Financial aid package components: Part 1

See what goes into a typical US college financial aid package. Then, go to https://www.khanacademy.org/college-admissions for Khan Academy's complete college admissions and financial aid resource!

- [Voiceover] We are
here with Karen Cooper,

the Director of Financial Aid
here at Stanford University.

Karen, thanks so much
for being with us today.

- [Karen] Oh, you're very welcome.

- [Voiceover] Karen, one
of the big things that

students often struggle with
in the financial aid process

is they receive offer letters
from several different schools

and they come in several
different formats.

They all look different.

So, as a student, what should I be doing

to make sense of this information,

organize it for myself so I can actually

compare them across each other.

- [Karen] That's a really good question.

So, I think the important thing to do is

pull out the information

that you're gonna compare from each one

and you might have to
search around for it.

But, what I would start with is

the estimated cost of attendance.

So, almost every school is going to have

a full estimated cost of
attendance right there

on their award letter for you.

That includes these components
like tuition, room and board

the things that we are
billing students for.

As well as allowances for books,

personal expenses, transportation.

So I want you to think about
each one of those items

and think about whether that's a realistic

estimate of the cost at
that institution for you.

- [Voiceover] Great, so when I receive

a financial aid award
letter, they may give me

the estimated cost of attendance,
will they always include

all of these items in
their estimated cost?

- [Karen] They may not break
down all of the details for you

and some schools might include
just the direct cost, the

tuition and housing expenses
that they're billing you for,

so you might have to go look for what's a

good book allowance at that institution.

But if it's not directly
there on their award letter,

it should be on the
school's website somewhere.

- [Voiceover] Okay, so
the first thing I do

is I really figure out
what is the full cost

to attend this university,
tuition, room/board, books,

transportation, other
cost, add that altogether,

I've got my estimated cost.

- [Karen] That's right.

- [Voiceover] Where do I go from there?

- [Karen] Well, I think
the next thing to look at

is the free money.

Where's the good money
that they're giving you,

that they've offered to you?

So, you're gonna wanna look
for any grants and scholarships

and usually, those are
very clearly identified

on an award letter.

So the total amount of
scholarships from the school,

if there are any federal
grants being offered

or state grants or any outside
sources of scholarship funds.

- [Voiceover] Great.

And so once I have my
estimated cost of attendance

and I have my grants and scholarships,

what do I do next?

- [Karen] The difference
between those two figures,

I think is a really
important thing to look at

as you're comparing from school to school

because whatever that
cost of attendance is,

less all of the scholarships
and grants you've been offered,

that is the amount that's
gonna come out of your pocket

one way or another.

Net cost is another thing
that that's often labeled.

Now, you may be offered
loans or work-study

to help meet those net cost,

but anything else that's not covered

by grants and scholarships,

you're gonna be responsible
for it one way or another.

- [Voiceover] Okay, so after
we get that net cost number,

before we talk about
my family contributing,

which is one of probably
the toughest thing to do,

what are some of the different options

that the school will give me?

- [Karen] I think the next
thing to think about is

have you been offered
work-study eligibility?

An opportunity to work
during the year on campus

that allows you, as the student perhaps,

to cover some of those personal expenses

that are listed in the cost of attendance.

- [Voiceover] And during work-study,

I'm still a full time student.

- [Karen] That's right.

Typically, work-study
jobs, students are working

seven to ten hours a week, so
a reasonable amount of work

that allows you to stay
engaged with your studies.

- [Voiceover] So, in
addition to work-study,

I know that oftentimes on
financial aid packages,

there's a Stafford Loan
or a Perkins Loan listed,

what exactly are those loans?

- [Karen] Those are loans
that the school is suggesting

that you will need to
help cover that net cost.

They've determined that amount based on

the information that you've provided

on your financial aid applications.

So, it's the amount
that they're suggesting.

It doesn't necessarily mean
that that's all that's available

so you might, if you are thinking about

maybe borrowing more or working less,

those kinds of options that
you have available to you,

you can talk to the financial
aid office about that.

- [Voiceover] Great.

So now that we understand work-study and

the Stafford and Perkins
loans that might be out there,

how do we actually get from net cost to

what my family's actually
going to have to pay

on a yearly basis?

- [Karen] Right.

So, your net cost is just
the overall picture of what

you and your family are
gonna be responsible for,

but you, the student,
may be able to pick up

some of that net cost with
the work-study and loans.

You'll wanna subtract those
amounts from the net cost

and that remaining amount
is what you need to sit down

with your parents and
have a conversation about

how are we, as a family,
going to cover these costs?

Generally, the school
is expecting that that

remaining amount would be
picked up by your parents.