Watch Out for Misleading College Financial Aid Letters


In the spring, enticing financial aid letters from colleges will start arriving in high school seniors’ mailboxes. Unfortunately, most of them are misleading.

The letters offering financial aid packages are supposed to help families who are making major financial decisions. But the vast majority of them are hiding the true cost of college, according to a newly released government report.

Here’s how it works: If you get accepted to a college or university (or if one of your offspring gets accepted), that school will send you a letter spelling out what financial aid you’re eligible for — typically a mix of student loans, grants, scholarships and work-study arrangements.

This is supposed to help you and your family decide whether you can afford to go to that school. However, too many of these letters avoid saying how much you’d really be spending to go there, according to a report by the Government Accountability Office, a nonpartisan congressional agency that serves as the government’s primary watchdog.

“Most colleges are not following best practices for providing clear and standard information in their financial aid offers,” the GAO report said. “Colleges should estimate the net price — how much a student will pay to attend that college… but about 91% of colleges understate or don’t include the net price in their offers.”

So, what should you do with this information? We have some ideas.

What to Know About College Financial Aid Letters

Misleading financial aid letters have gotten students to enroll in schools they can’t afford, causing them to rack up unnecessary debt and sometimes even drop out of school.

Nearly a quarter of all colleges include no information whatsoever about costs in their financial aid offer letters. And even if a college tells you how much tuition and housing cost there, too often they’ll skip over the out-of-pocket costs of books, transportation and various personal expenses, the GAO said.

What should you do when you get one of these letters? What questions should you ask? Here are a few suggestions:

  1. What’s missing? Train yourself to look for what information is missing from the letter. Now that you know how misleading they can be, look hard at what they’re not saying.
  2. Track down what you need. You need all the information about costs if you want to make an apples-to-apples comparison between colleges. If you’re really interested in attending a particular school, try to hunt down the answers in the financial aid section of its website. Some aggressive Googling can help here, too.
  3. Know the different kinds of aid. “Financial aid” is a term that includes grants and loans. Grants and scholarships are money that’s given to you — money you don’t have to repay — while student loans must be paid back.
  4. Merit aid: If you’re offered “merit aid,” make sure you review the terms of the package, such as whether it renews every year, and weigh the amount of the aid against your total annual costs.
  5. Need-based aid: If a school offers you need-based aid, be sure to check the fine print. There’s often more to this type of offer than meets the eye.
  6. How does each financial aid offer work? Will the amount awarded stay constant all four years? What does the school really mean when it says you’ll be given a “full” award? Will your private scholarships affect the amount of aid the college is willing to give you?
  7. Watch out for the “front-loading” of grants. According to the nonprofit financial aid guide Finaid, some colleges put more grants in the financial aid letters sent to potential incoming freshmen, with the balance between loans and grants shifting toward loans in later years. Ask if you can expect to receive a similar amount of grants later.
  8. FAFSA: If all this talk of financial aid has got you stressing out about your FAFSA, here’s a guide to filling it out — along with why it’s super important. (Seriously — don’t skip out on FAFSA!)
Now that you know FAFSA is important, when is it due? Here’s everything you need to know about FAFSA deadlines.

These are all necessary considerations when reviewing your financial aid packages from the schools you applied to. Before you accept or commit to anything, it’s crucial to understand exactly what you’re being offered.

The letters typically appear in mailboxes and email inboxes every April. Now you’re prepared.

Mike Brassfield is a senior writer at The Penny Hoarder. Graze Schweizer manages social media and SMS at The Penny Hoarder.


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