Your financial aid award: Is that all there is?

If you applied for financial assistance to cover college costs, then you’re probably as eager as your teen to get that thick envelope.

Somewhere in the packet-amid the “congratulations you’re accepted” letter and all those enrollment forms-you’ll find your financial aid award notice, the document that will help you figure out how you’ll manage to pay those huge college bills.

You may be disappointed: Today’s tough economy means more students are applying for aid. And with tight budgets and declining endowments, some colleges simply don’t have as much money to spread around. So this year it’s more important than ever to carefully decipher your financial aid package. A few important things to keep in mind as you consider your options:

Be careful with comparisons
Your financial aid letter will spell out the different types of aid that the school is offering you. But because there is no standard format that all colleges use, these letters can vary enormously, making them confusing and difficult to compare. Remember, a college that accepts your child is eager for him to attend. So a school may try to make its financial aid offer appear more substantial than it is. To accurately weigh one package against another, you’ll need to dive deeply into the details.

Look closely at costs
The first step in determining a school’s affordability is fully anticipating the expenses you’ll encounter. Colleges have different ways of reporting the “cost of attendance” (COA) in award letters, so you need to make sure the bottom-line figure includes all your anticipated expenses. In addition to tuition and room and board, you should budget for books, supplies, lab fees, transportation costs (so an out-of-town student can come home on breaks) as well as any spending money you decide to provide.

Focus on free money
When assessing an award package, hone in on what’s known as “gift aid.” That’s the term for grants and scholarships-money you don’t have to pay back. This includes government-subsidized awards (like the Pell and TAP grants), as well as private scholarships that are awarded on the basis of need or merit. Be sure to find out if there are any strings attached: A student who gets a theater scholarship, for example, may be required to work on school productions every semester. Students who get certain needs-based grants might have to maintain a certain grade point average. This should be spelled out in your award letter, but if it isn’t, call the school’s financial aid office to check.

Ask about work-study
A student’s participation in a work-study program is usually included in a financial aid package, too. In considering this piece of the pie, there are a few things you need to find out: Will the student be assigned a job or will he have to find one? How many hours a week is he required to work? Will he get a paycheck or will the money be credited to his student account? Different schools have different policies, so it’s important to know what they are.

Get the lowdown on loans
The typical aid package includes a variety of loans, but award letters don’t always divulge interest rates and repayment terms. So it’s up to you to figure out which loans make financial sense. In some cases, it’s a no-brainer: Need-based federal loans (the Perkins and subsidized Stafford) are always good deals. But your package may also list unsubsidized federal loans, as well as commercial ones offered by a college’s preferred lenders. These can be smart options, but you should shop around to see if they’re the best. (You can pick and choose which pieces of the financial aid award you want to accept.) Finally, be careful about taking on too much debt. While an award letter can make paying for college look manageable, don’t be fooled. If your aid is mostly in the form of loans, you’ll be paying the bills for many years to come.

Asking for More
What can you do if you genuinely feel that the aid package offered by a school isn’t sufficient to enable your child to attend? Unfortunately, not much. Most colleges say they will only consider an “appeal” if a family’s financial situation has significantly changed (through a job loss or unexpected health expense) since the application was made. However, if the aid offered by your student’s top-choice college is a lot less than what’s offered by others, you might want to check in with the financial aid office. Depending on how eager they are to enroll your student, they may be willing to make an adjustment.