Comparing financial aid offers: How to choose the right college

College is a big, exciting step, but choosing between different schools can be stressful. There’s a lot to consider, like programs and majors, distance, community, and more. And then, of course, there’s the price tag.

After receiving an acceptance letter, you should expect to receive a financial aid offer (sometimes called a financial aid award letter) from each college that has accepted you. This offer shows how much financial aid you can claim and includes a breakdown of the cost of attendance. Comparing financial aid offers side by side can be dizzying because they are often structured differently and may use different terminology.

That’s why there are resources out there to help compare offers for you. For example, the Citizens college planning platform, College Raptor®, has a Financial Aid Offer Comparison tool, available online for free, where prospective students can upload their financial aid offers for a clear side-by-side comparison.

It’s important to understand for yourself how to evaluate financial aid offers so you can make an informed decision.

Decoding your financial aid offer

After submitting your FAFSA (Free Application for Federal Student Aid), you'll be able to access a summary of the information you reported. The schools you listed on your FAFSA will get access to your FAFSA information too. Colleges that have accepted you can then use this information to send you a financial aid offer. Typically, these offers arrive between February and May when acceptance letters are issued.

Here are some items that are often included on a financial aid offer:

• Cost of attendance (COA): This is the “sticker price” of attending the college or university. This amount should include direct costs (tuition and fees) and indirect costs (room and board, textbooks, living expenses, etc.).
• Grants and scholarships: These are referred to as “gift aid” because they are types of financial aid that usually do not need to be paid back (although there may be other obligations).
• Work study: Some colleges offer programs that allow you to earn money through a part-time job to help pay for school.
• Loan options: This will include any federal student loans but may also include other types of student loans.

It’s important to note that financial aid offers often have different formats, categorize types of “financial aid” differently and use complicated terms that can sometimes hide costs and cause confusion. Therefore, parents and students need to understand how to interpret the numbers and break out the true cost of attending college.

How much will I have to pay to attend college?

The true cost of attending college is typically referred to as the “net cost.” The net cost is the amount that you and your family will be responsible for paying for college over the course of the year. The best practice to calculate net cost is to take your college’s COA and then subtract gift aid (grants and scholarships).

Some colleges may estimate net cost for you in your financial aid offer. However, since financial aid offers use varying formats and terminology, it can be challenging to compare them. For example, consider how colleges may address indirect costs or loan options on a financial aid offer:

How do I compare financial aid offers?

The chart below is an example of how you might compare financial aid offers from different colleges and universities. The “net cost” line is the truest apples to apples comparison of what you will need to pay to attend each school. The rows below net cost are ways to pay the net cost. Those payment options can include things like federal student loans (which you must pay back) and work study (money that you earn).

After you subtract the offered federal loans and work study, any remaining costs are your “financial aid gap” — basically, what you still owe. That financial aid gap could be covered by savings, additional income earnings, or private student loans.

Source: Bankrate/Citizens

Putting together a table will help you identify some key takeaways. In this example above, these are:

• College A has the lowest net cost of the three options, despite not having the lowest total COA.
• College B has the lowest COA, but with few financial aid options, the net cost is higher than College A.
• College C has a significantly higher COA than the other schools, but offers the most gift aid. This aid makes its net cost closer to the other two colleges.

The bottom line? Although the indirect costs of College A are the highest, this college is ultimately the least expensive option, thanks to gift aid. This proves that the net cost of going to college can be significantly different from the total cost of attendance, or “sticker price.”

And while different financial aid offers can be organized like this chart, don’t forget to take advantage of online resources that can simplify the process. Many organizations also hold free virtual or in-person seminars to help parents, students, counselors and others understand the process and demystify financial aid offers.

Weigh your options

In addition to choosing the school and cost that’s right for you, students may also want to consider other ways to pay for college, if the offer doesn’t cover what’s needed for their top school. Students can look for additional scholarships (There’s even a scholarship offered by Citizens!* No purchase necessary.), work part time or find a worthwhile side hustle.

If you still have a financial aid gap, consider applying for a private student loan. Citizens offers flexible terms for a private student loan that can fit any situation, with added benefits like Multi-Year Approval^† and Citizens Student Credit Builder™.^†

Of course, there’s more to consider than the cost. Maybe College A has a better engineering program. Maybe College B is closer to home. Maybe College C has better internships. Now that you know how to compare costs, you can factor in your personal preferences to make a choice that’s perfect for this next big step.

You’ve made your decision. Now what?

After you’ve chosen a school, you will need to decide how much of their financial aid offer you want to accept. For example, a school may offer more in loans than you’re willing to accept, but you don’t have to accept any or all of it. The student aid offer will have instructions on how to accept the aid either by mail or online, and make sure to follow it carefully.

The college adventure is an exciting time in a person’s life, and we are here to offer smart advice every step of the way. With more than 40 years of student lending experience and a deep understanding of the potential challenges, we can be trusted partners and answer any questions that students or their parents or guardians may have about paying for college.