Module 3: Understanding Your Financial Aid Offer
Financial aid can be confusing. Many students accept loans they don’t need, misunderstand the true cost of attendance, fail to maintain eligibility, or never learn how their choices today affect their future. Research shows that financial barriers are the number one reason students drop out of college, and many students enter college without fully understanding the total cost or long-term impact of loans.
By understanding the different types of aid, compare colleges effectively, and make smart decisions, you can avoid these pitfalls and build a sustainable path to graduation — without overwhelming financial stress. So, let’s brake it down:
Understanding Types of Aid
-
You do not pay this back.
Examples: Pell Grant, Texas Grant, SEOG, institutional grants. -
A part-time job on campus.
You receive your earnings through a paycheck, not up-front. -
You must pay these back.
Some have interest (unsubsidized), some don’t during school (subsidized).Tip:
Loans should be your last option, not your first. Always exhaust grants, scholarships, and work-study opportunities before accepting loans.
Understanding Your REAL Cost (“Net Cost”)
Many students only look at the award totals and ignore the actual price.
Your Net Cost =
Total Cost of Attendance (COA) – Grants – Scholarships – Work-Study
Loans do not reduce your cost—they simply delay payment.
Your COA includes:
Tuition & fees
Housing & meals
Books & supplies
Transportation
Personal expenses
This is the true cost of attending your school.
Sources
Across multiple national studies, financial difficulties consistently emerge as one of the top reasons students drop out of college. High costs, unexpected expenses, and lack of financial literacy often create overwhelming barriers that prevent students—especially first-generation and low-income students—from completing their degrees.