College Planning Center of Rhode Island

College Planning & Financial Aid Advice

5 Reasons to Save Summer Earnings

Posted by Lindie Johnson

Jul 2, 2014 2:21:00 PM

If you are a high school or college student, you may be tempted to blow your summer earnings on tasty meals out, trips to the amusement park, or a new wardrobe - but there are many good reasons that you should be paying yourself first before you spend your income. 

Trust me, I get your temptation to take home that beaded mini or a new set of hubcaps! I did plenty of spending and little saving when I was in high school and college and, believe me, I had little to show for it in the end. After graduation, I was left with a big credit card bill and no safety pad. This was not an ideal way to start out life on my own.

Learn from my mistakes and remember these 5 top reasons to save every time you get paid and each time you are thinking about pulling out your wallet. 

1. Reason #1: You will graduate with less debt. 

The average student graduates from college these days with over $29,000 in student debt, according to the Project on Student Debt. If you are going to school in Rhode Island, that figure is more like $31,000. You can easily be one of the students that brings that average down, but it takes some careful planning and serious will power. Just put a little aside each paycheck before you spend a dime. 

2. Reason #2: You will thank yourself later. Credit_Card_iStock_000019484812Web

Have you ever heard the saying, "live like a college student now so you don't have to later?" Not a lot of students really get excited about taking that advice, but you should! Would you rather be eating Ramen Noodles now or when you are done with school? 

3. Reason #3: You're going to want get rid of that sweater next year anyway. 

"But I neeeeeeed it!" There are lots of expensive (and even not-so-expensive) things that you like now and  feel like you need that you could care less about in 6 months or a year. Plan your purchases very carefully, don't make impulse buys, and ask yourself, "will I really still want this in a year, a month, or even next week?!?!?" If the answer is no, or even worse, if you are going to have to pull out your credit card to pay for it, simply walk away. I repeat, walk. away. 

4. Reason #4: Books are not cheap. 

Yes, you can get used books. And yes, you can buy some online. But college text books are still not cheap. When I was in college (and that was more than ten years ago, to date myself a bit), I would regularly spend $500 or more a semester on books, reading packets and other college supplies. Remember that. If you save your summer earnings, it will still hurt to spend this much on books, but at least you won't have to swipe your credit card to pay for them! 

5. Reason #5: Savings grow. 

Unlike borrowing, where you pay interest back on your puchases (Yes, that $30 meal could cost you $70 after you get around to paying it back!) savings actually earn you cash. While the APY (Annual Percentage Yield) isn't super high these days on most standard savings account, it is still better than nothing. Look for an account with a good interest rate, or consider saving your cash in a certificate of deposit or mutual fund if you won't need it right away and you can find a good yield. Put a little aside each time you get paid and watch it grow!


For free helping decided on where to go to school - or how to pay for it - make a free appointment with the College Planning Center of Rhode Island

Discerning Differences: Private Student Loans, Federal Student Loans and State-based Student Loans

Posted by Lindie Johnson

Jun 17, 2014 2:03:27 PM

If you are looking to borrow for college, you may have heard about federal, private, and state-based student loans. But what is the difference between these loan types and which ones are the right ones for you and your family? 

Federal Student Loans

There are several types of federal education loans that can help your family pay for college. Federal education loans fall into two categories: student loans and parent loans.

Federal Student Loans

When you borrow a federal loan, your lender is the US Department of Education. Students are advised to use up their Federal Subsidized and Unsubsidized Loans (also offen referred to as "Stafford" loans) before seeking a loan elsewhere. These loans carry a low fixed interest rate (currently, they are set at 4.66% for undergrads) and have an array of flexible repayment options to help new grads afford their monthly loan payments - or delay their payments, if necessary. To apply for one of these loans or for the Federal Perkins Loan, another low fixed rate federal student loan which is awarded through the school financial aid office, you must submit the Free Application for Federal Student Aid. LoanApplication_iStock_000019962865Small

Federal Parent Loans

There is also a federal college loan option for parents, called the Federal PLUS Loan. These loans do offer some repayment flexibility and deferment options although not quite as much as the Stafford or Perkins loans, but they also carry a higher interest rate than the federal student loan options.

Currently, the Federal PLUS Loan rate is set at 7.21% with a 4.288% origination fee.  

