We’re almost there: acceptance letters are arriving and the May 1 decision day is right around the corner. For most families, how much schools cost is part of the decision making process. But comparing award letters from different schools might seem like comparing apples to taco salad. The good news is, all offers need to show total cost of attendance, gift aid offered and any self-help aid– work-study and loans as applicable. Unfortunately, they have pretty broad latitude in how they do it. And really, there are two pieces to comparing college cost: what’s in the award letter and what’s in the school’s cost of attendance.

The award letter is the easy part, if you know what you’re looking for. Remember that your goal is to determine what your actual annual out of pocket expense will be at each school. The award letter will show–at the top– the total cost of attendance before any aid is subtracted. Gift aid usually comes next and can have multiple components. Then the award letter will state whether the student is eligible for work-study or subsidized loans; in addition, it may include an unsubsidized Direct Student Loan. Then, the student’s net cost will be listed. Your job in reviewing award letters is to remove the “self-help” aid– loans and work-study– to figure out your actual out-of-pocket cost. When doing this, double-check whether the aid amounts are listed annually or by academic term. The attached College Cost Comparison Worksheet lets you separate out all the items in your award.

The hard part is figuring out what’s included in Cost of Attendance. This is tricky because there are two competing philosophies in cost of attendance, based on the rule that financial aid and borrowing cannot exceed total cost of attendance. One philosophy– typically used by schools that are generous in meeting financial need– is to include all costs a student might incur under cost of attendance. The other philosophy is rooted in the idea that by reducing the cost of college, schools might help students to minimize student loan debt. And then there’s everything in between. In order to make apples-to-apples comparisons, you need to find out a few things:

  • Do you have options with housing costs or meal plans? If so, check out your options rather than just assuming what’s in your award letter is what you want. My son applied to two schools; one used the highest priced dorm and meal plan in cost of attendance and the other used the lowest. It made it seem like one school cost $7,000 more annually than the other, when in fact the costs were pretty similar.
  • Can you opt out of any of the COA items? My daughter’s school includes the student health insurance plan in COA; it’s waived with proof of insurance. This makes her school almost $5,000 cheaper annually than the published COA.
  • Books and personal expenses likely have little to do with what’s listed. Best bet? Ask the school to put your student in touch with a current student in the same major and just ask them. My daughter’s school quotes $3,000 annually for books; my son’s says $800. Neither of those is correct, though for some majors they could be close.
  • If any school is not local, figure out what your annual travel budget looks like. Your student will travel to campus in the fall, may come home at Thanksgiving, will make a roundtrip for winter break and likely spring break, and then come home at the end of the year. Your budget should also include a family visit to campus if that’s something you’d do.

A good way to get a handle on these hidden costs– and many many more topics– is to join the Facebook parents’ page for each school your student is accepted to. These groups are an excellent resource for insider information about a school.

The College Cost Comparison Worksheet lets you make all these adjustments and then compare the result 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.