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Financial aid package comparison: Part 3

Learn how to compare financial aid packages from different universities. Discover the importance of net cost, scholarships, and family contributions. Understand how work-study and loans can affect your costs. Remember, the most expensive school might not always cost you the most!

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Video transcript

- [Voiceover] We're here with Karen Cooper, director of financial aid at Stanford University, and Karen, once again, thank you so much for being here with us. - [Voiceover] Happy to be here. - [Voiceover] So now, what we're looking at is three different universities, and what we've done is we've taken the time to comb through the financial aid letter that each of them gave us and put it in a form that is consistent so that we can actually compare them. - [Voiceover] Sounds great. - [Voiceover] And we have the estimated cost of attendance here, tuition, room, board, all that. We have subtracting out grants and scholarships and that's giving us the net cost. So just taking a look at this top part of our financial aid comparison, what are the big things that jump out at you? - [Voiceover] So the first thing I would look at is this net cost calculation. So clearly these three, we've got three very different situations here, $10,000 at School A, $15,000 at School B, and $7,000 in net cost at School C which is really interesting. So you've got three very different options here available to you. And then I would look at, well how did we get here? And interestingly enough, the cost of attendance at these three institutions, is actually the most expensive institution at $60,000 that has the lowest net cost, which wouldn't be what you would always assume from the beginning, which is why I think it's good to do this exercise. - [Voiceover] Absolutely. And the net cost, if I'm remembering correctly, are actually what your family is going to owe. - [Voiceover] That's right. - [Voiceover] Or be responsible for. - [Voiceover] So in one way or another, you're responsible for that amount. The schools may be offering you some help to meet that amount through work-study or loans for example, but it's gonna come out of your pocket either now or later. - [Voiceover] Okay, so what you're saying then is because of the really pretty drastically different scholarship amounts between University A, University B, and University C, the net cost that we're paying actually is very, very different from the estimated cost of attendance that we began with. - [Voiceover] That's right. - [Voiceover] Great. So then, once we have that net cost, you know what we're gonna owe, either now or down the road, through work-study, through loans, through my family contributing, you know, I look below at some of the different ways that they are suggesting that I cover those net costs. And I see that they're pretty different. Let me start with University C because they were the one that had the lowest net cost. But interestingly, they had some of the highest family contributions. So the highest amount that they're actually suggesting that my family pay, you know, earlier, rather than through work-study, or through loans. So, do people typically get family contributions that are different form different schools? - [Voiceover] It's highly possible for that to happen, even when you've submitted the same information to each school. So it really has to do with the school's own institutional policies for how they award their institutional aid. So they're going to look at that information that you've provided differently. So, yes, it does happen to students all the time, and what I suggest is if you've got dramatically different family contributions at need-based institutions, schools that are offering need-based aid, I might go back and question the one that is expecting more of my family to just make sure that they've considered everything that was in my application. - [Voiceover] Okay, and, in this case, my gut reaction is, based on financial aid package alone, University C in the big picture, net cost, is asking the least. So financial aid-wise, it's the one I want to lean towards, but then I look down and say, well, maybe my family can only cover $5000. So if I go back to University C, they may be able to adjust, offer some work-study, or at a minimum, perhaps package some of these Stafford loans so that I can take a loan, and help to cover this. - [Voiceover] That's right. I would go in and talk to University C, or at least give them a call, and say do you have work-study available? Is that something that I could sign up for, and what about loans? So the federal loan programs, all students are going to be eligible for a minimum, as long as you are eligible for federal aid, you're eligible for a minimum of $5,500 in the Stafford loan program, might be subsidized, might be unsubsidized, but a minimum of $5,500. So you know you're going to have at least that amount to help you with that family contribution. - [Voiceover] Okay, so they could definitely add that in here. - [Voiceover] That's right. - [Voiceover] And that could move this family contribution down. Below either of these. So it looks like, you know, University C is a very generous package, but we know that not every university is going to be able to offer a package like this, not every student is going to get a package like this. So why don't we move between University A and University B, and kind of compare those to each other. - [Voiceover] Sure. - [Voiceover] So I look down at the family contribution, which to me, in some ways, again, gut reaction, is for the most important thing, and I don't think that's, you said, net cost, look at that first, but I see family contribution of $5000, $5000, and I say, well, that's how much my family has to pay now, so walk me through why these aren't equal, if they're truly not. - [Voiceover] Well, what I want you to look at is the difference between the work-study that's being offered and the loans that are being offered. So at School B, they are asking for $4,500 in work-study during the year. That is significantly more than what School A is asking the student to work. That might be due to a couple of different factors. Maybe at School B the minimum wage that they pay their student on campus is significantly higher. So the questions to the financial aid office would be how many hours a week do I have to work to earn that amount, and I think that would be an important thing to understand and compare School A to School B to decide if that package really is comparable. - [Voiceover] Okay, and sort of similar on the loan front. - [Voiceover] That's right. It's obvious that School B is asking you to borrow more money than School A is. So in the long run, although you don't have to pay that right now, when you're in repayment after you've graduated from school hopefully, you're going to have more to pay back than you would at School A. I think the point is, when you look at the net cost, there's a $5000 difference between those two schools, and it may come from different places. It's for you to consider how badly you want to be at that school, and whether or not you're willing to take on that level of indebtedness, or work during the academic year. - [Voiceover] Great. Big picture, any other things I need to be looking at when I'm comparing these three offers? - [Voiceover] I think this is a really good way to compare by looking first at that net cost. It gives you, I think, the cleanest picture of what you're costs are going to be at that school. - [Voiceover] Great. Karen, thank you so much. - [Voiceover] Thank you.