You can get more information on federal education loan programs at

State-based Student Loans

State-based student loans vary from lender to lender depending on the state in which you are borrowing. Not all states have a state-based student loan program, but these programs are typically available to students who are either a resident of the state or are going to a school in the state. These loans are often offered with low fixed interest rates and low or no fees. They are worth looking into if you think your student will need to borrow beyond the federal Stafford and Perkins loan limits.

Are you a resident of or going to school in one of the below Northeastern states? Check out the state-based student loan options. 

Private Student Loans

Private student loans are another alternative to the federal PLUS loans. Private student loans usually offer credit-based pricing and variable rates which means you don't necessarily know what rate you will pay on your loan until you apply. Variable rate loans may seem enticing right now as markets rates hover at historical lows. But you must assess whether or not you will be able to afford a higher monthly payment if rates increase prior to paying off your loan. Most variable rate loans are based off of Prime or LIBOR. Clicking these links will show you how Prime and LIBOR have changed over time.   

Fixed rate private loan programs are more rare and typically also have credit-based pricing. Unless you have some of the best credit out there, keep in mind you may not qualify for that lowest advertised rate. 

Comparing Student Loans

College is an enormous financial commitment, and loans can no doubt add to your costs. Before borrowing, make sure you have completed the FAFSA and fully explored your eligibility for grants and scholarships. Also, pay what you can from your salary and savings before taking on any debt. 

If you do decide you need to borrow, make sure you understand how much the loan will really cost you. What you repay is not only the amount you borrow, but also interest and fees. If you borrow a state-based or private student loan, you will receive a set of disclosures at the time of application that will give you information on all rates, fees and will display the total cost of the loan. Federal student loans are not subject to the same disclosure requirements but you can get an idea of your total costs by comparing rates and fees, as well as looking at your final loan disclosures. Also be sure to understand all of the loan benefits, from deferment to income-based repayment, to loan forgivenss before committing to any loan. 

Topics: student loans

5 Things to Do in RI the Summer Before College

Posted by Lindie Johnson

May 27, 2014 1:54:50 PM

High school seniors are surely breathing a sign of relief at this point, with college applications behind them and college life in the horizon. For students that are planning to live on a college campus, this summer is often a last hoorah in their hometown. Students can follow this guide to help make the most out of their last summer at home. 

1. Get a job!

Okay, so this may not be the most exciting way for a student to spend their last summer before college, but hear us out. Getting a job, and more importantly saving earnings from that job, can significantly reduce student debt. A couple thousand dollars can go a long way in covering the cost of college books and everyday living expenses. 

2. Sink your toes in the sand.

Now that we got that out of the way, it's time to have some fun. Rhode Island is home to some of the most beautiful beaches in the US. Students should take advantage of them while they are here and have free time. Check out GoLocal's 10 Best Beaches in RI

3. Hit a home run.

What would summer in Rhode Island be without watching a Pawsox game? Go in early July to catch a fantastic fireworks display after the game. Buy tickets here. 

4. Plan for some island time. 


Get together a group of high school friends or your family and (with parent approval, of course), take a day trip to Block Island. The Block Island Ferry offer daily trips with round trips rates around $26 from Point Judith. Take a walk through Mohegan Bluffs and grab some delicious eats at the Poor People's Pub

5. Light up your night. 

Waterfire is one of the biggest cultural events in the US, and here it is hosted in tiny little Rhode Island. Maybe you've never been before, or maybe you go on a weekly basis. Either way, it is a great way to spend a Saturday night. Start at Harry's Burger Bar for some sliders and walk through downtown, taking in all of the greatness. 

Just remember, no matter where you are going to college, and now matter how you spend your last summer as a high school student, make it a relaxing and memorable one!

Need some help trying to figure out how you will pay the tuition bill? Contact the College Planning Center of Rhode Island.

Need to learn more about student loans? 



Topics: college planning

Comparing College Costs: The Net Price Calculator

Posted by Lindie Johnson

May 13, 2014 11:34:19 AM

Comparing the “sticker price” of various colleges may seem like a reasonable first step to determining what your family can afford for college costs. But if you are like many families in the Ocean State, you are probably going to be paying less than the sticker price when all is said and done. Before you make yourself crazy searching on websites trying to figure college and university sticker prices - which may not mean much for your family in the long run - consider using each college’s Net Price Calculator. 107077-resized-600

The Net Price Calculator measures your family's financial ability to pay for college and uses other information to estimate the amount of grants, scholarships, and other financial aid you could potentially receive. Your "net price" is the difference between the amount of financial assistance you receive from the school, federal government and state - and the total cost of attendance at that school.

