Many parents and their college-bound children are in the process of completing perhaps their most important school assignment: evaluating financial-aid award letters.
Colleges and universities this time of year notify families about the grants, loans and other financial aid they can expect to receive if the aspiring student attends the school.
But letters don't make it easy for families to compare the bottom-line cost of one college to another. There's no standardization of award letters, which can make apples-to-apples comparisons difficult.
"They are quite confusing. They are a marketing document rather than telling you the real cost of college," says Mark Kantrowitz, publisher of the financial aid sites FinAid.org and Fastweb.com. "They are all about explaining how you can afford to attend that school, even if you can't afford to attend that school."
Some letters give detailed information on the cost of attendance, while many others provide incomplete or no figures so families have to do their own homework. And letters often contain cryptic acronyms or abbreviations that can confuse families and lead them to assume the aid package is more generous than it is, Kantrowitz says.
Adding to the confusion are unresolved budget fights in Congress, putting the popular Pell Grant in doubt. The House wants to slash the maximum Pell Grant — which is awarded to the neediest of students — by $845 to $4,705. With no resolution in sight, the University of Maryland, College Park and other schools are adding a disclaimer to award notifications that the Pell Grant could be reduced later.
"A lot of institutions held off letters" as long as possible, says Sarah Bauder, assistant vice president for financial aid and enrollment services at College Park.
Prospective students generally have until May 1 to respond to award letters. So get out your pencils and be prepared to flex those math skills.
Take the total cost of attendance at a school and subtract all the aid that doesn't have to be repaid. (Don't subtract loans, even student loans with low interest rates, because they must be paid back.) The result is the family's out-of-pocket cost for that school. Do the calculation for each school.
"You can have tremendous differences," Kantrowitz says. "Some colleges are a lot more generous than other colleges."
Schools, often some pricey ones, have no-loan aid packages that make them cheaper to attend than even some in-state public colleges, he says.
To get started with these calculations, though, families need to know the cost of attendance. That's not just tuition, but textbooks, housing and travel.
Zhanna Goltser, director of financial aid at the College of Notre Dame of Maryland, says in recent years the Baltimore school has added a breakdown of all costs to award letters to clarify expenses for parents.
But not all schools provide this in the award letter. Some might list only tuition and fees, which could make that school appear less expensive. Other colleges don't include any of these numbers in the award letters, though families might be able to find them on a school's website. Even then, be skeptical and do some sleuthing.
Michelle Broseus, a junior at Stevenson University in Baltimore County, reviewed several award letters last year before transferring from a school in Ohio to Maryland. Broseus checked the colleges' websites to get a better handle on costs. After looking up the information online, she discovered that one school understated the cost of housing by $500 in an award letter.
"Make sure the costs they include are accurate," advises Broseus, 21.
Families also need to review the details of grants, scholarships and other free money to find out if these funds are renewable annually and what's required of the student.
Some merit scholarships, for instance, can be lost if a student doesn't maintain a certain grade-point average. And the Teach Grant is an annual loan worth up to $4,000 that is forgiven — if students teach for a certain number of years after graduation.
Kantrowitz also warns that some schools give more grants in the first year of college than in the later years. The theory is that if students drop out early, they will have less debt to carry, he says. But this also makes the school appear less expensive upfront, he says.
Students should ask whether they can expect similar aid packages year after year from schools, assuming family circumstances remain the same.
In addition, some terminology in award letters may be confusing, particularly for families receiving notices for the first time.
Letters may refer to "EFC," for instance, which stands for "expected family contribution." This sounds like the amount a family is expected to shell out. Not so. It's a term used in the formula to ration financial aid, but the amount the family will have to pay will likely be more.