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Understanding and Comparing Financial Aid Award Letters

Whether you’re an incoming freshman or a senior looking forward to graduation, receiving a financial aid award letter is a crucial step in planning for your college education. This letter details the different types of financial aid you qualify for and how much, as well as some of the costs of attending college. Carefully reading the letter can help you determine your strategy for paying for college and compare offers from different schools.

What Your Financial Aid Award Letter Includes

There’s no standard for what a financial aid award letter should look like, so some schools provide more information than others. Additionally, your school may call it by another name, such as a merit letter, school aid offer, or financial aid package. Generally, you’ll see the following details in an award letter:

• Cost of attendance (COA): An estimate of your cost of attendance for the upcoming school year, including tuition and fees, room and board, books, supplies, and other expenses.
• Expected family contribution (EFC): Based on your FAFSA, this is the amount your family is expected to contribute to your educational costs.
• Financial need: The difference between your school’s COA and your EFC.
• Scholarships and grants: These forms of gift aid don’t need to be repaid and may be broken down into merit-based and need-based scholarships, as well as federal, state, and institutional grants.
• Work-study: If eligible, this program allows you to work on or off campus, with details on the annual benefit and estimated work hours per week.
• Student loans: Information on federal student loans you qualify for, including subsidized or unsubsidized loans, the total amount you can borrow, the interest rate, and the upfront loan fee.

Steps to Reading Your Financial Aid Award Letter

Whether you’ve received multiple award letters or just one, here are some steps to help you review and understand the information:

1. Identify the main components: Identify the main components discussed above to get a full understanding of what you can expect, both in terms of costs and aid.
2. Calculate the net price: Your net price or net cost is the difference between the school’s cost of attendance and the value of the scholarships and grants you’re eligible to receive.
3. Evaluate the expected family contribution: If your EFC is not included in your award letter, check your student aid report on the Federal Student Aid website.
4. Make sure all costs are included: Verify that the estimated COA includes all potential costs by checking your school’s website or contacting the financial aid office.
5. Be clear about the length of gift aid: Understand the duration of scholarships and grants and any conditions attached to them.
6. Note the student loan terms: Use an online calculator to determine your payments based on the loan amount and interest rate.
7. Decide what to accept: You can accept a lower amount of student loans if you don’t need the full amount offered.

How to Compare Financial Aid Awards

If you’re an incoming freshman, financial aid award letters are crucial in helping you determine which school is the right one for you. Here are some steps to compare them:

• Focus on the net cost: While the cost of attendance at one school may be higher, it may ultimately be less expensive if the college provides more gift aid.
• Understand what’s included: Compare what each scholarship covers, such as tuition, fees, and books.
• Look beyond the first year: Consider the duration of scholarships and grants.
• Consider other expenses: Think about additional costs like living arrangements and travel expenses.

When Will I Get My Financial Aid Award Letter?

Schools typically send out financial aid award letters between February and May, though some may send them sooner. The exact timing depends on your school and when you submitted your FAFSA. You may receive the letter by mail, email, or in your student portal.

What to Do if You Need More Aid

If your net cost is higher than what you can cover with federal student loans, here are a few steps you could take to obtain additional aid:

• Appeal your award letter: If your family’s financial situation has changed, you can write a financial aid appeal letter.
• Apply for private scholarships and grants: Use scholarship databases to find and apply for additional scholarships and grants.
• Ask your employer for help: Check if your company offers tuition assistance.
• Find a part-time job: Consider getting a part-time job to supplement your income.
• Get on a tuition payment plan: Some schools offer plans that allow you to pay tuition over the course of the semester.
• See if you qualify for additional federal loans: If your parents don’t qualify for parent PLUS loans, you may be eligible for additional student loans.
• Look into school-based loans and aid: Some schools offer short-term loans and emergency aid.
• Consider private student loans: If all else fails, private student loans may be an option, though they often come with higher interest rates.

The Bottom Line

Paying for college can be a daunting task, but it all starts with your financial aid award letter. Knowing how to read and assess your financial aid awards and compare offers from different schools can help you make better decisions about your college education and help you save money by limiting the long-term costs of student loans.

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