Guide to Financial Aid Award Letters for Students
You’ve received your acceptance letters and already filled out your Free Application for Federal Student Aid (FAFSA®). You couldn’t be more excited about college. As you daydream about this next step in your life, you may start to think about your future financial aid award letter and when it will arrive. What exactly will it say? Will it be a list of numbers in a confusing language? Or will the information be easy to understand?
Continue reading to learn how to read financial aid award letters.
What is a Financial Aid Award Letter?
So, what is a financial aid award letter? In simple terms, if you submitted a FAFSA and were approved for financial aid, this letter will explain how much financial aid you can expect to receive from your college or university for the upcoming academic year. Each school you’ve been accepted to will send you an award letter if you listed them on your financial aid application.
When Do You Receive Your Financial Aid Award Letter?
When do you receive the financial aid award letter? You can expect your financial aid award letter around the same time you receive your college acceptance letter. You can expect to receive it via email or mail.
How to Read a Financial Aid Award Letter
While universities use no standard format to write award letters, there is some common information that each letter will contain.
Cost of Attendance (COA)
The cost of attendance (COA) section will explain your total cost for one year of school. Depending on your school, this may include tuition, supplies, books, transportation, room and board, and other fees. Remember that your attendance cost is your school costs for one academic year. You’ll need to submit the FAFSA every year to see how much federal aid you may be eligible for to cover your cost of attendance.
Expected Family Contribution (EFC)
The next section you might see on your financial aid award letter is your Expected Family Contribution (EFC). Your school uses your EFC amount to determine how much federal aid to award you. In general, the lower the EFC number, the more financial aid you may receive.
Heads up! In 2023, the EFC will change, including its renaming to the Student Aid Index.
Grants, Scholarships, Work-Study Programs, and Loans
While each school might have custom names for its different types of aid, it generally falls into these categories.
- Grants: Grants don’t have to be repaid and are awarded based on financial need.
- Scholarships: These are awarded based on interests/talents and don’t need to be paid back. These could be athletic-based, artistic-based, or academic-based.
- Work-Study Jobs: These programs help you earn money for college with an on-campus job. You’ll work while attending college. You’ll be paid minimum wage but could be paid more based on your qualifications and the job you get.
- Loans: You’re probably already familiar with loans. You borrow money from the federal government, a bank, a credit union, state-based organizations, or private sources. You will be required to pay the loans back plus any interest that accrues.
Comparing Financial Aid Award Letters
Now that you know the basics of your financial aid award letters, you can compare your options. Here’s how you can get started:
- Create a spreadsheet. Under each column, write the name of each school that sent you an award letter. School A goes under column A, and so on.
- Under the school’s name in row 2, add the total cost of attendance. Add all expenses, including room and board, meal plans, and supplies.
- In row 3, write the financial aid you plan to receive, including grants and scholarships. You may also include any additional money you intend to receive from family or friends. Subtract that from the total cost of attendance.
- Lastly, in row 4, write in the money you’re borrowing via loans and subtract that from the total cost of attendance.
- You’ll need to cover the amount left over through other funding sources, such as private student loans.
Following this method will help you get a clear picture of what you can expect to receive and pay for each of your top choice schools.