All schools are required to have a Net Price Calculator on their website. It’s often housed on the school financial aid site, but if you can’t locate it, search for “Net Price Calculator” in the search box of the college website.   

Before you sit down to examine Net Price Calculators at different schools, there are some things that you will need to have handy.  Start with your most recent tax return for both you and the student.  W-2’s may be needed if you file a joint return. Depending on the school, it may be handy to know your child’s CSS profile user name and password, but you will also have the opportunity to sign in as a guest.

The Net Price Calculator is a valuable tool in the college shopping process. We recommend you start using it to narrow down your college list, whether the student is in 10th or 12th grade.

Also, remember to sit down with your child before their junior year in high school - if you haven’t already - and give them a realistic idea of what money you are able to contribute towards college.  Make clear statements about your financial goals and use all the resources available to find a school that meets all of your family’s needs.

Need some assistance narrowing down your options? Make a free appointment with the College Planning Center of RI.

Topics: financial aid

Have an honest conversation about finances with your child

Posted by Lindie Johnson

May 4, 2014 5:35:00 PM

When it comes to finances, some parents are reluctant to discuss their personal information with their children. But when preparing for college, you will have to break down and have an important discussion as a family as to what you are willing to pay (and can realistically afford to pay) towards a college education. 

If you have not saved towards your child's college education - which for many parents, is the case - loans may be inevitable. Just remember, borrowing for college is not always a bad thing, as long as it is done responsibly.

What are some of the things that you need to think about when looking at loans?  

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Interest rate/APR. It's easy to overlook the impact interest has on the amount you pay towards a loan. For example, if you were to borrow $20,000 at a rate of 6%, your monthly payment would be about $222.04 per month for 10 years (assuming no fees). That means over the course of those ten years, you would pay over $6,500 in interest in addition to the original $20,000 borrowed. Look at the interest rate on your loan and make sure you are getting the best option available for our family.

Monthly payment. Know what the monthly payment will be on your loan before you borrow. Think about borrowing not only for the first year of college, but for two, three or four. Will you be able to afford this monthly payment? If you need to borrow for all 4 years, and your first year's payment will be $222.04, the question then becomes, "can I afford $888 per month?"

Fees. Fees can add up. Pay attention to origination fees, late payment fees, etc. Any fees on non-federal loans should be disclosed to you in the lender's Application and Solicitation Disclosures. To learn more about fees on Federal PLUS Loans, visit

Future Goals. How old are you? When do you want to retire? How many other children do you have?  Do they want to go to college? Assess what your family's future goals are and determine how much you can afford to borrow and still be able to meet those goals. 

If you are not comfortable with going into debt  - or the amount of debt your child would like you to take on in order to go to their dream college - you need to be upfront about it early on. It's easier to have this conversation before your child starts their college search, in either in 10th or 11th grade. For example, if you can only contribute $5000 per year towards your child’s education, make sure they understand that your contribution is not negotiable. Setting up an early guideline may initially be met with some frustration by your teen, but this eventually will pass. Borrowing responsibly will bring peace of mind for the entire family.

Also, make sure your child understands that the sticker price on a college website isn't necessarily what you will pay if you qualify for financial aid. After you have had a discussion with your child about college finances, go through a few Net Price Calculators (you can usually find a link to them through the college financial aid website), and see what typical costs are at some colleges your child is interested in. The Net Price Calculator, which every college is required to have, is intended to give you an estimate of what a family like yours generally pays at the college after financial aid has been awarded.

Once your child has some guidelines to work with, he or she is more likely to find schools that meet both their personal needs and your family's financial needs.

Topics: federal student aid, college financial aid, borrowing, borrow for college, education loans, education financing, education loan

College Planning: What to Expect at Orientation

Posted by Lindie Johnson

Apr 30, 2014 10:51:00 AM

Your child has finally been accepted to college and its only a few months until your little bird flies the nest. Even so, the college planning isn't over yet. Going to college can be both an exciting and nerve-wracking experience for students and parents, especially if your child will be living on campus. College orientation, which is mandatory at some schools and optional at others, is intended to help your child make a smooth transition into college. 

Whether orientation is required at your college or not, you should definitely register your child to attend. 

So, what's the big deal about orientation? 

