College Financial Aid: Understanding the System

Summary

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Podcast Summary: WSJ Your Money Briefing

Episode: College Financial Aid: Understanding the System
Date: March 5, 2018
Host: J.R. Whalen
Guest: Cheryl Winokur Monk (WSJ Contributor)

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Overview

This episode focuses on demystifying the college financial aid process for students and families. Host J.R. Whalen speaks with Cheryl Winokur Monk about how to understand key financial aid terminology, intelligently compare award packages, and navigate the process of accepting, declining, or appealing aid offers.

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Key Discussion Points & Insights

1. The Alphabet Soup of Financial Aid (01:24–02:32)

• Understanding Key Terms:
  • Cost of Attendance: An estimate of attending a given school, but inclusions may vary by institution.
    • Quote: “One term is cost of attendance, which is an estimate of what the school will cost. But not all schools include the same things in this cost of attendance. So it's really important to know what you're looking at.” — Cheryl Winokur Monk [01:38]
  • EFC (Expected Family Contribution): Calculated from the FAFSA and not always equivalent to what a family will actually pay.
    • Quote: “Some families think that this EFC is going to be what they're actually going to pay, but it really could be more or less and in some cases significantly.” — Cheryl Winokur Monk [02:10]

2. Breaking Down Aid Types: Grants, Scholarships, Loans, and Work-Study (02:32–03:59)

• Aid Variability:
  • Not all aid packages are equal; knowing the ratio of loans (need to be repaid) to grants/scholarships (don’t need to be repaid) is crucial.
    • Quote: “Just because you have what looks like a very large package, if it's mostly loans, it might not be as good as a different school's package.” — Cheryl Winokur Monk [02:56]
  • Higher-priced schools can sometimes be cheaper if they offer more non-loan aid.
• Work-Study Considerations:
  • Students (especially freshmen) should consider if they can realistically manage on-campus work-study jobs alongside new living and academic adjustments.
    • Quote: “Freshmen especially want to consider this because when they're going into a new situation, there's a lot of factors ... And then that can play into whether a student can handle the job responsibilities.” — Cheryl Winokur Monk [03:46]

3. Comparing Aid Packages—Apples to Apples (03:59–04:46)

• Comparing Offers:
  • Financial aid offers vary widely; mistakes and misunderstandings are common.
  • Tools like the College Board’s website, bigfuture.org, or personal spreadsheets are recommended for clear, apples-to-apples comparisons.
    • Quote: “You can kind of see, get an apples to apples comparison over what the schools are offering. ... As long as you're comparing apples to apples. That's the really important part.” — Cheryl Winokur Monk [04:29]

4. Accepting, Declining, and Appealing Aid Offers (04:46–06:47)

• Flexibility in Accepting Offers:
  • Students can accept all or part of the offered package.
  • Notify the financial aid office if there has been a significant change in family finances after submitting the FAFSA.
    • Quote: “You can tell the financial aid office that you’ve had a change. You shouldn't assume that they won't give you more aid if you ask for it.” — Cheryl Winokur Monk [05:12]
  • Don’t be afraid to call and ask for adjustments or clarifications.
    • Quote: “Don't be afraid to pick up the phone and ask if you have any questions, concerns, anything at all, because you just may end up with number one, answers to your questions and also maybe even more money.” — Cheryl Winokur Monk [05:44]
• Additional Funding Options:
  • If the school’s aid isn’t sufficient, consider private scholarships, federal Direct PLUS loans for parents, or private loans.
    • Quote: “If the school doesn't ... fulfill your entire need, there are other options, such as private scholarships, a federal Direct PLUS loan for parents, or private loans.” — Cheryl Winokur Monk [06:21]
  • Aid letters may not reference all available funding options—families should inquire.

