By Kathy Kristof

As high school seniors watch their mailboxes waiting for thick envelopes that signal a college acceptance, their parents wait for another form of communication from schools -- financial aid award letters.

Those letters describe what aid, if any, is being offered to reduce the high cost of a college education. But in some cases, the letters are so dizzyingly complex that students and their families misunderstand what they're being offered.

"I've seen students misinterpreting the award letter, thinking that they're getting a free ride," said Mark Kantrowitz, publisher of and author of the new e-book "Secrets to Winning a Scholarship."

"Then they end up at a college they can't afford," he says.

Why are the award letters so complex? Part of the reason lies in the fact that financial aid for education comes from many sources and in myriad forms, ranging from grants and scholarships to work study and loans.

But Kantrowitz suspects that some colleges purposefully obfuscate the offers because they don't want to lose students to schools that are better funded or more generous.

He said students and parents should carefully analyze competing aid letters before committing to a school.

The bottom-line question: What is being offered and what is left for the student and/or parents to pay out of pocket?

Here's how to evaluate aid offers.

-- Pull out a legal pad and create columns for each school. At the top of each column, write the full cost of attendance for that college or university. The figure should include costs for tuition, fees, books, and room and board.

Some schools will provide an estimate that includes all these costs. Others will mention only the cost of tuition, which is considerably less than the full cost of attendance. If a school letter lists only tuition, you can look up other expenses on sites such as or

-- For each school, add up the value of scholarships and grants offered and list it under the cost figure. Ignore any aid that's listed with the lowercase letters "ln." That's college shorthand for a loan. You want to compare the aid that you won't have to repay.

Also ignore the work-study awards. This is simply the college's promise to find the student an on-campus job. It's good to know but should be considered separately from scholarship and grant aid.

-- Subtract the value of scholarships and grants from the cost of attendance at each school. That should be your net cost.

But your work isn't over yet. You need the answers to two important questions, and you might have to call the schools to get them.

First, find out if the schools front-load their scholarships and grants. This simply means that they provide more grant aid to freshmen than sophomores, juniors and seniors. Sound like a bait and switch? It isn't always done to mislead, Kantrowitz says.

Sometimes it's a way to help the many students who drop out in the first year -- it reduces the debt burden on those who don't complete their education.

But assuming your child intends to stay in school until a degree is earned, you'll need to know whether less aid will be available in coming years.

Secondly, you should become familiar with the school's policy on private scholarships.

Companies, trade groups and nonprofit organizations offer thousands of dollars in scholarships each year. (Many of these can be found on scholarship search sites, such as These private scholarships nearly always affect the college-based aid a student can get. But colleges differ on what type of aid they'll reduce to account for private scholarships, Kantrowitz says.

The best deal is when the college cuts work-study and loan aid; the worst is when they reduce scholarship aid. Some colleges do a 50-50 split.

Now, with all this knowledge in hand, you can evaluate the true value of the aid being offered.

"Colleges like to focus on total aid, which includes loans," Kantrowitz said. "When you compare the out-of-pocket amounts, you'll find that the costs vary significantly from one school to another."

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Personal Finance - How to Evaluate College Financial Aid Options