The financial aid award letter

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After you apply for financial aid, colleges and universities will send a letter detailing the cost of the school and what aid you are eligible to receive.

First, evaluate whether the costs are realistic. If you live particularly far away, for example, it may cost you more to travel than the school estimates. Of if you live at home, the costs may be less.

Then look at how much "free" money you are being offered, such as grants and scholarships that do not have to be paid back. Be clear on whether these are offered for just one year or for more years. If they are offered for more than one year, be sure you understand what you must do to keep them, such as maintain a certain grade point average.

The amount of grants and scholarships can vary widely for the same student from school to school, so compare schools carefully.

Next see whether you are eligible for a work-study job which will help to pay some of the costs.

Consider how much the parents and student can contribute from savings and income.

When all other resources have been considered, look at the loans, which have to be paid back unless there is a special forgiveness program that applies to you.

The lowest-cost loans are federal ones, and there are varieties based on income and loans that aren't based on income. Interest rates and fees vary from federal loan program to loan program, so be certain you understand the full costs of any federal loans.

If all of the above aren't enough to pay the bill, private loans, which generally are more expensive than federal ones, can be considered. The rates and conditions of such loans vary widely, so shop carefully.

Be realistic about how much your future income might be to determine whether you can afford the loans. Be clear on how much you would be expected to pay and when.

If your loan burden would be too heavy, consider a lower-priced school.


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