Once you've received your financial aid award letter, it's time to compare your options and make a decision on which college to attend. Here’s your quick and dirty guide to reviewing your financial aid award letter the right way.

You’ve just received your financial aid award letter from the college you’ve always wanted to attend. But before you start celebrating, there’s just one problem…how do you even read this thing?

Meme of man asking, 'What am I looking at?'

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If you’re feeling lost, don’t worry! Here’s a quick rundown on how to read a financial aid award letter.

What’s a Financial Aid Award Letter?

A financial aid award letter is a document that outlines the different types of aid a student is eligible for, such as grants, loans, and scholarships. It also lists the specific amount of each type of aid that the student has been awarded.

Financial aid award letters are also sometimes referred to as a financial aid notification, financial aid package, or just an award letter. Students can expect to receive their letter around the same time they receive their acceptance letter, typically in late March or early April.

Students should carefully review their award letter and compare it to their estimated costs of attendance (which we’ll talk about in a second) to get a clear picture of how much they’ll need to cover on their own.

Key Financial Aid Terms to Understand

Financial aid award letters vary from school to school. But here’s a quick rundown of some key things you should see when you get your letter in the mail.

The Cost of Attendance (COA)

The cost of attendance (COA) is the total amount it will cost you to attend college for one academic year. It typically includes tuition and fees, room and board, books and supplies, and other expenses like transportation. You’ll typically see this estimate at the very top of your award letter.

Expected Family Contribution (EFC)

This is the estimated amount your family is expected to contribute to your education, as determined by your Free Application for Federal Student Aid (FAFSA).

FAFSA is the form you (and your parents, if you’re a dependent student) must fill out to apply for federal financial aid, including grants, loans, and work-study.

Read more: Money Under 30’s Guide to Filling Out the FAFSA

Financial Need

Your financial need is the difference between your COA and EFC. In other words, it’s how much you’d have to pay out of pocket if you were awarded no financial aid at all.

If your COA is $20,000 and your EFC is $10,000, your financial need is $10,000.

Grants, Scholarships, and Other Gift Aid

These are forms of free money that you don’t have to pay back. Scholarships are often based on academic merit, but can also be based on need, your major, or other criteria.

Scholarships are usually awarded by colleges, while grants are usually awarded by the government. Scholarships can be used to pay for any type of educational expense, while grants are often need-based and can only be used for specific expenses, like tuition and fees.

Read more: Scholarships and Grants: How to Score Free Money for College

Student Loans

Student loans are a form of financial aid that you will have to pay back, with interest. There are two types of student loans: federal and private.

  • Federal loans are available to all students, regardless of their financial need. They’re backed by the government.
  • Private loans are offered by banks and other lending institutions, and usually require a good credit history.

Read more: The Best Student Loans of 2022 — How to Find the Best Loan

Work-Study

Work-study is a type of financial aid that allows you to work in exchange for money to help pay for college. It’s typically needs based, so your eligibility for work-study may be based on your FAFSA.

The amount of money you can earn through work-study depends on your financial need, the school you attend, and the availability of jobs. Work-study jobs are usually on campus, although some may be off campus.

Read more: Everything You Need to Know About FAFSA (But Were Too Afraid to Ask)

When Can I Expect to Get My Financial Aid Award Letter?

For first-time, full-time students who submit the FAFSA by the priority deadline, you can expect to receive your financial aid award letter around the same time you get your admissions decision.

If you’re a returning student or if you submitted your FAFSA after the priority deadline, it may take longer to receive your financial aid award letter.

What Might Be Missing from the Letter?

Not all colleges are required to include the same information in their financial aid award letters.

For instance, a college’s cost of attendance (COA) covers a wide range of expenses, from tuition and fees to books and supplies.

However, some universities may omit certain expenses, such as transportation and personal expenses. It’s up to you to add these expenses back in so you can compare colleges apples to apples.

Scholarships and loan terms may also differ from school to school. If you’re granted aid, take note of how long any scholarships last, what requirements you have to meet to maintain them, and any other requirements.

MU30 TIP: If you have any questions about your financial aid award letter, don’t hesitate to reach out to the financial aid office at the college. They’ll be more than happy to help you understand your options and make the best decision for your future.

What Should I Do after I Receive My Financial Aid Award Letter?

Once you’ve received your financial aid award letter, it’s time to compare your options and make a decision on which college to attend.

When making your decision, be sure to consider:

  • The financial gap you’ll have to cover after you take into account the total cost of attendance and the types and amount of aid you’re being offered.
  • What you can realistically afford to pay back after you graduate. Taking out too much in loans can put you in a difficult financial situation after college, so be sure to borrow responsibly.

For instance, say you’re trying to choose between the two schools in this table — a private university and a public university:

 Private universityPublic university
Cost of Attendance (COA)$55,000$25,000
Expected Family Contribution (EFC)$10,000$10,000
Financial need (COA - EFC)$45,000$15,000
Financial aid award$30,000$12,000
Financial gap$15,000$3,000

In this table, the financial gap is how much you’ll have to cover out of pocket each year. 

Even though the private university is willing to grant you $30,000 in aid compared to $12,000 from the public school (which sounds like the best deal on the surface), the public school is still considerably cheaper.

Read more: Decision Day Just Got Easier Thanks to College Scorecard’s Latest Update

What If I Don’t Like My Financial Aid Award Letter?

If you’re not happy with the financial aid award letter you received, don’t panic! There are a few things you can do:

Look For Other Sources of Aid

You may be able to find additional scholarships and grants from private organizations or the government.

Negotiate with the Financial Aid Office

If you have a good reason for why you need more aid, you may be able to negotiate with the financial aid office for a better package.

Read more: How (And When) to Contest Your Financial Aid Package

Take Out Loans

You can always take out private or federal student loans to help cover the cost of college if your heart is set on it. But be cautious of racking up too much student loan debt.

The average student loan monthly payment is $460 but can be as high as $2,553 for a professional degree. Think about Future You and try to keep your minimum payments as low as possible to help ease your transition into the workforce after you graduate.

Read more: Student Loan Debt: Understanding the Growing National Crisis

Go to a Cheaper School

Your last option is to attend a cheaper school. This is ultimately what I decided to do when I graduated high school.

Storytime…

When my financial aid award letters started rolling in, I was stuck between two schools: my dream college (a private university that would cost $40K a year after aid) and a public university that would cost me about $2,000 a year.

As much as I loved the private university, I felt like no bachelor’s degree was worth over $120K in student loan debt. So I chose the public university instead. I don’t regret it one bit.

Summary

Now that you know what to look for in a financial aid award letter, it’s time to start reading! And remember, if you have any questions along the way, the financial aid office is always there to help.

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About the author

Cassidy Horton
Total Articles: 50
Cassidy Horton is a finance writer who specializes in banking and insurance. She earned her MBA and bachelor’s degree in public relations from Georgia Southern University — and has since published hundreds of finance articles online for Forbes Advisor, The Balance, Money, Finder.com, and more. When she's not helping Millennials and Gen Zers gain control of their finances, you can find Cassidy hiking around the Pacific Northwest, cuddling her two cats, and eating way too much fried chicken. Connect with her on cassidyhorton.com or LinkedIn to see what she’s up to next.