(written by Val, College Counselor at the Center for College Planning) 

Hi Bloggers,

Right now seniors in high school are in the process of reviewing their financial aid award letters, and while we have discussed the need to read them over carefully and do research before accepting, it occurred to me that we never fully explained the process.

When looking at your award letters, look at the amount of loan options that may have already been given to you (such as the Federal Direct loans).  Keep in mind that those are loans in the student’s name and must be paid off after graduation.  Next, find the total billable cost for each college (tuition, fees, room and board) and then subtract out the free money offered to you (in the form of grants and scholarships) as well as the loan money.  (Do not subtract out  federal  work-study offered as it is solely money that the student has the potential to earn, but is not money deducted from the overall bill.  Also, know that if a school listed a PLUS loan, it is not free money, but rather a loan that a parent must decide if they would like to take out for your college education.)  That number is the amount that would be due to the school either through a loan, tuition payment plan, taking from a savings vehicle or cash.    

When determining appropriate loan amounts to finance a student’s education, it may be helpful to use a loan repayment calculator to receive an estimated  monthly payment  amount .  Take the amount to be borrowed for one year and multiply it by the number of years the student will be in school (remember, college is a multi-year investment)., so you can determine the loan payment that will be due each month.  I recommend using NHHEAF’s calculator.

When you see what a loan payment could look like, it’s important to consider the salary  you can reasonably expect to earn upon graduation, the cost of living expenses (such as rent, car, food, clothing, etc.) and determine if the payments are one that  you think you  can afford or not.  Seeing those numbers in black and white could help you make your final college decision.

Has this been helpful?   If you need help determining what kind of financial aid you were offered and how you may be able to pay the difference, please know that the Center for College Planning is here to help.  Call them at 888.7.GRADUATE ext. 119.

Choose wisely,
Val