Orientation will give your child their first glimpse of what real college life will be like. Going to college can be stressful for some students. They are put into a new environment, with new people, and a new set of rules, services, etc. Orientation can help both you and your child attain a new comfort level with the school and help students understand better how they will fit in. 

At orientation, students get to meet their future classmates, attend information sessions about campus services and policies, stay in campus dorms, and pick out fall classes in some cases. As a parent, you will also have the opportunity to attend information sessions as well.GradHugwithParent iStock 000035259354XLarge WEB

The college will provide instructions on how to register for orientation and give you some guidelines of what to expect while the student is there. If you didn't receive something the the mail, research college orientation on the school's website. 

If your child is attending a college where class registration is done during orientation, he or she should prepare by researching mandatory classes for their major. If your child is starting college undecided, classes in the school's core curriculum might be a good place to start. Encourage your child to check out the school's on line course catalog so they have an idea of what is available before they head to orientation. 

While at orientation, your child will likely also have the opportunity to meet their academic adviser, giving them a resource to turn to when they arrive on campus. 

What to bring to orientation

At orientation, your child will be provided with a lot of information, from registration procedures, to general rules and policies. Bringing a notebook and writing utensil is a must, as well as a bag to carry around any handouts. There is also likely to be a lot of walking around as students move from session to session, so comfortable walking shoes and weather appropriate clothing are a good choice (remember an umbrella if it is supposed to rain!). Students should silence their cell phones during sessions to make sure they don't miss a vital piece of information during an important session. 

After daytime informational sessions have included, your student may have the opportunity to attend more social sessions, such as dances, sports and other activities. These activities give students the chance to learn more about each other, interact, and make new friends.

Remember, orientation is meant to be fun and informational. Take advantage of this great opportunity and encourage your child to make some new connections.  

Topics: college planning, college major, college orientation

How to compare college loan options

Posted by Lindie Johnson

Apr 23, 2014 11:00:00 AM

College is expensive and comparing college loans can be a bit tricky, especially when you're just getting started. That's why students and parents need to carefully consider their funding options based on crucial factors such as total cost, future earnings and ability to pay. 

While the process can be stressful, a little bit of planning and patience will help you find a financial program that works best for you and your child's situation. And it all starts with a thorough research on comparing college loan options.

Here are a few planning tips you might want to consider:

Learn about federal education loans.pricetag

Student loans issued by the federal government, such as the Federal Stafford Loan and Federal Perkins Loan, have low fixed rates and low fees, in addition to having the most liberal repayment flexibility. The Federal Stafford Loan should be a student's first option for borrowing.  

Perkins loans are available to financially needy graduates and undergraduates. These loans are directly provided by the college or university and if your family qualifies, it will be included in your financial aid award letter.

Federal PLUS Loans are in the parent name only, meaning the student has no obligation to repay this debt. The rates on these loans, which are set annually (but are fixed for the term of your loan) are not as low as those on the Stafford or Perkins loans and these loans do not offer as many repayment benefits as the Stafford or Perkins loan. 

Explore your state-based loans options.

State-based loans, such a those made by RISLA, are another alternative. State-based loans are available to residents of the state where the agency serves or to students from other states who come to the state to study.

For example, if someone from Connecticut goes to Rhode Island to enroll to one of the colleges and universities there, he or she may be eligible to apply for RISLA's state-based loans. The same is true for students who live in Providence, RI, whether they enroll in a school in or outside the state.

State-based loans are different from both private and federal student loans in a lot of ways. For one, unlike most private loans, state-based loans typically offer fixed rates. State-based loans also often offer better rates than those on even the Federal PLUS loan. 

Talk to a non-profit, state-affiliated lender if you're interested in exploring your child's state-based college loan options. 

Consider private loans.

If you are unable to exhaust your federal or state-based loans options, or if you need additional loans, then you may consider shopping for private loans. Check with your trusted bank or other financial institutions.

While private loans usually have higher interest rates than federal and state-based loans and often offer variable rather than fixed rates, they are typically better than credit cards.

Pay attention to terms, rates and fees. Compare and save. 

When shopping for a college loan, you need to pay attention to specific disclosures. Here's a quick overview of the crucial details you should look into.

Interest rates 

College loan interest rates vary. It's one of the most important factors to consider when shopping for college loan options.

