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How to Read Your Financial Aid Award Letter

Congratulations, you have received a college or graduate school acceptance letter and know all that hard work got you here! Now comes the next letter that will tell you how much financial aid you will receive if you attend.

The financial aid award letter helps bring the college dream closer to reality—once you know what information it holds.

What Your Financial Aid Award Letter Should Include

If you filed the FAFSA and were approved for financial aid, you should get a financial aid letter either with your college acceptance or shortly after.  

Financial aid award letters from schools aren’t all the same (and some might be called something different) but should include the same information:

  1. The annual cost of attendance
  2. A list of the financial aid types available to you

Understand the Types of Financial Aid Awarded In Your Letter

Just like how your financial aid award letter might be called a financial aid package, merit letter, or financial aid offering, different schools refer to the types of aid provided differently. It’s important to understand if the aid awarded is a loan, grant, scholarship, or work-study program.

If you are ever confused by your financial aid letter, reach out to the school’s financial aid office.

Grants and Scholarships

These are financial aid awards that students do not need to pay back—often called “gift aid.” Awarded for merit or need, these are ideal for students hoping to avoid taking on further debt. Requirements to keep your scholarship or grant each semester could include being a full-time student or earning a specific GPA.

If you don’t see scholarships or grants listed, look for “need-based aid,” “merit-based award,” or “gift aid.”

Federal Loans

As you will need to pay interest on your loans, it is important to understand the amount offered and the loan terms before deciding how much you want to borrow each year. The loan information is based on the information included in your FAFSA and is specific to your financial situation.  

Be sure to think about that money over the course of 4+ years for a bachelor’s degree, or the specific timeline of your chosen grad program.

This section may also be called “Federal Direct Loans” or “Direct Graduate PLUS Loans.”

Work-Study Programs

Work-study programs are employment opportunities with the school on- or off-campus. Often these are first reserved for students financial need. Job opportunities could include working as a tutor, resident advisor, in the school fitness center, in a research department, computer lab, etc.

You will have to apply and interview like any other job, and find a balance between your class schedule and homework. Not only is this a way to help finance your education, but can also be a great resume builder for students.

In your financial aid award letter, you might see work-study labeled “self-help aid” or “earned money.”

Understand the Cost of College to You

If you are not set on a school yet, it can be helpful to compare your financial aid award letters. Understanding the real cost of each institution might make your choice more clear.

Make sure to think beyond your first year of school. Often the cost of tuition will increase year over year, and your costs will go up. Estimate how your total cost of attendance could change over the length of your program. It could be worth selecting a more affordable school to keep your expense growth under control.

If you didn’t receive the level of financial aid you were hoping for, write to the financial aid office of the schools and appeal your financial aid package. Not everyone realizes the office could offer you more if you are a highly qualified student.

Paying For What a Financial Aid Award Letter Doesn’t Cover

Aid, federal loans, and work options may not cover the total cost of attendance. The financial aid award letter is a great way to calculate the financial gap that you will need to cover to attend college. These could include:

  • Savings: Some students will have a 529 or other savings account they can tap into to help cover the cost of further education.
  • Private scholarships: Your financial aid letter will list the scholarships specific to their school, but that doesn’t mean you can’t apply to other scholarships. There are a number of places that you can look for scholarship options outside of your school.
  • Private loans: For the education costs you can’t cover with savings, aid, or federal loans, private loans can close the college affordability gap.

This article was written by Carolyn Pairitz Morris, Senior Editor at Earnest.

Disclaimer: This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.