Get smart about financing college: Comparing aid offers

Nov 08, 2016
Student loans

By Heather Pautenaude


Heather Pautenaude is an expert on college financial aid with 20 years of experience in this area. She has worked at Simmons College, Boston College, and George Washington University in their financial aid offices. Most recently, she was Director of Financial Aid at Simmons College.



Receiving your financial aid award from a school can be exciting and scary at the same time. You and your family have spent time and energy, and maybe some money, on your financial aid applications and may not know what to expect when it’s time to pay for school.

When the cost of school is a factor in your decision making, it’s important to make meaningful comparisons rather than simply looking at the total dollar amount of the awards. First, set up a spreadsheet so that you can easily compare both the costs and the aid offered. This will allow you to fairly compare the offers from each school. Here, you’ll find a sample spreadsheet and a few ways to make the comparison.

Sample spreadsheet to compare financial aid offers (Click here)

Billed & Out-of-Pocket Costs

All schools publish their billed costs on their website. Don’t be scared off by the published costs. What matters is your out-of-pocket costs. Your bill will include tuition and fees as well as on-campus housing and meal plans. Your school may charge a variety of fees, or have just one or two comprehensive fees.

Once your spreadsheet is set up, you can easily compare the billed cost of each school. Then, you can enter the information from your financial aid awards to be able to compare those as well and calculate your out-of-pocket costs. Your out-of-pocket cost is the amount you are responsible for financing after your financial aid package is credited to your bill.

Net Price

Comparing the “Net Price” of schools can help you understand what amount you are responsible for after your scholarships and grants are deducted from the bill. This kind of comparison looks at both your billed costs and your anticipated expenses. Anticipated expenses include your books and travel to and from your school. When looking at your Net Price, you’ll need to use the cost of attendance figure for your school. This figure may be printed on your award letter or published on your school’s website and will be larger than your billed costs.

Once you know your cost of attendance, subtract your total scholarship and grant amounts. The difference is your Net Price. The Net Price does not take loan amounts into consideration because these are amounts that are paid back.

Percentage of Need Met

When determining how much aid a school can offer to you, they will often try to meet a certain percentage of your demonstrated need. Your need is equal to your cost of attendance minus the expected family contribution (EFC) from either your FAFSA or your CSS Profile. Both your cost of attendance and your EFC may be printed on your award letter or are available by calling your school’s financial aid office.

To determine your percentage of need met, divide the amount of your scholarship and grant aid from all sources by your need. Most schools will continue to award scholarship and grant aid to this same percentage each year that you attend. Changes to your EFC or cost of attendance each year will change the dollar amount of your award, but the percentage of need met will generally remain constant.

Guaranteed or Multi-Year Amounts

In general, only merit scholarship amounts are guaranteed to be renewed in the same amount year after year. Funds offered based on financial need will often change from year to year. This means that if your family’s financial situation changes, so will the financial aid award. However, some funds may have been offered to you for multiple years in a specific dollar amount regardless of your family’s financial situation. Higher amounts of aid that is guaranteed is more desirable.

Policy for Outside Scholarships

What will your school do to the offered financial aid package if you receive funding from an outside source? Your school’s policy should be on their website or in the materials they send with your award letter. School policies will vary. Many schools will first meet any unmet need, and then reduce self-help aid (need-based loans and work-study), if necessary. Sometimes it will be necessary to reduce grant funding from the school.

Tax Implications

Most students do not consider the potential tax implications of their aid packages, but some aid may be taxable and some families may qualify for tax credits based, in part, on the amounts they finance through payments or loans. Scholarship and grant amounts that exceed the cost of your tuition, fees and books are taxable. Similarly, scholarship and grant amounts that are specifically designated for housing or meal expenses are taxable. Having taxable aid could increase your out-of-pocket expenses.

If you expect to have out-of-pocket expenses, be sure to consider the tax deductions you or your family may qualify for. IRS Publication 970 contains information about both taxable aid and the tax credits available for paying for education. There is also information about the tax credits available for paying interest on student loans after you are no longer in school.

Big Picture

As you are comparing your aid offers, remember to think also about what’s most important to you and to your family. You’ll want to consider not only the total amount of aid that you were offered, but also how much of that aid is in the form of scholarship and grant funding as well as what your final costs will be after your aid package. When thinking about your aid package, don’t forget to consider how it may or may not change in future years. To do so, you’ll want to understand if any of the award amounts are guaranteed for multiple years and determine what percentage of your need has been met with scholarship and grant funding. This percentage is unlikely to change even though your family’s financial situation may change.

About the Author

Karthik Krishnan

Karthik is the CEO and Co-founder of MentorWorks Education Capital as well as a tenured Associate Professor of finance at Northeastern University and a former angel investor with Launchpad Venture Group. His teaching and research in the areas of entrepreneurship and education finance has made him a go-to-resource and thought leader on education financing having published various articles on the subject. He has mentored many students and assisted them in securing meaningful internships and jobs. Reach out to Karthik at

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