Education loans come with two types of interest rate: fixed and variable. Fixed rates remain stable for the life of the loan, while variable rates fluctuate depending on economic conditions. Right now, variable rates are at historic lows, so it's very possible they will increase before your loan is paid in full if you take on a varible rate loan. If a rate on a variable rate increases, so does your monthly payment. 

Annual Percentage Rate (APR)

Other things being equal, you'll want to get the lowest possible APR. It takes into account the interest rate and other fees assessed on your loan.

Repayment terms

The term refers to the amount of years borrowers are expected to repay their loans. Banks usually offer 5, 10, 15, and 20 years of repayment terms.  It's best to decide on how much you can afford to pay. A 5-year repayment term, for instance, will accrue a lesser amount of interest (and sometimes comes with a lower interest rate) than a 10-year term—but your monthly payments will likely be higher.

Monthly payments

Before borrowing any loan, it is important to understand what your monthly payment will be and ensure that it will be affordable for whoever has agreed to repay the loan. 


Check for other fees that may significantly increase the total amount you need to repay. It's easy to overlook these fees. Be sure to consider returned check fees, administration fees, late payment fees, origination fees, repayment fees, and other fees.

Benefits & protections

What benefits does the loan offer? Do you get an interest rate discount for making automatic monthly payment by debit? Are there any reward programs available? Also, what protections are in place on the loan? What are the deferment and forbearance options? Are there extended or income-based repayment plans? What happens if the student or parent becomes deceased? It is important to know what happens if you land in an unfortunate and unexpected situation. Consider the answers to these questions when you are determining the overall best loans for your family. 

Topics: student loans, student borrowing, student debt, student loan, student lending, education loans, private loans, college loan, education loan, private student loans

Appealing Your Financial Aid Award

Posted by Lindie Johnson

Apr 17, 2014 10:50:00 AM

Finally, it happened! Your child received his or her acceptance letter. And with it came what you were waiting for - the financial aid award letter. Lots of parents are surprised to see what the school offered and sometimes were excepting to contribute less to tuition costs than indicated on the financial aid award letter. If you fall under this category, you don’t have to just accept the award as it. The award letter is just an offer. You can accept, decline or appeal any part of the financial aid award.

1. Contact the financial aid office.

Every financial aid office has specific rules about appealing a financial aid award letter. These rules are called appeal procedures. As the parent, you will likely want to handle this part instead of letting your child appeal. Also, you may want to call or go to the financial aid office in person rather than emailing them. It might help you get quicker results. InstitutionalGrants

When discussing the appeal, tell the financial aid officer exactly what you expected. You don’t want to be harsh or nasty. Just let him or her know that you believe you deserve a specific dollar amount. You want to use terms that include special circumstances. When a financial aid office calculates a financial aid award, it uses information from the Free Application for Student Financial Aid (FASFA) and sometimes from the CSS Profile as well. Your circumstances may have changed since those forms were filed. Special circumstances gives the financial aid office a way to recalculate your child’s financial aid award letter.

Some special circumstances include:

  • You or your spouse losing a source of income (job, child support, social security benefits).
  • You or your spouse being enrolled in a degree program.
  • Bankruptcy.
  • Remarriage.
  • Divorce.
  • Elder care expenses (you are taking care of a relative).
  • Illness.

A financial aid office doesn’t include things like standard of living, paying money to your church or vacation expenses as special circumstances (although it would be nice!).

2. Tell the financial aid representative exactly what you want.

You want to know the procedures to appeal the financial aid award letter. This may be a certain appeals form or a letter you must write. Depending on the school, it may be both. So once the financial aid representative tells you about the appeals process and deadlines, request the needed form. This seems like a no-brainer, but it’s easy to forget.

3. Use correct terminology when discussing the financial aid award letter appeal.

Whether you are talking to the financial aid representatives or writing an appeal letter, use the right terminology. For instance, if you have to write a letter you want to start with the fact that you are requesting reconsideration of aid offered to your child. Be clear about why you are making the request. Try to avoid phrases like "negotiate," "bargain," "re-do" or "money your child deserves" in your request.  

Remember to provide specific documentation to support your appeal. For example, if you lost your job, you want to include your last pay stub or unemployment documents. A financial aid office won’t take your word alone regarding a change in circumstances. Always be specific as you can regarding the details that changed your finances.