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Notable Quotes & Moments

• “It would be so much easier if there were one standard that everybody had, but that just doesn't exist nowadays.”
  — Cheryl Winokur Monk on the complexity of financial aid letters [01:30]

• “A more expensive school could actually end up being less expensive if they offer, if the school offers a better package, especially if there's more grant and scholarship money involved.”
  — Cheryl Winokur Monk [03:17]

• “It's true that many people don't know what questions to ask, and financial aid administrators really do recommend that people who do have questions get in touch with them.”
  — Cheryl Winokur Monk [06:14]

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Timestamps for Key Segments

• 01:24: Decoding confusing financial aid terminology
• 02:32: Grants vs loans and comparing aid packages
• 03:39: Work-study programs: pros and cons
• 03:59: Tools and methods for comparing different aid offers
• 04:46: What if your financial situation changes?
• 05:29: How and when to appeal or adjust aid offers
• 06:14: Other sources of financial aid beyond official packages

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Tone and Style

• The discussion is frank and practical, with empathy for the confusion families face.
• Cheryl Winokur Monk’s approach is informative, demystifying, and encouraging—stressing proactivity and resourcefulness.

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Takeaways

• Families need to educate themselves on financial aid terms and what’s actually being offered.
• Don’t be afraid to ask questions or for more aid—advocating can pay off.
• Use available online tools or personal spreadsheets to make rigorous, apples-to-apples comparisons.
• Stay updated if family finances change, and don’t overlook alternative sources of funding.

This episode offers a clear, actionable primer for families navigating the complicated world of college financial aid, emphasizing the value of preparation, comparison, and active engagement with financial aid offices.

Transcript

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need it.

[Retail Industry Advocate]

Inflation is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Advocate]

they need while increasing megastore profits. They deserve it, don't they?

[Cheryl Winokur Monk]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.

[J.R. Whalen]

This is yous Money Matters from the Wall Street Journal. Welcome to youo money matters. I'm J.R. whelan in New York. For many U.S. families, the college application process is stressful. Selecting the right range of schools is important, but a student's future can hinge on a family's ability to navigate the financial aid landscape. Wall Street Journal contributor Cheryl Winiker Monk joins us to lay out a few key tips for understanding terminology, comparing financial aid packages, and knowing how to accept or decline all or part of a package. So, Cheryl, college Decision day is May 1, and that's going to sneak up on families pretty quickly. You point out in your story in the Wall Street Journal the importance of students and families doing their homework and understanding key terms especially. There's a lot of Alphabet soup out there.

[Cheryl Winokur Monk]

Yes, there is, J.R. when you look, I did some research looking at various letters that the acceptance letters that families receive, and they're all over the board. Some of them are just so hard to read. It would be so much easier if there were one standard that everybody had, but that just doesn't exist nowadays, or at least it doesn't exist yet. It may at some point, people really students and families really need to be familiar with the basic financial lingo. One term is cost of attendance, which is an estimate of what the school will cost. But not all schools include the same things in this cost of attendance. So it's really important to know what you're looking at. Another term that people might come across is efc, expected Family Contribution. It's a figure that's calculated using the financial information families provide in what's called the fafsa, the Free Application for Financial Student Aid, which is the long way of saying it. And some families think that this EFC is going to be what they're actually going to pay, but it really could be more or less and in some cases significantly. So it just, it really depends. And again, that's why you need to understand the terms that you're looking at.

[J.R. Whalen]

Okay. And a lot of this is spelled out in your Story in the Wall Street Journal. And you know, not all financial aid packages are the same. It's important for recipients to understand what percentage of aid is, for example, a loan and what is a gift. So that means they, some of that money might not have to be paid back.

[Cheryl Winokur Monk]

That's correct. If you get a scholarship or a grant, you're not expected to pay that back, but a loan you do need to pay back. And the loan terms can be very different depending on the kind of loan you really want to look. If you have. Just because you have what looks like a very large package, if it's mostly loans, it might not be as good as a different school's package. Students need to take care when they look at the price of a school or the cost of a school. And a more expensive school could actually end up being less expensive if they offer, if the school offers a better package, especially if there's more grant and scholarship money involved.

