1. Figure out the amounts for the Direct Costs (Tuition & Fees + Room & Board if living on campus) and the Indirect Costs (estimate for Books, Transportation and Personal Expense) – When determining how much you are going to need to borrow if any at all, we encourage families to try to pay for the Indirect Costs out of their own pocket. This is one way to keep your debt load down.
2. Determine the amount of Gift Aid – Gift Aid is the “Free Money” in the forms of Grant and Scholarships
3. Take the Direct Costs and subtract the Gift Aid and any amount you can pay out of pocket from savings or 529 College Savings Plan. (Direct Costs - Gift Aid - Out of Pocket money). This is your Remaining Cost you will need to come up with.
4. If you need to borrow money for school, the Federal Stafford Loan is typically the first loan you should take out. Take that Remaining Cost and subtract the Stafford Loan. (Remaining Cost – Stafford Loan) The remaining balance is what we call the Gap. You will need to look for options to fund that Gap.
In the past, families were told that a PLUS Loan, (Federal loan in the Parents' name) would be the best option to fund that Gap. But right now, with the interest rate and amount of fees that the Plus Loan has, many families could get a better deal with a Private Loan. Here is a link with more information to help you if you need to look into a Private Loan: https://www.icansucceed.org/financial-aid/student-loans/private-loan-options
One more tip I'll mention is when you are looking at award letters, remember this is just for one year. Students usually go at least 2-4 years. Families need to think in terms of the amount they are borrowing for not just one year, but what the estimate is for borrowing for ALL the years the student will be in college. A good tool to help look at your total college expenses is called the College Funding Forecaster: https://www.iowastudentloan.org/smart-borrowing/college-funding-forecaster/college-funding-forecaster.aspx
ICAN is holding an online how-to on comparing award letters on Thursday, March 14 – Covering College Costs: Understanding & Comparing College Award Letters at Noon. To register visit https://attendee.gotowebinar.com/register/4777714869798787595
If you would like help in reviewing your award letter(s), schedule an appt with us at one of our locations by going on-line at www.icansucceed.org/apt or calling us at 877-272-4692. We would be happy to help!
Good luck to all the HS seniors with your college decisions!
Erick - ICAN Ankeny and Des Moines Centers
