What’s in a financial aid award letter

Making the big decision

This is a super exciting time for college students! If they haven’t already, your admissions packages and award letters should be flooding in this month. Fortunately you don’t have to make your decision until May 1st.

Most schools send out financial aid award letters around the same time as their acceptance letters. The timing can vary, however, depending on things like when you submitted your FAFSA and how many FAFSAs the school received. If you have questions about when you can expect your award letter, call your school’s financial aid office.

Figuring out how you’ll pay for school is a big deal. It can have an impact on the amount of debt you’ll have after you graduate. Once you understand the offers in your financial aid award letters, you can choose what works for you and start planning how you’re going to pay for any gap not covered by your financial aid.

Your award package—and how much extra you’ll need to pay for school—are important, but there are other things to consider than money. Factor in each school’s location, campus culture, quality of academic programs, and graduation rate. Make a pros and cons list. Price goes at the top…but it shouldn’t be the only thing on the list.

Keep in mind, your award letter covers one year only, so you will get a new award letter every year. And that means you’ll need to fill out the FAFSA and apply for financial aid annually while you’re in school.

Compare your financial aid packages

Okay, now it’s time to compare the award letters from all your schools and see which has the best deal for you. An easy way is to create a spreadsheet so you can compare their offers side by side.

  1. Create a column for each school.
  2. Make a row for each category: COA, scholarships, grants, fellowships, work-study, and federal loans.
  3. Subtract all the categories from the COA.
  4. What remains is the gap—the amount you’ll need to pay for school from other sources, such as savings or a private student loan.

Financial aid award letters usually contain this information:

  • Cost of attendance (COA), an estimate of what you can expect to pay for one year of school. This includes tuition and fees, room and board, books and supplies, transportation, and even some personal expenses.2 If the COA isn’t included in your letter, check the school’s website or call the financial aid office.
  • Expected Family Contribution (EFC), a number that your school uses to determine how much financial aid you’re eligible for. It’s not (despite its name) how much your family will have to pay for college.3
  • College grants are typically need-based and can be given by state or federal governments.
  • College scholarships can be need-, merit-, or interest-based and are awarded by a school, company, or private organization.
  • Federal work-study is a program, implemented by the school, where you work to earn your financial aid.
  • Federal student loans let you borrow money directly from the federal government; you pay this financial aid back with interest. A financial aid award letter may also list the amount you can borrow with a credit-based loan (like a federal Direct PLUS Loan or a private student loan).

Free money vs borrowed money vs earned

Your award letter lists all the financial aid you’re eligible for, but there’s an important difference between whether the aid is free, borrowed, or earned:

  • Free money is money that you don’t have to pay back: scholarships, grants, and fellowships.
  • Borrowed money is money you’ll need to pay back with interest: federal student loans (which may be listed as “Federal Direct Loans”) or credit-based loans (like Direct PLUS Loans, which come from the federal government, or private student loans).
  • Earned money is like a part-time job and you don’t have to pay back the money you earn: work-study.

A financial aid offer isn’t always set in stone

You don’t have to accept all the financial aid listed in your award letter.

Let’s say you’re awarded work-study in your financial aid package but you know you’re going to be too busy with schoolwork. Or the amount of the federal loan you’re qualified for is more than you want to take out. You can say “no” to all or part of a financial aid award, or ask your school’s financial aid office to review your financial situation. Just be sure that you won’t need to borrow money for costs that you could have covered with free money.

Whether you decide to accept or decline your financial aid package, you’ll need to respond to the award letter. Each school sets a deadline for a response, so don’t miss out, whether it’s mailing back a signed form or answering online. If you do decide to request more financial aid from a school, talk to your financial aid office. There might be a written process to request a review of your financial situation.

Remember, bigger isn’t always better. Don’t rely only on the total dollar amount of a school’s financial aid award. For instance, you might receive a smaller total award that offers more scholarships and grants than a larger award consisting mostly of loans. Or, despite a generous financial aid package, School A will still cost a lot more than School B, which is offering less financial aid.


Take your time when you’re comparing your financial aid packages. You’re investing years of your life in school, so invest the time now to figure out what’s best for you.

1 This information was gathered on 10/26/18 from https://studentaid.ed.gov/sa/fafsa/next-steps/how-calculated#cost-of-attendance.

2 This information was gathered on 10/26/18 from https://studentaid.ed.gov/sa/fafsa/next-steps/how-calculated#whats-the-expected-family-contribution.

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