4. Complete the appeals process on time.

The majority of schools have a deadline for appealing financial aid. You don’t want to wait until it’s time for your son or daughter to start school. Pay attention to the deadline the financial aid office provides and adhere to it. 

5. Submit the appeal.

Once you submit the financial aid award letter appeal, ask when to expect a decision. The appeals committee typically decides each appeal in categories. For instance, they may make decisions on transfer students at a different time than early admittance. The time may vary by date.

Remember a financial aid award letter is an offer that may be changeable depending on your financial circumstances. The important part of the appeals process is documenting the need for more financial aid for your child. Without documentation, you may not have a positive outcome.

Need assistance? 

Topics: financial aid, college financial aid, Financial Aid Award Letters, award letters

Comparing Financial Aid Award Letters

Posted by Lindie Johnson

Apr 11, 2014 8:59:00 AM

You've been accepted! Now what? Making an enrollment decision may seem like a no brainer if you got into your number one choice school. But with the high costs of colleges these days, you better think twice and compare costs and financial aid awards before sending in your enrollment decision. Financial Aid Awards

More and more these days, we hear from students that they wish they understood how much money they would make after college before deciding to borrow. Does your number one choice school come with a signicant amount of borrowing attached to it? What career do you plan to pursue? Is it worth it to be in serious debt after you graduate to go to your top choice?

So, how can you decide what is the best choice for you and your family? We recommend you start by researching entry level salaries in your desired fields of choice. A good rule of thumb (although not always a perfect one) is not to borrow more than one year's worth of your starting salary (and this is combined for all 4 years, folks!)

For example, according to, a high school teach in Cranston, RI, has a median salary of $57,718. This means half of teachers make more than this, and half make less. As an entry level teacher, you are likely to make less. For example, the tenth percentile of the range of salaries for Cranston High School teachers is at $34,819. This is probably a safer number to expect for your career choice. What this means is that you shouldn't borrow more than $34,800. The thing is, $34,000 is still a lot to borrow. If you borrowed this amount, and had an average interest rate of 5% on your loans, and repaid them over 10 years, you would pay about $370 a month. Is this what you really want to be doing? What other sacrifices will you need to make to afford this payment? If you have an opportunity to borrow less by attending a different school (or nothing at all), and the school can still meet your academic needs, isn't at least worth considing? 

So, now that you have researched your starting salary, what next? This is the time to compare and contrast your financial aid award letters. We recommend following the below set of steps to make an apples to apples comparison. 

  1. Add up your direct costs at each school. These costs include, tuition, fees, room and board. Direct costs are those that will be included in your college bill, and don't include things like living expenses, your books or a new computer. 
  2. Subtract the total amount of grants and scholarships you were awarded. Make sure you understand the terms of these awards and know whether they are one time awards or if they are renewable in future years. If they are renewable, what do you have to do to continue receiving the award? 
  3. Subtract your family resources for payment. This includes any student or parent savings, earnings, college savings accounts, or gifts from family members that you plan to send to your college.
  4. What are you left with? This number is the number you want to compare from college to college. An "award" might be bigger at one school, but the bottom line is how much you will have to pay them at the end of the day, whether it be through loans, a payment plan, or work-study. 

Besides grants and scholarships, your school may have included any of the below loans in your financial aid award letter:

  • Federal Direct Student Loans - These loans, formerly referred to as "Stafford" loans come in two types. Subsidized loans are the better of the two options because the governments pays the interest on these loans while you are in school. Your family must be eligible to receive this type of loan (find out by filing the FAFSA). You are responsible for all interest charges on your unsubsidized Direct Student Loans. The Federal Direct Student Loan, regardless of which option you receive, are often a student's best option for borrowing since they carry a low interest rate (3.86% for undergrads for the 2013/14 academic year - rates to be set for 2014/15 in May) and low fees (1.072%).
  • Federal Perkins Loans - Not all schools have funds to award these. If they are included in your award, you will receive them at a 5% interest rate once you sign your promissory note.  
  • Federal PLUS Loans - Some schools include the parent PLUS loan in their award letters. If you filled out the FAFSA, you can apply for this loan whether or not it is included in your award. For 2013/14, this loan carried an interest rate of 6.41% and fees of 4.288%. Rates for 2014/15 will be determined in May. 
Keep in mind, you are not required to accept your financial aid award letter in full. You can choose to accept a portion ("yes, please, to the grants and scholarships!"), deny a portion ("I'll pass on the PLUS loan"), and lower the amount on another part ("I only need $2,000 for the Federal Direct Subsidized Loan"). Before accepting any loan, be sure to understand the rates, fees, terms and compare it to other options out there. Just because it is in your financial aid award letter doesn't necessarily make it the best option for your family. 
Need assistance comparing your financial aid award letters? 

