Read the Fine Print
It is that time of year again where impatient seniors are waiting to cross that stage and grab their diploma! These young people see their graduation as the end of childhood while actually it is the beginning of real life, real adult life, because decisions are being made that are going to affect them for years or even decades to come. One crucial decision that is being made on their behalf is financial aid. Parents all around the country have applied for financial aid for their child’s college of choice and by now have received a response. Each college or university have their own form to fill out as well as their own award letter that they send back to each family and because every school is different some families end up being confused about the amount of “free” money that is actually being given.
When parents receive the financial aid letter a lot of times they see the final number which might say for a $32,000 a year tuition they were awarded $22,000, but if they read the FINE PRINT the parents actually still have to borrow $15,000 in loans. The $22K they tend to see as the award usually has the amount of loans needed on behalf of the student in order for them to attend that university. When parents figure this out sometimes it is too late to make an adjustment and the parents end up borrowing tens of thousands of dollars in the student’s name. This is why the national student loan debt is topping $1 trillion dollars. There is not enough financial aid available like in the past so more students are going into debt to go to their dream school.
Parents do have a few options if they are stuck with sticker shock when the award letter arrives. First they can appeal the university for more financial aid, because most schools keep an appeal fund on the side for just that purpose. They are more likely to accept the parent’s appeal if there is a comparable college offering the student more money. Also make sure that when filling out the financial aid that you provide as much information as possible so that your child receives the best possible offer from the university. The other option that is probably the best option and that is have your child choose a college that you the parent can afford without too much financial aid and if the child receives financial aid it is just icing on the cake. One side note when I say a college you can afford I mean that the money has already been saved and you don’t have to tap credit cards, home equity, or any retirement funds. Remember always read the fine print, it could save your child a future with debt!
Have you ran into sticker shock when dealing with financial aid?