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Personal finance
Course: Personal finance > Unit 9
Lesson 6: Financial aid packagesFinancial aid package comparison: Part 3
Want to join the conversation?
- Do you have to pay extra to live at the college?(4 votes)
- Yes. There are room and board charges at every college usually around 10k.(6 votes)
- Are their colleges in other countries?(0 votes)
- Certainly! For example, the University of Oxford, the University of Cambridge, the University of Leeds, and the University of Warwick are in Great Britain.(7 votes)
- Could someone please tell me what % of students get these (univ b, univ c) kind of offers. I presume such "too good to be true" offers are available to only us citizens. Right?(3 votes)
- Is the net cost for one year or four years?(3 votes)
- why is it that a more expensive collage dose not accept student loan or work/study? 2:25(2 votes)
- If you participate in a work-study program, do you get paid the money and you just have to pay it right back (maybe even a certain percentage of what you made) or does the school just convert your hours to $ and you never actually see your paycheck?(1 vote)
- The work-study programs in which I participated while a student (decades ago) came with a job assignment to some office or department at the school. I got no cash in my hand. I'm assuming that if I failed to show up for my work hours, or performed poorly during them, some kind of word would have been spoken. Thankfully, my duties were light enough that the hours spent on them were rarely onerous.(1 vote)
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.