants for low- and moderate-income students typically fluctuate each year along with a family’s student aid index (SAI). This number, which data provided on the FAFSA generates, used to be called the expected family contribution (EFC). It’s useful knowing both the new name and the old name for this figure, Weaver said, because many colleges haven’t yet switched to using SAI in their materials. Whatever you call it, this number is central to how colleges calculate need and then assemble financial aid packages in response.

To understand exactly how these calculations work — especially considering all the terms and acronyms involved — Tucker recommends families make contact early and often with financial aid officials at different schools.

“The people at these institutions who work in admissions and financial aid, they want you to come to their institutions,” she said. “They are there to help you.”

Families also should ask about and consider, Weaver said, support for students to graduate in four years vs. five. The duration of studies, he pointed out, can significantly change the cost comparison.

Finally, for students who take on debt, there are issues to consider with various loan packages. And if students go debt-free, families must recognize they’ll have to cover the amount listed as loans on the financial aid letter, Tucker said.

Given all the complexity, “this year is definitely a time crunch for students and families,” Walter said, considering all the FAFSA delays.

The FAFSA opened later than usual this school year because the federal government needed time for changes intended to make it easier to apply for and receive financial aid. The form was available starting Dec. 30, the U.S. Department of Education said, whereas FAFSA had opened in October in the past.

On the plus side, the new form is shorter for some families. Some information now automatically populates from tax returns, and the revamp includes needed changes to formulas used for calculating aid. But problems this winter quickly surfaced. The new form lacked updated inflation tables, and some students couldn’t apply if their parents lacked Social Security numbers.

A new question related to applying for unsubsidized loans confused some families, with many providing a response that actually blocked eligibility for need-based federal aid options. The new FAFSA technology didn’t let families start correcting these errors for months.

Then, on Jan. 30, the Department of Education announced schools wouldn’t be able to access FAFSA data until March, about six weeks later than anticipated. In response, the University of Minnesota and other schools across the state started announcing delays in their deadlines for student decisions.

By early May, the processing delays at the federal government had pretty much resolved, so FAFSA information is now relaying to schools in a timely manner, Walter said. But with all the problems, schools have been running behind as they turn data submissions into aid offers. Among respondents to a late April survey by NASFAA, roughly one-third of four-year public colleges/universities as well as 13% of nonprofit schools said they had not yet begun packaging aid offers.

“Usually, the FASFA information comes in over five months to schools so they can spread out the processing,” Walter said via email. “This is all happening basically in half the time now. There will also be students who are just finding out they need to complete verification, etc., so they won’t have complete offers.”

Many families still are confronting technical problems with trying to complete the FAFSA, said Tucker.

She said some families have struggled to receive prompt application assistance via the phone or online from the federal government. An alternative is the state Office of Higher Education Financial Aid, which can address general application or process questions. Operators are available Monday through Friday from 8 a.m. to 4:30 p.m. at 651-642-0567 (select option 2).

“We’re definitely in a space right now where our students and families are frustrated, and rightly so,” Tucker said. “Some of them have been working on the FAFSA and trying to submit it since January.”

The U.S. Department of Education offers several resources that students and parents can consult, including guides to understanding college costs and accepting financial aid. The department also has a video on comparing financial aid offers and a college scorecard with information about the average net price at schools.