[J.R. Whalen]

And there's another category of aid available, and it has to do with work study, a student being able to work on campus. And that's another category that families really do need to be aware of.

[Cheryl Winokur Monk]

Students really have to think long and hard about whether they'll be able to fulfill the duties of the job. Freshmen especially want to consider this because when they're going into a new situation, there's a lot of factors. It may be a new place they're leaving, living, it's a whole new life or way of life. And then that can play into whether a student can handle the job responsibilities.

[J.R. Whalen]

All right, we're speaking with Cheryl Winokur, Monk via Skype, and you're listening to your Money Matters from the Wall Street Journal. Welcome back, everybody. So, Cheryl, just to make things nice and confusing, many schools offer financial aid packages that look very different from each other and that can result in errors and misunderstandings. The College Board actually has some tools that, that can help families and students connect the dots between plans.

[Cheryl Winokur Monk]

Yes, you can go do it right online and you can plug in the name of the school and all the different options that they give you. And you can kind of see, get an apples to apples comparison over what the schools are offering. There's some people who want to do it the old fashioned way as well. And you can do that with your own spreadsheet, an Excel spreadsheet, or even on paper, as long as you can see. As long as you're comparing apples to apples. That's the really important part.

[J.R. Whalen]

And that's a website that's run by the College Board and it is called bigfuture.org and finally, Cheryl, students don't have to accept all of an award package being offered, and they need to let a school know that. But they should also let a school know if there has been some sort of significant change in a family's financial profile.

[Cheryl Winokur Monk]

That's correct. So let's say that you fill out your FAFSA in October, and in November or December, a family member loses a job or there's some other circumstance, college is necessarily or don't automatically know that. So you can tell the financial aid office that you've had a change. You shouldn't assume that they won't give you more aid if you ask for it.

[J.R. Whalen]

So they might actually tailor the aid package based upon the changing situation of a student and that student's family?

[Cheryl Winokur Monk]

Absolutely. It's no guarantee that something will change, but it certainly never hurts to ask. And if there's some reason you don't get a lot of what you consider a large enough package, you can ask about it. And that's one of the things that financial aid administrators will tell you is don't be afraid to pick up the phone and ask if you have any questions, concerns, anything at all, because you just may end up with number one answers to your questions and also maybe even more money.

[J.R. Whalen]

And, Cheryl, I guess that, you know, there must be funds left on the table because people don't know what questions to ask which might allow them to really cash in on money that could fit their situation.

[Cheryl Winokur Monk]

It's true that many people don't know what questions to ask, and financial aid administrators really do recommend that people who do have questions get in touch with them. The other thing to consider is that if the school doesn't give you or isn't able to fulfill your entire need, there are other options, such as private scholarships, a federal Direct plus loan for parents, or private loans. Now, there are other considerations when you're dealing with a private loan. However, parents should know these exist because these award letters don't always say it. They might, but they don't always.

[J.R. Whalen]

All right. So it's a lot of homework on the part of the students and for the parents as well. That's Wall Street Journal contributor Cheryl Winokur Monk joining us via Skype. Cheryl, thanks so much for being with us.

[Cheryl Winokur Monk]

Thank you for having me, and thank

[J.R. Whalen]

you for listening to your money matters. I'm JR Whalen in New York for the Wall Street Journal.

[Small Business Owner]

Access to affordable credit helps me pay my employees, but I don't really need

[Retail Industry Advocate]

it infliction is killing me, but who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill.

[Small Business Owner]

See, banks and credit unions help small businesses make payroll. This bill would cut the vital resources

[Retail Industry Advocate]

they need while increasing megastore profits. They deserve it, don't they?

[Cheryl Winokur Monk]

Tell Congress, stop the Durbin Marshall money grab for corporate megastores paid for by the Electronic Payments Coalition.