Understanding Financial Aid Award Letters

Understanding Financial Aid Award Letters

If you were accepted to multiple universities (congratulations!), you likely felt a great deal of excitement when you received your financial aid award letter. But then your excitement was probably quickly replaced with confusion, and maybe even anxiety, when you tried to understand your financial aid award letter.

After all, universities don't have a standard way of presenting the information, and it can be hard to see what offer is best.

The good news is that it doesn't need to be confusing. This article will help you not only learn how to read your financial aid award letter, but also understand a financial aid award letter based on what the information in it means.

Quick Hit: 8 Things You Need to Know About College Award Letters

What Is a Financial Aid Award Letter?

If you submitted a Free Application for Federal Student Aid (FAFSA) and were approved for financial aid, each school that accepts you will send you a financial aid award letter - sometimes referred to as a "financial aid offer," a "merit letter," a "financial aid package," or simply an "award letter."

By definition, an award letter is meant to provide you with your cost of attendance for one year, and how the specifics of your financial aid package measure up to that cost.

There is no standard format that all schools follow, so we'll address the most important elements typically included in the letter, and how to assess them together to compare your offers.

This will also help you better understand the financial aid terms these letters might contain.

When Will I Get My Financial Aid Award Letter?

Often, you will receive your financial aid award letter around the same time you receive your acceptance letter. This can vary depending upon the timing of your FAFSA submission and each school's administrative process. Information about a school's timing is best obtained by contacting the school's financial aid office directly.

Keep in mind the information in a financial aid award letter reflects one year of attendance only. For each year you attend school with a completed FAFSA, you will receive a separate financial aid award letter.

Elements of financial aid letters

The first step to evaluating financial aid award letters is to understand the elements they include.

Each financial aid award letter will include:

  • Cost of attendance (COA - an estimate of tuition and fees, room and board, books, and other supplies)
  • Money that you do not have to repay (e.g., grants or scholarships)
  • Money that you need to repay (e.g., federal loans)
  • Work-study programs funded by the federal government and/or the university
  • Expected Family Contribution (EFC - the amount of money your family is expected to contribute for your college education)

With these numbers, you can see how your financial need is calculated:

  • COA - EFC = financial need
  • COA - all aid received (incl. grants and work study) = eligibility for non-need-based aid

These equations also help create a realistic picture of your true financial responsibilities.

Factors to consider when reviewing financial aid award letters

Contact the university's financial aid officer listed in your offer letter to gather more information about your offer and what your financial aid award letter covers. It's a good idea to do this by email so you have a written record of the conversation. You'll want to know the following information:

Additional costs

Some universities will only list tuition in the "cost of attendance," but remember that you'll have to cover housing, food, transportation, books, supplies, additional fees, and other living expenses. In addition, if the school is far away from home, you may want to consider the costs to fly home during school breaks.

Estimated tuition cost increases

Ask them how much tuition and other fees have increased recently and if they can give you an idea of how likely they are to increase over the coming years. You might also be able to find some of this information on your own online.

The average graduation rate at the university

This should give you a sense of how long it may take you to earn your degree. For example, if the average graduation rate for students is five years, you might want to calculate your tuition costs over that period. This is a safer approach.

Scholarship terms

If the school is offering you scholarships, learn as much as possible about what those include. For example:

  • Will the scholarship renew every year you're in school?
  • Will it renew at the same amount?
  • What are your responsibilities to continue to receive the scholarship (i.e., maintaining certain academic performance)?

Although it's not fun, think about worst-case scenarios when you're considering your options. For example, if you have an athletic scholarship and you get injured and can't play, how will you continue to pay for college?

Loan terms

Your financial aid award offer letter may include federal student loans. You may choose to accept or decline these. Loan terms vary significantly, so before you accept any, be sure you understand all the terms. For example:

  • What is the interest rate?
  • Are there any additional fees aside from the interest rate?
  • How soon will I need to start payments?
  • When will I start accruing interest?
  • How long do I have to repay the loan?
  • How much will I need to pay each month once I start repaying the loan?

