College acceptance season is upon us. But in all the excitement, it is also time to ensure you are not about to bury yourself, or your child, in student loan debt.
The college application process can be tiring, but your work is not done after you submit your applications. Once you hear back from colleges, you will likely be provided financial aid offers as well. How should you go about comparing different schools’ financial aid offerings, while ensuring you are not going in over your head?
Specific Iowa College and University Application and Financial Aid Deadlines
Depending on the school you apply to, you will begin hearing back about financial aid awards as soon as January. Some schools (large public schools in particular) may be slower to approve aid.
As a reminder, here are application deadlines and important links for scholarship opportunities for nearby Iowa schools:
|School||Application Deadline||Financial Aid/Scholarship Deadlines||Scholarship Links|
|University of Iowa||May 1st||March 1st||See Scholarships available for University of Iowa students here|
|Iowa State University||May 1st||December 1st||See scholarships available for Iowa State students here|
|University of Northern Iowa||Rolling||January 15th||See scholarships for University of Northern Iowa students here|
|Coe College||Early Decision: November 15th
Early Action: December 10th
Regular: March 1st
|Considered upon applying||See scholarships for Coe College here|
|Grinnell College||Early Decision: November 15th
Regular: January 15th
|Merit: December 1st||See more scholarships for Grinnell College here|
|Cornell College||Early Action: Nov 1st
Regular: February 1st
|Considered upon applying||See scholarships for Cornell College here|
|Drake University||Early Action: December 1st
Priority: March 1st
|Some as early as December 1st||See scholarships for Drake Univeristy here|
Deciding on a College After the Acceptance Letters Come In
Once you have received your acceptance letters, there is still work to be done. It is important to ensure that you will be able to afford the tuition and make the most of your offers of financial aid. Calculating whether or not you can afford to attend a certain university will be dependent on your family’s Expected Financial Contribution (EFC), the cost of attendance (COA) for a university, and the amount of financial aid available. Here is how you can start:
Comparing Financial Award Letters
If you received an award letter with your acceptance letter, you are likely looking at a combination of several different kinds of financial aid. Award letters may offer grants and scholarships, student work-study options, and various types of loans. But not all financial aid is created equal. First, let’s look at each type of aid, then we will look at a few examples on how to compare award letters from different colleges.
Grant, Scholarships, and Other Gift Financial Aid
Gift aid is the preferred type of financial aid. It does not have to be paid back or require you to work. There may be stipulations to the award, and it is important you understand the details of the award package. Some questions you should ask before accepting your award:
It is also important to know if your financial aid offer is official, or only an estimate. Your award letter should clearly state whether you are being offered the shown amount, or if you are being shown an estimate of aid based on your calculated need.
These offers represent the amount of earnings you can expect from a Federal work-study position, or a job that the University may help you obtain. Depending on the offer, work-study offers should be evaluated by:
It is important to understand what will be asked of you by accepting work-study aid. Is the student comfortable working 20 hours a week while attending school full time? Is another university offering similar aid with less hours per week required? Knowing the answer to these questions is important to compare aid offers.
College loans can be a great aid in helping you pay for college, but it also means long term debt for the student or parents that must be paid back. It is important to understand the long-term impact of accepting loan offers. Some important questions to ask:
You may see offers for Direct subsidized and unsubsidized loans, Perkins loans, PLUS loans, and more. Each type of loan may have different interest rates, payback terms, flexible payments options, etc.
Comparing Financial Aid Offers
Because not all financial aid is equal, it is important to sit down and compare the details of each offer. When you have all of the details together, only then can you sit down and objectively determine your best option.
For example, a prospective student in Iowa may be looking at a combination of acceptance and award letters that look like this:
Many families may quickly gravitate towards the school with the cheapest out of pocket (or family share) costs. But that may not be the best, or ultimately even the cheapest choice.
Notice in our example above that 70% of Iowa State’s aid package is loans, which will ultimately have to be repaid. The cost for Iowa State for this prospective student will be cheaper while he or she is in school, but they will be repaying loans for much longer than had they chosen an aid package that consisted of more grants and scholarships from another school.
What if You Don’t Have All of Your Award Letters Yet?
Even if you don’t have a finalized scholarship or grant letters from certain schools (or you are planning ahead), you can begin to start estimating the costs of attending the universities that you are interested in.
To do this, you can go the college or university website and look for a “Net Price Calculator”, which they are required to have. Here are links for calculators from some of Iowa’s more popular colleges and universities:
For example, for Iowa State University you can find the Net Price Calculator from the university’s homepage:
The calculators will ask for some of your family’s person financial information like income, assets, family size, etc. and provide you an estimate of financial aid you may be eligible for, and return a result like this:
Some college calculators are better than others. While Iowa State’s lumps all aid into one line some calculators, like Cornell College’s Net Price Calculator are much more detailed:
Without an official letter or scholarships, these calculators will just help you make an estimation. However, they still provide valuable information for your college planning.
How Much Can You Afford?
Whether you are planning ahead before applying to colleges, or crunching the numbers before sending your acceptance letter, it is important to ensure that you will not be stretching your finances too much by selecting a certain university.
Step One – Determine Out of Pocket Costs
To start, let’s take the information from the table above showing various aid offers (or Net Price Calculator results for those planning ahead) from 4 different Iowa schools. Our first step is to determine the true out of pocket costs to attend.
For the University of Iowa, out of pocket costs were calculated at $11,223 per year. If we assume that out of pocket costs remain constant over 4 years, the student and parents are looking at a total out of pocket cost of $44,892.
Step Two – Calculate Funding Options
Next, determine how much of that cost you are able to pay from existing savings or cash flow. For example, assume you are able to pay $4,500 per year from college savings accounts, such as a 529, and current cash flow. That leaves you needing to cover the leftover $6,723 per year.
Step Three – Make up the Difference
You have several options to pay that $6,723. Certain schools may offer payments plans, colleges may offer additional loans, there are private loans available, parent PLUS loans, and more.
Where else can you look? Many colleges post additional scholarship opportunities online. Here are scholarship pages for some of the most popular Iowa schools:
Step Four – Is It Affordable?
Now you can determine what your finances will look like after you graduate. In this example, let’s assume you took out a private student loan to cover $6,723 of costs annually. Using an online student loan calculator and making an assumption on interest rates and loan terms, we can estimate that you will have a monthly payment of $223:
And you can also calculate your Federal student loan payments with the calculator available on the U.S. Department of Education website.
Depending on the types of loans you were offered as financial aid, you may be looking at a monthly payment around $270, with variations based on your chosen repayment plan:
After graduation, this student is looking at around $500 per month in total for their student loans. Is this reasonable for you?
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