The Kid Is In! Time to Make Sense of the College Financial Aid Award

The Squeeze

• Students who fill out a FAFSA receive a financial aid award letter from each school that accepts them, detailing any public financial aid they’re eligible to receive.
• Award letters are inconsistent from school to school, so they may be tough to read, but each will include basic elements that help you understand how much and which types of aid the student is eligible to receive.
• After reading a letter, you can accept, decline or appeal an offer, and you might have to seek additional funding or private aid to fill in any gaps.

The financial aid award letter is an important step for many students in preparing for college. Unfortunately, like so much about finances — and paying for college in particular — they’re not easy to understand.

Here’s everything you need to know about the financial aid award letter, how to read it, how to compare offers and what to do after you receive it.

What Is a Financial Aid Award Letter?

A financial aid award letter is the official notification from a school that lets you know how much the school can offer you in various types of financial aid.

Students receive a letter after filling out the free application for federal student aid (FAFSA) and being accepted into a school. Each school that accepts you sends a financial aid award letter; even though student aid is funded federally, each school uses the information in the FAFSA to determine what they can award. 

What’s Included in the Letter

Your financial aid award letter will include information about:

• Cost of Attendance (COA): The school-certified amount it typically costs students to attend that school per year, including tuition, fees, supplies, books, room and board and some living expenses. Your actual cost could vary, depending on where the student lives (on versus off campus, for example) and which classes they take.
• Expected Family Contribution (EFC): This number has been confounding families for years. Thankfully, the Department of Education has decided to change its title to the more fitting Student Aid Index starting in July 2023. The number is not the amount your family has to pay toward a student’s education. It’s a number used in the formula to determine financial aid eligibility. Administrators subtract the EFC (SAI) from the COA to determine how much money the student needs.  
• Grants: The letter lists federal grants you’re eligible for, including a Pell Grant or a Federal Supplemental Educational Opportunity Grants (FSEOG), both need-based aid you don’t have to repay.
• Scholarships: These are any gift aid the school is offering, money you don’t have to repay.
• Work-Study: Students with financial need may be eligible for federal work-study, jobs on or off campus that pay up to the work-study award amount each year to help a student pay for college. (Basically, working their way through college, but the employer receives federal aid to pay the student.)
• Loans: These are the financial aid tools you will have to repay with interest after college. The award letter lets you know how much in subsidized and unsubsidized loans you can borrow each year, and you can accept as much or as little of them as you want.

When You’ll Receive a Financial Aid Award Letter

Students receive financial aid award letters around the same time college acceptance letters come out.

A student doesn’t automatically get a financial aid award offer just for being accepted into a school. To receive federal financial aid, you have to fill out the FAFSA to indicate your interest and give schools the information they need to determine how much aid to offer.

Students will receive letters from any school that accepts them (as long as that school receives federal funding, which most do).

How to Compare Financial Aid Offers

To compare financial aid award offers from various schools, you have to figure out the net price to attend each school and whether the offer makes the school affordable for your family.

The net price is the school’s cost of attendance minus any grants and scholarships you’re eligible to receive from the school — basically, your out-of-pocket cost. Use the information in your award letter to determine net price for each school.

Once you know the net price, compare the work-study and loan offers from each school to see how they stack up. Some questions to consider:

• Do the work-study and loan offers cover your remaining costs?
• If they don’t cover the cost, do you have savings or other resources that cover the cost?
• What is the debt load or workload the student has to take on to cover costs at each school? Which school offers the best balance for your situation?

Make sure you understand the details of the aid being offered with each package. You might have to contact a school’s financial aid office to get more information, including:

• Scholarship and grant renewal details: Is the money being offered once, or will it renew every year? What are the conditions for the student to continue to qualify?
• Student loan repayment: Federal loans come with standard repayment terms, including the timeline, interest rate, grace period and alternative repayment options. How might those options and the interest rate affect the student’s finances long term?
• Work-study options: Which jobs are available? What’s the hourly pay? How well do they accommodate a student’s course load and class schedule? What’s the hourly pay?

Next Steps

Once you know how your financial aid award offers stack up to each other, you can take any of these next steps.

Accept an Offer

If you see an offer you like from a school you want to attend, accept the offer! The letter should include details about how to officially accept the offer, including a deadline. You’ll also have to decline offers from other schools.

You can accept all or part of an offer — so, you might accept scholarships and grants, but not work-study or loans. Or you might accept scholarships, grants and loans, but not work-study. 

You should accept any scholarships and grants from the school you plan to attend, because that’s free money you don’t have to repay. But consider the impact of work-study and student loan debt before accepting those parts of the award offer.

Appeal an Offer

If you don’t think your financial aid award offer accurately reflects your financial situation, you can write a letter to the school’s financial aid office to appeal the offer and ask for more.

You might write a financial aid appeal letter if:

• Your financial situation has changed since you filled out the FAFSA, due to something like job loss, death, homelessness or a medical emergency.
• You made an error on the FAFSA.
• You want a particular school to match a better offer you received from a different school.

To write an appeal, contact the school’s financial aid office to get their requirements and who to send an appeal to.

Seek Additional Funding

Don’t have enough in savings, gift aid, work-study and loans to cover the cost of college? Figure out the gap, and consider these options to cover the difference:

• Work out a tuition payment plan with the school to spread out the cost. You might be able to afford tuition payments in your regular monthly budget if you don’t have to pay for every semester in one upfront chunk.
• Work during school to pay out of pocket.
• Apply for scholarships from private organizations.
• Apply for a federal parent PLUS loan.
• Apply for private student loans.