When a college accepts you, it usually sends a financial aid offer letter. Some schools call it an award letter. This letter shows how much the college will cost and how much help you can get to pay for it. Reading it carefully can save you thousands of dollars, so take your time.
First, look for the total cost, often called the cost of attendance. This number includes tuition, fees, housing, food, books, and other costs for one year. Some of these are billed by the school, and some, like transportation, are only an estimate. The cost of attendance is the full price before any aid.
Next, find the aid the college is offering, and notice that it comes in two very different kinds. Grants and scholarships are gift aid — free money you do not pay back. Loans are borrowed money that you must pay back later, usually with interest. Work-study is a part-time job that lets you earn money during the school year.
Here is the most important step. To find your real cost — also called your net cost — subtract only the gift aid from the cost of attendance. Do not subtract the loans. Many letters make the price look small by adding loans into the total aid, but a loan is not a discount. It is a bill for the future.
Finally, compare letters from different schools side by side. A college with a higher price but more gift aid can cost less than a cheaper one. If anything is unclear, email the financial aid office and ask. They answer these questions every day, and one short email can help you choose the right school.