Net price, aid and loans
How to read an award letter for what a year actually costs your family, and how to tell a grant from a loan wearing the same font. Free, no account, nothing saved.
Published by Taspara Solutions LLC, maker of Bloom · Published · Updated
Four numbers off the letter, and the one subtraction it does not show you.
Sticker versus net
A college's published cost of attendance is an estimated annual budget the college builds for aid purposes: tuition and required fees, room and board, and an allowance for books, transport and personal expenses. Some of it is money you owe the college and some of it is money you would spend anyway — which is why two colleges quoting the same total can leave a family with very different bills. It caps how much aid can be packaged, not how much your family will actually spend: books, flights home and personal costs can and do run past the allowance.
Net price is what is left once grants and scholarships come off that total. Colleges also publish an average net price, and that average is a real number about a real group of students — just not necessarily yours. At a public university the figure is reported over in-state students who received aid, so an out-of-state family reading it is reading somebody else's discount. That trap has its own guide: in-state vs out-of-state cost.
The award letter
There is no required format for an award letter. The three lines below behave completely differently and are routinely set in the same font, at the same indent, under one heading — and the heading is usually the word "award".
Money that generally does not have to be repaid, and the only category that belongs in a net price. Generally, not always: withdrawing mid-term can trigger a return of federal funds, and awards conditioned on enrolment, a GPA, or a service commitment can be reduced or reclaimed. Ask whether each one renews, and on what.
Your money, later, with interest. Subsidised and unsubsidised loans differ in when interest starts accruing, and a parent PLUS loan is a separate debt in a parent's name with its own repayment timing. A loan lowers what you pay this year and raises what you pay in total.
Earned, not granted. It makes your student eligible for qualifying part-time work — on campus or with an approved off-campus employer — paid as wages for hours actually worked, up to the award limit. If no job is found, or the hours are not there, the money never arrives. The award guarantees a limit, not an income.
The red flag: a letter that sums all three into one "total award" and subtracts it from the cost. That number is not a net price, and it makes the offer with the biggest loan look like the most generous one.
Where the aid number starts
Filing the FAFSA generates a Student Aid Index — a single figure computed by a federal statutory formula from your household's income and circumstances. Federally, it is what determines eligibility for Pell and the rest of the federal aid programs. It is not what you will pay and it is not a budget.
Institutional aid is a separate decision. A college's own grant money is the college's to allocate, many use their own methodology rather than the federal formula, and some require a different form — the CSS Profile is the common one — before they will consider you for it. That is why two colleges reading the same index can, and do, send back very different letters. The federal side — the form, the formula and the official calculator — lives at studentaid.gov, and whether your student can file at all is its own question: is my child FAFSA-eligible?
Two letters, side by side
Most of the difference between two offers is in what each letter left out. Three checks close that gap.
Put both letters in the same frame: full cost of attendance for the same academic year, grants only, then everything else listed separately. If one letter omits room and board and the other includes it, you are comparing two different questions.
Ask each office, in writing, which awards renew, what GPA or credit load they require, and whether the grant is reviewed against a new FAFSA each year. A four-year award and a first-year award can be printed identically.
Multiply and then check the assumption. Four years of net price, four years of borrowing, and the honest note that costs rise and awards can change — that total is the decision, not the first-year number.
This page does arithmetic on numbers you type and nothing else. It quotes no interest rate, no average debt and no college's price. Verify aid rules and repayment at studentaid.gov, repayment specifically with the federal Loan Simulator, and published costs and net prices at the U.S. Department of Education's College Scorecard. Each college's own net price calculator and financial aid office remain the authority on your family's figure.
Keep going
One letter is arithmetic you can do here. A list of colleges is the same arithmetic, kept in the same frame, every time an offer or a cost changes — which is what a family account is for: Bloom estimates net cost for each college on your student's list from your own figures, and models borrowing scenarios beside them.
Open to families
Inside a family account Bloom prices every college on your student's list in the same frame — your income, your state, your aid eligibility — and keeps them comparable.
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