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Five Questions and Answers About Your Financial Aid Offers
You’ve applied to a variety of schools and are starting to receive financial aid offers. You may be finding it difficult to understand and compare offers because each financial aid offer looks different. We've put together these FAQs and answers to help you interpret your financial aid offers and determine how much each school will cost you, so you can make an informed decision about school selection.
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1. What's a financial aid offer, and how and when will I receive it?
The financial aid offer is a notification that outlines the types and amounts of financial aid the school is offering you. Most schools won’t send you an offer until you’ve been admitted. It might come in the form of a paper letter, or you may receive an email to view your offer in your student portal. The offer may include scholarships and grants, which are funds that do not have to be repaid. Typically, a Federal Direct Loan will be listed as part of your financial aid offer, but if borrowed it will need to be repaid. You may also see work-study on your aid offer. Work-study funds are not available to pay the tuition bill as they must be earned once you're on campus and working. Check out our video, Understanding Financial Aid Offers for more details about these types of aid.
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2. How is my financial aid calculated?
Your aid eligibility will be determined by the Financial Aid Office (FAO) at each school that receives your Free Application for Federal Student Aid (FAFSA) once you’ve been offered admission. Some schools also require a supplemental financial aid form, the CSS Profile. The FAO uses information from your financial aid application(s), in combination with the cost of the school and the aid available, to determine the amount and types of aid you are eligible to receive. Because the cost and amount of aid varies by school, your financial aid offer will likely be different at each school.
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3. How do I compare financial aid offers?
To get an “apples-to-apples” comparison of your aid offers you’ll need to gather a few pieces of information. First, total up the aid offered into three categories – grants and scholarships, federal student loans, and work study. You’ll also need critical direct cost information, including tuition, fees, and living expenses. Ideally this information will be found on the financial aid offer, but it may be in supplemental information that comes with the offer or require research on the school’s website. Next, enter the information into FAME’s Comparing Costs and Aid Offers worksheet. The worksheet provides a side-by-side comparison of your financial aid offers, and it will even do the math for you! Be sure to check out the “net cost before loans” to see what each school actually costs.
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4. Should I automatically borrow the Federal Direct Loan included in my aid offer?
If your tuition, fees, and living expenses are not covered by grants and scholarships, you’ll need to figure out how to cover the remaining balance as well as other costs like books, supplies, and travel. First, focus on funding sources that don’t have to be repaid like scholarships, summer earnings, and savings. But, if after doing the math you decide to borrow, consider Federal Direct Loans first. Federal Direct Loans are different than most other student loans as they are not credit based and don’t require a co-signer. Additionally, these loans have flexible repayment plans and may even be eligible for partial forgiveness. If you decide to borrow a Federal Direct Loan, know that you don’t have to borrow the full amount offered. Contact your school to reduce the amount if you can get by with borrowing less.
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5. How much borrowing is too much?
The amount of student loan debt that’s considered manageable varies by individual and family. Important considerations include how many years you are going to need to borrow as well as your potential earnings when you graduate. One rule is to limit borrowing to no more than your annual starting salary when you graduate. You can also use FAME’s Student Loan/Salary Calculator. To get an estimate of your first-year salary based on your occupation, go to CareerOneStop.org. If your estimated borrowing doesn’t seem manageable for your desired school, explore ways to reduce your costs, increase your aid, or even consider attending another college. As challenging as that may seem, it’s important to keep in mind the life you want to live after college as well as your life while in college.
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The Finance Authority of Maine (FAME) does not discriminate in the administration of any of its programs or in its employment practices on the basis of race, color, national origin, age, gender, religion, physical or mental disability, political affiliation, marital status or sexual orientation. FAME is an equal opportunity employer, provider and lender.
FAME provides links to other websites as a convenience and does not endorse or guarantee the content, accuracy or usability of such sites.
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