Before College: It’s Essential To Calculate Your Unmet Financial Need As Your Financial Aid Award Letters Arrive

If you completed the Free Application for Federal Student Aid (FAFSA) for your freshman year of college in 2020-21, you’ll soon get financial aid award letters from colleges that admitted you if you listed them on your FAFSA.

Unfortunately, many award letters, which offer financial aid, don’t list unmet financial need. But calculating it is essential.

Start with what you’ll pay to attend each college — it’s called your cost of attendance. It includes:

Tuition and Fees: Charges required for you to take a full-time load of classes.

Books and Supplies: What full-time students’ textbooks and class materials typically cost.

Room and Board: Costs for student shelter and meals, plus utilities in off-campus apartments.

Transportation: Expenditures for occasional trips between campus and home.

Miscellaneous or Personal Expenses: Clothing, eating out, event tickets, toiletries, etc.

Warning! Some colleges “fudge” these costs to appear less expensive than they really are. If possible, ask students already attending an institution about its hidden costs.

Next, subtract your financial aid. Your award letter may list:

Grants and Scholarships: Amounts you’ll receive from federal, state, and institutional programs providing aid you need not work for or repay. But remember, colleges may not yet know about scholarships from private sources, so factor those in once you’re sure you’ll receive them.

Federal Direct Loans: What you’re authorized to borrow in Federal Direct Subsidized and Unsubsidized Loans, up to $5,500. While award letters usually don’t include Federal Direct PLUS Loans, most parents may request and borrow them for up to your cost of attendance minus your grants, scholarships, work-study, and loans.

Borrow conservatively. Federal Direct Loans must be repaid with interest at rates that are currently 5.05% for students and 7.06% for parents, and that could be higher in 2020-21. So remember, you can and should reject or downsize loan offers you don’t need.

Work-Study: You may also be awarded opportunities to earn money through federal and/or state part-time job programs. More about working below.

Most freshmen and their families use two other sets of resources to cover cost of attendance:

College Savings and Family Income: Hopefully such savings and income will meet or exceed your Expected Family Contribution (EFC) — costs you and your family are expected to pay. EFC will be the same at every school because it’s calculated by plugging your FAFSA data into a formula set in federal law.

Your Earnings at School: Even without work-study, you can probably still find part-time employment while taking classes. Don’t fear it — 43% of full-time undergraduates work, and research has long shown that freshmen working 10-14 hours a week average higher GPAs than freshmen who don’t work at all.

What remains is your unmet need — what you’ll have to cut from your cost of attendance, find from still other resources, or both. But eliminating unmet need isn’t easy. The most recent data available show it averaged $4,920 at public 2-year colleges, $9,134 at public 4-year institutions, and $13,844 at private 4-year colleges back in 2015-16. It’s often more now.

Here’s the harsh reality: if you can’t eliminate your unmet need at a particular college, you can’t afford that college and shouldn’t enroll there. It’s time to consider your other options.

Grappling with unmet need? Let College Affordability Solutions help. Contact us at (512) 366-5354 or collegeafford@gmail.com to arrange a no-charge consultation.

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