Congratulations! Your family has taken the essential step of submitting a Free Application for Federal Student Aid (FAFSA®) form and your student has applied to colleges. Now, as the acceptance letters roll in, you'll soon be faced with another critical task: deciphering your financial aid award letters.

These award letters will outline the financial assistance each college is offering your family and play a significant role in determining the affordability of your student’s higher education journey. Here are some things to consider as you navigate this process and make informed decisions that could save your family money and protect against future surprises.

1. The Purpose of Financial Aid Offers

Financial aid offers, often referred to as award letters, aim to bridge the gap between your Student Aid Index and the total cost of attending a particular institution. As you compare offers, keep two fundamental questions in mind:

• What types of aid is the school offering?
• How much of your financial need is met through the aid provided?

2. The Duration of Each Type of Aid

Different types of financial aid may have varying durations. While some federal student aid, such as loans, are typically offered on a yearly basis, scholarships and grants may be awarded for one year or multiple years. Pay attention to whether the aid is renewable and how long it will be available to your student.

3. Total Costs and Cost of Attendance

Each college will provide an estimate of the total costs involved in attending for a year, known as the Cost of Attendance. This includes tuition, fees, housing, books, transportation, and other miscellaneous expenses. Understand when and how these costs need to be paid to effectively budget for your student’s education.

Calculate the difference between the total cost of attendance and the aid you’re offered to determine the “tuition gap” for each college. Don’t assume that a higher-priced school will necessarily cost more; compare aid packages to understand your actual expenses.

4. Funding That Doesn’t Require Repayment

Scholarships, grants, and work-study opportunities are some of the forms of aid that do not require repayment. Be aware of any eligibility requirements and whether the funds will be available to you each year. If you need to take out loans, carefully evaluate each loan's terms, including interest rates, grace periods, and repayment plans.

5. The Impact of 529 Accounts on Financial Aid

Families who have 529 accounts often use them to minimize student loan debt while covering as much of the college price tag as possible. While a 529 account may affect a financial aid package, the impact is usually minimal. Make sure to understand how your 529 account may influence your financial aid eligibility and discuss any concerns with the financial aid office.

By carefully reviewing each offer and considering factors such as types of aid, duration, total costs, and repayment terms, you can effectively manage your finances and send your student off on their higher education journey with confidence.

Virginia529 does not provide legal, tax or financial advice. Please consult a professional if you have questions about your legal, tax or financial situation.