Comparing financial aid award letters from different schools can be confusing. Although there is a standard set of information that should be included– total Cost of Attendance, gift aid offered, loans and work study as applicable– each school has its own format for the letter including where certain elements are listed and whether the award lists your EFC so you can see whether they’re meeting your need or not. I’ve attached my College Cost Comparison worksheet which you can use to make apples-to-apples comparisons of your financial aid awards as they come in.

As you review these letters, the main thing you’re trying to discern is what your actual out-of-pocket cost will be. That can be confusing when a school subtracts loans from your costs, for example.

The letter should state (at the top) the total Cost of Attendance. This is before any scholarships, grants, loans, work study, etc., gets subtracted.

Gift aid– scholarships and grants– should be listed next. Award letters will also state the student’s eligibility for work study and typically also offer a direct student loan. When you look at the total cost on the award letter, you need to determine whether it includes loans and work study or only only gift aid. Loans and work study are your money; you have to repay the loan and you have to get a work study job and then earn the work study award.

If you’re using the College Cost Comparison worksheet, you’ll find lines for grants and scholarships under Gift Aid, as well as for the Direct Student Loan and Work Study under Self-Help Aid.

That’s the easy part. The next step is to figure out what’s included in COA. Your first stop should be room and board. Schools with multiple levels of housing costs or meal plans get to decide whether to include high, medium or low figures in room and board. When my son got his award letters, one school used a high estimate and the other a low one, which made it appear that one school would cost about $7,000 more per year than the other. When we researched the actual options, we realized that the discrepancy was largely attributable to one school using the highest room and board costs and the other using the lowest, and that in fact the same options were cheaper at the school with higher room and board costs on the award letter than at the one quoting lower costs. If you are using the worksheet, there are lines for adjustments to housing cost and meal cost– be sure to use the “-” sign if your cost is less than what’s included in COA. Note: Many schools only give details of housing and meal plan costs to prospective students, so you might not be able to research all the options until you have access to the school’s student portal. However, you could contact the school directly to ask.

Schools also use a variety of means of estimating costs for books, which is part of your COA. You might look up syllabi for classes you’re likely to take in order to get a better estimate of your costs. For example, my daughter’s school estimated $1,800 per year for books; I doubt she will pay $1,000. Some schools include other items in COA, too. My daughter’s college includes health insurance; however, any student who already has health insurance can waive that cost.

Finally, you’ll want to look at other costs, especially travel if you’re considering out-of-state schools. Location and travel dates make a big difference, so you should go to a website like Expedia to price flights for back-to-school, Thanksgiving, winter break, spring break and returning home at the end of the year. Pro tip: Consider whether you will make a family trip to visit your student; if so, add that to the travel budget.

Once you’ve done all this, you need to compare it with your ability to pay. The Worksheet has a Family Affordability Cheat Sheet section at the bottom (named thus because it’s more of a back-of-the-envelope calculation) to help you ballpark how much you can spend annually on college. There are spaces for 1/4 of your savings, your annual contribution from cash flow, any outside scholarships your student might have earned, and the AOTC if you’re eligible. This is an annual number.

The Worksheet will give you the following data points per school:

  • Annual Funding Need is the difference between COA (net of the above adjustments) and everything the school is offering (including work study and the direct student loan).
  • Annual Shortfall is the difference between the Annual Funding Need and your Family Contribution as calculated on the Family Affordability Cheat Sheet. This is the annual amount you would need to make up through other resources such as borrowing, applying for outside scholarships, etc.
  • 4-Year Shortfall is simply the Annual Shortfall multiplied by 4 so you can see what this looks like at graduation.
  • 4-Year Shortfall Incl Loan adds the Direct Student Loan if you included that in Self Help Aid to your total shortfall.

Note that this only assumes a single student, and assumes that the student receives the same aid package every year and the family’s resources remain more or less the same every year.