For a one-page document, schools make financial aid award statements incredibly difficult to understand. What you really need to know is the difference between the “free money” that you don’t pay back and the money that you’ll have to earn or pay back later to understand the true cost of each school on your child’s list. Let’s go through the details:
Cost of attendance. This is the “sticker price” of each school on your child’s list. It is the total cost when adding together tuition, room and board, books and the other expenses associated with a year of college. This cost reflects what the cost of attending school would be if your student doesn’t receive any scholarships or financial aid.
Many families that we talk to know these sticker prices well. When they compare Boston College to UMass, they think of the estimated 2024 cost of attendance of attendance of $85,600 at BC vs $33,325 at UMass Amherst. What many people fail to realize is that the number of students actually paying this full sticker price at either school is very small.
While private colleges usually have a higher cost of attendance than in state public schools, they are often more generous when it comes to handing out the “free money” in the form of scholarships and need-based grants. As a result of this, private colleges shouldn’t be totally ignored from the college conversation with your child.
So what is this “free money”? Here, we’re referring to grant money that directly reduces the cost of attendance on a dollar-for-dollar basis. The most common forms are academic and talent-based scholarships, as well as need-based financial aid. When you see scholarships and grants on your financial aid award statement, these do not need to be paid back.
What needs to be paid back? When you see work study and federal loans on your student’s award statement, they don’t necessarily reduce the cost. Work studies are federal programs that allow your child to work part time on campus while attending school. While they can help to reduce the cost, your student must work on campus to earn the money, so it’s not free.
When you see unsubsidized and subsidized loans on an award statement, these can be misleading as well. While they can be a solid funding option with low interest rates, they are still loans that will need to be paid back in full with interest after your child graduates.
Need some help deciphering your child’s award statement? Don’t hesitate to reach out!
All the best,
Andrew Holmes, Certified College Planning Specialist™
Revised since originally published on December 20th, 2021
 https://www.bc.edu/bc-web/offices/student-services/financial-aid/undergraduate/how-aid-works.html https://www.umass.edu/financialaid/undergraduate/undergraduate-costs