Topics: financial aid, Financial Aid Award Letters, financial literacy, financial education

What's included in your financial aid award

Posted by Lindie Johnson

Apr 9, 2014 9:11:00 AM

Understanding your child’s financial aid award is probably more daunting than completing all the admission requirements to get him or her into college. Basically, the financial aid package includes the state and federal funds to pay your tuition as well as any awards the college is giving you from their own funds. Keep in mind that the money in the award may not (and usually doesn't) cover the entire tuition or even your family's Expected Family Contribution, as determined by the Federal Department of Education when you submit the FAFSA. So you and/or your child may have to figure out how to pay the remaining balance.

Gift AidFinAid Sources

Financial aid that is considered a gift are grants and scholarships. College grants are free money given to you to reduce the amount of your tuition. In other words, your child doesn’t have to repay them. They can be given to you by the State of Rhode Island (if you are a resident and you filed your FAFSA by March 1), the federal government, the college/university, or a private donor. 

Grants can vary according to who they are given by. For instance, your child may receive a grant specific to age, gender, race or academic pursuit. Or the grant may be awarded solely on financial need, as is the case for all federal grants and most state-based grant programs.

State and federal grants are the most common types of grants students receive. For example, the Federal Pell grant is available to students who meet certain qualifications like being an undergraduate and from a low-income household. Other grants are geared toward academic pursuits such as music, technology and nursing. These awards are usually offered by private organizations or donors through the college itself. 

Another source of free money are scholarships which may also be listed on the financial aid award. Scholarships may be need- or merit-based. Need-based simply means based on financial need. Merit-based means students earn the scholarship based on either meeting or exceeding specific standards. Standards are set by the person, company or organization giving the scholarship, or by the school. Some scholarships you need to pursue on your own and will not be included on your financial aid award. You can look for local scholarships at

Self-help Aid

Self-help financial aid is repaid by paying money or working. Whether your child has to work to repay the self-help aid or not depends on the type of aid on the package.

Work Study

Work study is included on the award. However, it doesn’t reduce the cost of tuition. The work study program offers wages to pay the student through part-time employment to assist with college expenses like books or tuition. Your child will receive at least the federal minimum wage per hour for working through the work study program. It is up to your child to apply for work study jobs and work the hours necessary to receive the funds awarded. Not everyone receives work study.


Certain types of loans are also listed on the financial aid award. They must be repaid to the lender, regardless of the type of loan. Some student loans are based on credit. These are typically private student loans offered by financial institutions and companies and these would not be included on your financial aid award. You need to pursue these loans on your own.

The federal government offers student loans such as subsidized and unsubsidized Stafford student loans and the federal Perkins loan. These loans are typically a student's best option for borrowing because they offer low/no fees and low fixed interest rates. Depending on your financial need and eligibility requirements, you may have one or both federal loans on your financial aid award. 

Perkins loans are financial aid offered through the school. Federal monies are given to participating colleges to distribute to students according to financial need. Not all schools have these monies to award to students so these loans are less common than federal subsidized and unsubsidized Stafford loans. 

Lastly, the Federal PLUS Loan could be included on your financial aid award letter. Not all schools include this loan in financial aid awards and you can apply for this loan regardless of whether or not it is included in your package. There is a basic credit check for this loan. Before accepting this type of award, make sure to compare it to other loan options to ensure you are getting the best deal for your family. Rates and terms vary widely for private and state-based loans so be careful to understand the details before you commit to any loan, regardless of whether or not it is included in your award. 

Regardless of the loans taken out to pay for college, the terms of the loan agreement will not be on your financial aid award. Only the money eligible to receive is listed.

Accepting or Declining Aid

A financial aid package isn’t concrete. For instance, you or your child can accept or decline one, part or all of the award. Also, the award may change. You may not be eligible for the PLUS loan because of your credit. It’s best to talk to the financial aid office about any questions you have. If you don't think the award is enough, or your family circumstances have chance, you can appeal the award. Stayed tuned for our upcoming blog on appealing financial aid awards. 

Topics: financial aid, college financial aid, award letters