Look carefully at those financial-aid offers

The formula seems so simple:

Cost of Attending: $32,000
Expected Family Contribution: $11,000
Need: $21,000

College #1
Grant $5,000
Scholarship $8,500
Subsidized Loan $3,500
Unsubsidized Loan $2,000
TOTAL AID AWARD $19,000
UNMET NEED $2,000

Loan Amount:  $5,500  x 4 years of college = $22,000

Bottom line for college #1:  The family will be expected to come up with $13,000 each year assuming the Expected Family Contribution derived from FAFSA remains the same.  It will be important for the student to have a summer job for which much of the earning can go toward college costs.  Additionally, this student should contact the financial aid office to see about the Work/Study Program to earn income while in college. Both of those jobs can make up for the $2,000 of unmet need.  At the end of four years, the student will have a total loan in the amount of $22,000—similar to the cost of an average automobile.

College #2
Grant $4,000
Scholarship $5,000
College Work Study $1,500
Federal  Direct Subsidized Loan $3,500
Federal  Direct Unsubsidized Loan $2,000
Federal Parent PLUS Direct Loan $5,000
TOTAL AID AWARD $21,000
UNMET NEED    0

At first glance, this offer looks better than the college #1 offer.  All need has been met.  But look more closely.

Total Loan Amount: $10,500 x 4 years of college = $42,000

Bottom line for college #2:  The family will be expected to come up with $11,000 each year assuming the Expected Family Contribution derived from FAFSA remains the same.  It will be important for the student to have a summer job for which much of the earning can go toward college costs, perhaps lowering the amount of loan that will be necessary.  At the end of four years, the student and parent will have a total loan in the amount of $42,000—similar to the cost of a luxury automobile.

Observation:  While college #2 pronounces that all need has been met, the burden of a much higher loan is being placed on this student and family than the college #1 offer.  It is very important to look at that debt.

The Question: Is attending college #2 worth carrying that heavy debt when a more reasonable debt load is available at college #1?

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