Financial Aid Award Letters: Eschew Obfuscation

For years, a good friend of mine had the words "eschew obfuscation" posted on his office door. I had to look them up when I first met him, because these were not words I used. When I found out their meaning, which you will have to look up on your own, it all made sense to me. As much as he appreciated humor and irony, this friend believed in straight talk and clarity.

I am reminded of his phrase at this time of year, as I read financial award letters from various institutions when families send them into my office for comparison's sake. You see, although I have 23 years of experience in admissions and financial aid, even I have a difficult time interpreting aid award letters. I cannot imagine the difficulty prospective students and families have in trying to decipher financial letters from a variety of institutions, all using different formats and terms.

I often find myself helping a prospective student or parent understand an award offered by another institution. So, I thought it might be helpful to point out a couple of things that often lead to so-called "a-ha" moments with families. In the last three weeks of counseling families, I've run across a variety of interesting factors that do not eschew obfuscation.

Be on the lookout for the following when reviewing an aid award:

Are the college's costs updated? While I am always surprised to see a financial aid award letter that uses the current year rather than next year's costs, it happens more frequently than it should. This is terribly misleading to a family trying to make a decision. Before making a decision that assumes you are comparing "apples to apples," make certain that you are fully aware of the 2015-16 costs to attend the colleges you are considering.

Does the award include an institutional loan in addition to the Federal Direct/Stafford Loan? This year in particular I've seen more schools offer institutional loans to bring down the immediate out-of-pocket cost for a student and family. I have no objection to institutional loans and understand that they often make the difference for students to attend. But keep in mind it's a loan and not a grant, so you'll have to pay it back later. It's unfortunate that students and families don't always make that connection, because it might be listed among other awards from the institution and is not clearly identified as additional debt. Take a careful look to see whether an institutional student loan is included in your award letter.

Is a PLUS loan included in the award letter? Many institutions include a parent PLUS loan in the financial aid award letter to show that it costs nothing or very little to attend. While it is accurate to say that after financial aid, credit-worthy borrowers are eligible to get a loan for the full difference between the Expected Family Contribution (EFC) and cost to attend, colleges should not automatically assume a family will want to borrow the amount estimated. Check carefully to determine if an estimated PLUS loan (for which you have not yet applied) is included as a "credit" toward the cost to attend.

Has Federal Work Study been included as a resource to reduce your bottom-line, out-of-pocket cost? More often than not, I hear from students and parents that the work-study calculation is higher at another college, making it "less expensive to attend the other college." We must be clear on this: work-study included in a financial aid award letter is not guaranteed like a scholarship, grant or loan -- you have to work to earn it. Furthermore, it is rare that work-study earnings are used to pay tuition and fees. Students generally use their work-study earnings for spending money, books and other incidental expenses. It's an important part of the overall "do-ability" of living at college, but frequently it is confused as financial aid that helps with immediate out-of-pocket cost to attend. Too often, aid award letters present work-study as helping to lower the bottom-line cost, instead of paying students for hours on the job.

Are the renewability criteria for the scholarship offered realistic? This year I've seen a few examples of requirements needed to renew scholarships (after the first year) that seem unreasonably high, based on the student's level of academic achievement. While I know college represents an opportunity for students to start over, I also know that high school grades are still the best predictor of the grades a student will earn in college. If a student has a 2.6 cumulative GPA in high school and the renewal criterion for the scholarships awarded is a 3.5 GPA in college, one might want to think about the reality of attaining that 3.5 in the first, transitional year. If you don't know what it takes to keep the scholarship every year, ask for the criteria and decide whether that scholarship is needed for your student to attend.

Since "eschew obfuscation" is a little too high-brow for me, I've adopted the phrase "explain it to me like I am a third-grader" to convey the same idea. At my institution, we've tried to provide families with the clarity and transparency they deserve, and developed a primer on "how to read your award letter;" it might help you as you look at the letters you receive, too.

I hope the reminders offered above will help families decipher the award letters that will be arriving over the course of the next few weeks. For good decisions everyone can live with, including colleges, it's important that prospective students and families can interpret one of the final pieces in an already complex and confusing process.