Overview
Comparing net costs across schools requires a consistent methodology. A headline "$50K aid package" can mean very different things depending on the composition.
The Correct Formula
Net Price = COA - Gift Aid
- Gift Aid = Grants + Scholarships
- Never repaid
Out of Pocket = COA - Gift Aid - Work Study - Accepted Loans
- What your family writes a check for each year
- Loans are deferred out-of-pocket (future repayment)
Why This Matters
Schools often pack financial aid letters to look generous:
- Include Parent PLUS as "aid" (it's a loan)
- List "Total Aid" that includes loans
- Don't separate gift from self-help clearly
Evaluate Each Offer
Example: Two Similar Packages
School A: $70K COA, $40K grants, $5K work-study, $5K subsidized loan
- Gift Aid: $40K
- Net Price: $30K
- Out of Pocket (if loan accepted): $25K
- Debt after 4 years: $20K
School B: $70K COA, $25K grants, $5K work-study, $10K subsidized loan, $15K Parent PLUS listed as "aid"
- Gift Aid: $25K
- Net Price: $45K
- Out of Pocket (if all loans accepted): $30K
- Debt after 4 years: $100K (student + parent)
School B looks similar on paper but is financially worse.
The Loan Distinction
Federal Subsidized Loan
- Interest covered while in school
- Reasonable to accept up to limit
- $3,500 freshman year cap
Federal Unsubsidized Loan
- Interest accrues from day 1
- Accept only what's needed
Parent PLUS Loan
- Parent's loan, not student's
- Higher interest, credit-dependent
- Should NOT appear in "aid" total
Private Loans
- Last resort
- Higher rates, credit-dependent
- Rarely recommended
4-Year Projection
Estimate total 4-year cost and total 4-year debt:
- COA typically rises 3-4% per year
- Aid usually rises proportionally (but not always)
- Your family's financial situation may change
Work-Study Reality
- Up to $3,000-$5,000 per year
- Earned through part-time work
- Not guaranteed; finding job matters
- Subtract from out-of-pocket only if confident student will work
Merit vs. Need Aid
- Need-based: Based on FAFSA/CSS
- Merit: Based on academic profile, typically renewable with GPA
- Some colleges: Only offer need-based (Ivies, some top privates)
- Some colleges: Mix of both (most privates, many publics)
Talking to Financial Aid Office
If unclear:
- Call the financial aid office
- Ask them to walk through the package
- Confirm what's grant vs. loan
- Ask about renewability
Institutional Aid Fine Print
- Merit scholarships often require GPA maintenance (e.g., 3.0+)
- Renewable for how many years
- Can be increased or decreased based on circumstances
- Some contingent on FAFSA renewal
Sibling in College
If you have a sibling in college, your family contribution shifts. Report this on FAFSA and mention in appeals if relevant.
Gap Between Aid and Cost
If the package doesn't cover your expected contribution:
- Negotiate (if competing offer exists)
- Apply for more scholarships (external)
- Consider work-study expansion
- Look at community college + transfer path
Appeal Decision Tree
Appeal if:
- Competing peer-school offer is significantly better
- Material change in family circumstances
- Calculation error
- Non-custodial parent refusal
Don't appeal:
- Just because you want more money
- Without documentation
- With an emotional or entitled tone