Work-study program terms

If work-study opportunities are included in your financial aid award offer, ask the admissions counselor:

  • What jobs are available to you?
  • What's involved with getting accepted to their work-study program?
  • How much can you earn?
  • What are the minimum and maximum number of hours a week you can work?
  • Are the jobs on or off campus?

Additional questions

In addition, you'll want to know:

  • Might the amount of my award increase if some other students don't accept their awards?
  • What do I need to do to receive the award?
  • What do I need to do to continue to receive award funds in subsequent years?

Why Need Is Not Just a Number

It is important not to judge information in a financial aid award letter on numerical value alone. While your EFC (expected family contribution) is a fixed amount, predetermined by FAFSA, your financial need is not. This can vary greatly, as depicted in this sample scenario:

University A
University B
Cost of Attendance (COA)
$20,000
$40,000
Estimated Family Contribution (EFC)
$12,000 (fixed)
$12,000 (fixed)
Your Financial Need
$8,000
$28,000


University B is clearly more expensive than University A, leaving you with greater financial need. But when you compare the schools' financial aid award offers, the more expensive school becomes less expensive to attend:

University A
University B
Your Financial
$8,000
$28,000
Your Financial Aid Award
$4,000
$26,000
Your Financial Aid Gap (Unmet Need)
$4,000
$2,000


When you know how much aid you'll receive, you can start to compare offers from different schools by plugging the numbers from each letter into a financial aid calculator.

What to do next with financial aid letters

  • Find out the deadline and instructions for accepting the financial aid award.
  • Notify the university ahead of time, and be sure to let the other universities you were accepted to, as well.
  • Complete any necessary forms, such as loan applications.

What to Do If You Need More Financial Aid

It is possible that your financial aid package will not cover all of your college costs. There are many ways to close this gap, so don't be dissuaded from attending your top choice school based on the numbers in your financial aid award letter alone.

Appeal Your Financial Aid Package

You can sometimes find more financial aid for school by appealing to a school directly. How do you ask a college financial aid office for more money? The simple answer is to state your case honestly.

If you or your family had a change in your financial circumstances, or if you've received a more attractive financial aid offer elsewhere, it can't hurt to request a modification to the financial aid award you received from your top choice school. Visit the university's website to find out their procedure for appealing a financial aid award.

Tip: If you have the opportunity to discuss this with a financial aid officer, politely let them know why you're asking for the change. If you're asking for additional funds because you got a better offer elsewhere, you may be asked to share that letter.

Live At Home and/or Work Part-Time

These options might not fit your image of an ideal college experience, but they do ease the costs of pursuing your degree. If you live at home during your first year, you can save up for housing for the following year. If you work part-time, you might be able to afford housing for every year.

Doing both together will save you the most, but remember that your studies should come first - especially during your first year.

Consider a Less Expensive School

Some schools have built-in prestige and name value, but that can come with a hefty price tag. Be clear on what that buys you. This might depend on the field you want to enter or whether or not you plan to attend graduate school.

If well-known professors or state-of-the-art research facilities are not integral to your personal academic goals, you might do well with a less expensive option. This will not only reduce your financial burden, but your stress level, too!

Last-Minute Scholarships

Last-minute scholarships often feature later deadlines and quick eligibility requirements - register an online account or answer a monthly sweepstakes question, for example.

Here at College Ave, we award $1,000 monthly, and all that's required is completing a simple form:

College Ave Monthly Scholarship Sweepstakes

You can also reach out to your school's financial aid office for information about last-minute scholarships and assistance programs. Some could be unique to your college or degree.

Other ways to find last-minute scholarships:

Late Deadline Scholarships (U.S. News & World Report)
4 Places to Find Last-Minute Scholarships (NerdWallet)
Quick and Easy Scholarships (Fastweb)

Consider Private Loans

Private student loans can help fill the gaps federal student loans and other assistance programs don't cover.

