How to decipher your financial aid award letter


Now that you’ve received your acceptance letters, it’s time to figure out how you’re going to pay for school. Understanding your awards letter can be tricky. They contain a lot of acronyms and potentially confusing information that may make deciphering your federal student aid award difficult. Use the information below to help you review your options and make an informed decision about which school is the right choice for you and your family.

Loans vs. grants and scholarships

It’s important to know the difference between a student loan and college scholarships and grants.

  • Loans must be paid back to the college or lender, usually with interest.
  • Scholarships and grants are free money awarded to you by the government or college, typically based on financial need. You do not have to pay back scholarships and grants.

The real cost of attending college may be higher than the listed Cost of Attendance (COA)

Each school calculates its own COA, so the school’s COA on the award letter may or may not show the full picture. Sometimes schools only include tuition, fees, and room and board in the COA, which leaves out the cost of textbooks, transportation, student health insurance, and other expenses. Practices vary among colleges, so pay attention to each award letter and note whether or not personal expenses, meal plans, travel, and textbooks are included.

If you notice that only the direct college costs (tuition and fees, room and board) are included in the school’s COA, go to the college’s website and find estimated costs for other expenses, or contact the financial aid office at the school to get a more realistic picture.

Net price and net cost are two very different things

Pay close attention to the difference between net price and net cost. The most accurate reflection of the true cost of college is net price.

  • Net Price = COA (Cost of Attendance) – gift aid (grants and scholarships)
  • Net Cost = COA (Cost of Attendance) – financial aid (scholarships, grants, federal work study, student loans)

Student loans are more than just the amount on your award letter

The federal student loans included in your award letters do not show the amount of interest that will accrue or your expected monthly payments to the lender. The actual amount that you’ll be paying for college when you have student loans is considerably higher than what is displayed in the award letter.

Also, the monthly payments you’ll be making to the lender or school are not stated in your award letter, so before accepting student loans it’s important to get in touch with a financial aid officer at your school to understand all of the implied obligations.

Each school will offer you different financial aid packages

Each school you apply to has a different price tag, and some schools are more generous than others when it comes to offering college scholarships, grants, and student loans. Some schools may be more sensitive to your special circumstances, talents, or merits and may offer more financial aid as a result, while other schools may be less rewarding. There’s also no set standard that schools must use for award letters, so no two award letters will look the same.

And, keep in mind that a higher-cost school may offer the best support and, ultimately, be the least expensive to attend.

You can appeal for more financial aid

If there is a significant gap between what a school offers in grants and student loans and what you can pay, consider appealing your award letter. You can typically appeal to a school for more than what was initially offered without risking a negative change in your admission status. To send a letter of appeal, you must have a valid reason for appealing, such as an illness in the family, job loss, a change in marital status for you or your parents, or anything else that has changed since you first filed your FAFSA that affects your ability to pay for college.

Be sure to follow directions when submitting appeal letters as each school has its own appeal process. Appeals may require supporting documents that reflect your need for more aid, such as bank statements, tax forms, medical records, or letters from relatives.

You may want to consider going to the financial aid office at the college to appeal in person. This can sometimes be more persuasive. But, keep in mind that no matter how compelling your appeal might be, there is no guarantee that the college will give you more aid. There’s not always enough money in the college’s budget.

You can choose which grants and student loans to accept

You don’t have to accept every part of the college’s financial aid offer. Many times a school will offer you several federal student loan options (that may include the Stafford Loan or the Direct PLUS Loan), but remember this money will have to be paid back. So be careful with how much money you decide to take out in student loans.

Your award letter is not a complete, take-it-or-leave-it package. You can pick and choose which offers make the most financial sense for your situation.

Sign and return your letter

To secure the financial aid you’ve been offered, you have to specify which items in the award letter you’re accepting, sign the award letter, and submit it to the school you’re planning to attend. Deadlines are typically in May.

Last day to enter is October 31st!
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