If you or your child are preparing for college, you are likely familiar with financial aid. Due to a college education’s high and rising costs, financial aid is awarded to families who need help funding their schooling.
Financial aid awards are given through scholarships, school grants, work-study programs, or student loans.
To receive financial aid, you or your child must complete a Free Application For Student Aid, also known as a FAFSA. Even if you feel your family makes too much, it is worth applying for.
Many families are surprised when they discover they qualify for aid.
After a FAFSA is reviewed, you will receive a financial aid award letter if you qualified for funding. Reading an award letter can be tricky when you’re not sure what you’re looking at.
Learn more about your financial aid award letter, what to look for when reviewing it, how a school will determine your aid, and how to accept the funding.
What is a Financial Aid Award Letter?
The colleges that accept you will send out their acceptance letters and financial aid award letters around the same time.
A financial aid award letter is a document that notifies you of the financial aid that the college is willing to offer you and the total cost of attendance for the year, including tuition, fees, and room and board.
An award letter will also specify whether the funding you qualified for is through scholarships, school grants, work-study programs, or student loans.
Financial aid is need-based, and depending on your financial need, you may receive more than one type of aid.
If you received multiple financial aid award letters, you will want to review each college and award letter to determine which would be the smartest to accept.
One school may offer more aid than another, but their tuition and fees may be higher, meaning that the extra funding they offer won’t make a big difference in the long run.
What to Look for When Reviewing Your Financial Aid Award Letter?
Not all financial aid award letters will look the same, but the content will be similar regardless of their format and language.
Each award letter should explain:
- The cost of attendance (COA)
The COA is a college’s total estimated expenses for the year, including tuition and fees, books and supplies, room and board, transportation, loan fees, and miscellaneous expenses.
- Your expected family contribution (EFC)
Your EFC is an index number that colleges use to determine how much financial aid you’re eligible to receive. The lower the EFC, the more funding you can get.
- Details (and dollar amounts)
These pertain to the types and amounts of aid being offered. It will explain what grants, scholarships, work-study programs, and loans the college is offering you.
- The deadline for accepting the aid offer
- How and when the money will be disbursed
- The academic period the award covers
How Did They Determine Your Financial Aid?
To calculate your financial aid award, your cost of attendance (COA) will be subtracted from your expected family contribution (EFC). After this calculation is made, it will show your financial need.
Typically, need-based aid is awarded first. The following are need-based student aid programs:
- Federal Pell Grant
- Federal Supplemental Educational Opportunity Grant
- Direct Subsidized Loan
- Federal Work-Study
If your award letter mentions unsubsidized loans, these are not need-based loans and will need to be paid back in the future.
Since an EFC is calculated using your family’s taxed and untaxed income, assets, benefits, and family size, it may not reflect your family’s current situation.
If your EFC is incorrect, you can request more financial aid. Examples of special circumstances colleges may consider are loss of a job or a reduction in income, death of a parent or spouse, and reduced earnings due to disability or natural disaster.
Next Steps – Accept Your Financial Aid Award
Before accepting any awards, you will want to review your financial aid award letters and be sure that you understand their terms and the types of awards you are being offered.
Sometimes, a school may offer you more financial aid than you need. While it may be tempting to accept the extra amount, it is wise to only take what you need, especially on loans that need to be paid back.
Once you have chosen a college and are happy with your award, you must accept your funding before the school’s deadline. You can find the deadline on your financial aid award letter.
Each college is different, but most will allow you to accept your award by logging on to your school’s website and using your student identification number.
For schools that require you to send in physical forms, you must send them in early, so they are received before the deadline.
You’re Not Alone
College planning and financial planning can be challenging when you attempt to do it alone.
If you find your financial aid award letter confusing, reach out to teachers, counselors, academic advisors, and college planning specialists.
Your educational journey should be an exciting time, not a stressful one. Let professionals help you, so you can focus on what matters the most- getting into the college of your dreams and earning your degree.
Your college acceptance letter and financial aid award letter are documentation that you are one step closer to achieving your goals.
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