While federal student loans are usually based on need, private student loans are based on creditworthiness, which is determined by income and credit history. Since most college students don't yet have either, private lenders often require applying with a cosigner. This helps you not only secure the loan, but a lower interest rate and favorable repayment options, as well.

Sometimes, financial aid and federal student loans aren't enough to cover the full cost of college, and private student loans like the ones at College Ave might be the right answer for you.

Explore College Ave. Private Student Loan Options

Relevant Articles

Understanding Financial Aid Award Letters

Learn how to understand your financial aid award letter with a full breakdown of the different elements of the award letter, and what other factors you should consider when reviewing and comparing them.

Federal vs. Private Student Loans

When shopping for student loan options, you can opt to take out a federal or private student loan, or a combination of the two. Learn about the differences and benefits between both types to make an educated decision on which options work best for your financial situation.

Student Loans 101: How Student Loans Work

Thinking about taking out a student loan to pay for college? Before you get started, make sure you understand how student loans work. Click here to learn the student loan basics, the different types of student loans, repayment options and more

Read more about
Student Loans 101

10 Things to Know When Student Loan Shopping

Knowing where to start in finding a student loan is hard. Read College Ave's student loan shopping guide to learn the most important things when researching loans.

How to Apply & Qualify for College Grants

Learn everything you need to know about how to reduce your college education costs with grants, including the different types, how to qualify and how to apply for grants. Explore federal and non-federal grant programs for college today.

Variable vs. Fixed Interest Rates: What's the Difference?

It's important to understand the difference between student loan variable interest rates and fixed interest rates. Learn the basics so that you can choose which is best for you

How To Choose A Student Loan: Key Factors To Consider

First, consider any federal student loan options available to you. When it comes time to apply for a private student loan, do not assume that all private student loans are the same. Benefits can vary by lender, and some lenders offer more repayment flexibility than others.

Understanding How Borrowing and Lending Works

Learning how lending works is not only important while you're in college and looking for student loans but also for life in general. While the nitty-gritty of borrowing (and lending) may vary depending on the type of loan you're seeking (student loan, car loan, mortgage, etc.), the general principles can be applied across the board.

College Planning Timeline: High School Checklist

Getting ready for college doesn't have to be complicated. Just map it out with our handy college planning timeline.

What’s the FAFSA and why is it important?

The Free Application for Federal Student Aid (or FASFSA) is the online form you must complete each year to access federal aid (including federal student loans). In addition to helping you access federal aid, many states and individual colleges also use the FAFSA to determine your eligibility for state and school aid.

I Just accepted and signed my loan documents. Now what happens during school certification?

After your loan is approved, and you have accepted the terms, signed the loan documents, and (if asked) provided documents to verify your identity, your loan is sent to your school for certification. At this point in the process, you’re done until we hear back from the school. So what's happening on their side?

What types of degree programs can a graduate student loan cover?

A graduate student loan can cover school costs for most master’s, doctoral, or advanced professional degree programs, including the examples listed below, and many more. If you’re wondering whether grad school is the right investment for you, do your homework.

What’s the difference between federal student loans and private student loans?

Federal student loans are made and funded directly by the federal government. To apply, you need to complete the Free Application for Federal Student Aid (FAFSA).

How do I get my 0.25% auto-pay interest rate reduction?

You'll need to set up a "Recurring Payment" on our Customer Service site. We will walk you through the steps setting up.

Read more about
Setting up auto-pay

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

Information advertised valid as of 08/29/2018. Variable interest rates may increase after consummation.

WE RESERVE THE RIGHT TO MODIFY OR DISCONTINUE (IN WHOLE OR IN PART) THIS LOAN PROGRAM AND ITS ASSOCIATED SERVICES AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK WWW.COLLEGEAVESTUDENTLOANS.COM FOR THE MOST UP-TO-DATE INFORMATION.