De-Mystifying the Financial Aid Award Letter: Ultimate Guide Part 1

What is a Financial Aid Award Letter?

Navigating the world of financial aid can be overwhelming, but understanding your award letter is a crucial step in making informed decisions about paying for college.

The award letter is a document that outlines the types and amounts of financial aid a student is eligible to receive for an academic year. It is issued by the college or university the student plans to attend and takes into account the student’s family’s financial needs.

The letter breaks down the different forms of financial aid available, such as scholarships, grants, loans, and work-study programs, and the amount of funding each offer. The goal of the award letter is to help bridge the gap between the cost of attending the school and what the student and their family can afford to pay.

Important Terms:

1. Cost of Attendance (COA):

This is the estimated total cost of attending the school for one full school year and includes tuition and fees, room and board, books and supplies, transportation costs, and personal expenses. This is essential for determining how much financial aid is needed to cover the gap between the COA and what a student and their family can afford to pay. Different schools may have different estimated COA figures, so make sure to compare them carefully when considering financial aid packages.

2. Expected Family Contribution (EFC):

This is how much financial aid a student is eligible for based on their family’s financial needs. The lower the EFC number, the less money the student’s family is able to pay for school, and the more financial aid the student is able to receive. EFC is calculated using a formula that takes into account the student’s family income, assets, and other factors.

3. Financial Need (COA – EFC = Financial Need):

This is the difference between a student’s ability to pay for college and how much it costs to attend. After subtracting the expected family contribution (EFC) from the cost of attendance (COA), the resulting amount is the financial need, which determines the amount of financial aid a student is eligible to receive.

Your award letter will offer you a financial aid package based on your eligibility. This may include multiple financial aid sources, such as grants, work study programs, and loans. The award letter goes over how much money you can expect to receive from each source.

Am I Eligible for Financial Aid?

Financial aid eligibility is determined by the FAFSA (Free Application for Federal Student Aid). This application is used by the federal government, states, colleges, and universities to determine a student’s eligibility for financial aid.

You must fill out this application for each year you are in school, which will determine if you qualify for financial aid for that year, and if so, how much. The application is free, and students can either fill out the online application from the US Department of Education or mail in a physical application.

To complete the FAFSA application, you will need to provide information about your family’s income, assets, and other financial information. The application can be time-consuming, but it is important to complete it accurately and on time to ensure eligibility for financial aid.

It is important to note that the FAFSA application has an annual deadline, typically on June 30th. Students should check with their school or state for specific deadlines, as they may vary. It is recommended to complete the FAFSA as soon as possible after it becomes available on October 1st to increase your chances of receiving financial aid.

In addition to federal financial aid, some states and colleges also use the FAFSA to determine eligibility for their own financial aid programs. Students should check with their school’s financial aid office and their state’s higher education agency to learn about additional financial aid opportunities.

Financial Aid Sources

There are 4 main sources of financial aid:

1. Grants:

Grants are a type of financial aid that does not have to be repaid and are typically awarded based on the student’s financial need as determined by the FAFSA. Grants can come from the federal government, state governments, or individual colleges and universities. They can cover some or all of a student’s tuition and fees.

2. Work-Study Programs

Work-study programs may be included in the financial aid award letter as a form of financial aid that allows the student to work on or near campus to help cover the cost of attendance. Students are typically awarded a specific amount of money they can earn through work each semester. These programs can also provide valuable work experience in addition to offsetting the cost of tuition and other expenses.

3. Student Loans:

Student loans are a form of financial aid that must be paid back with interest. They may be included in the financial aid award letter and can come from either the federal government or private sources such as banks, credit unions, or private organizations. It is important to carefully consider the terms and conditions, such as interest rates and repayment options, of any loan before accepting it to ensure that it can be repaid in a timely and manageable manner.

4. Scholarships:

Just like grants, scholarships are a type of gifted aid that does not have to be repaid. Here are a few common types:

  • Merit-based scholarships

These scholarships are awarded based on academic achievement, athletic ability, leadership skills, or other factors that demonstrate your potential as a student. They may be awarded by the college or university, private organizations, or government agencies. Students are automatically considered for merit-based scholarships when applying through the Common App, though you can also apply for more.

  • Need-based scholarships

These scholarships are awarded based on financial need. To be considered for these scholarships, you’ll need to submit the Free Application for Federal Student Aid (FAFSA), which will determine your Expected Family Contribution (EFC). The lower your EFC, the more need-based aid you may be eligible to receive.

  • Institutional scholarships

These scholarships are offered by the college or university you plan to attend. They may be based on merit or need, and the amount may vary depending on the school and the student’s qualifications.

  • Outside scholarships

These scholarships are offered by private organizations, foundations, or businesses. They may have specific eligibility criteria and application requirements, such as submitting an essay or participating in a community service project.

When reading your award letter, pay attention to the TYPE of financial aid that is being offered to you as well as any terms and conditions so that you know what to expect.

When Should You Receive Your Award Letter?

If approved by FAFSA, each school that accepted you will send you a financial aid award letter. You should receive this letter in early to mid-April after you receive your acceptance letters from schools.

When you receive your award letter, pay attention to the total cost of attendance for the school and the total amount of financial aid being given.

Make sure you understand:

Additional costs (beyond tuition)

There may be other costs associated with attending college that are not covered by financial aid such as housing, textbooks, transportation, and personal expenses. It’s important to factor in these costs when deciding which college to attend and to make a budget plan to manage them. Some schools may offer financial assistance for these expenses, so be sure to ask your financial aid office about any available resources.

Scholarship terms

What are the terms of the scholarship? What are your responsibilities to maintain it? For example, a school may offer a larger amount of aid but require the student to maintain a higher GPA or participate in a specific program, which may not be feasible for all students. You should also be aware of whether a scholarship is renewable and with the same amount every year, or a one-time award. This information should be clearly stated in your financial aid award letter.

Work-study programs

It is important to ask questions such as:

1. What jobs are available?

2. Are they on or off campus?

3. What is the compensation?

4. How do I apply and be accepted into a work-study program?

Some work-study jobs have limited availability and may not cover all of your expenses. Other work-study programs may require a certain number of hours worked per week or have specific job duties. Make sure that the work-study program is manageable alongside your academic workload.

Loan terms

While student loans can be a helpful resource to finance your education, it’s crucial to understand the potential long-term consequences of taking on debt.

You should be aware of the interest rates and additional fees associated with the loan. The interest rate will determine how much extra you will have to pay on top of the loan amount over the life of the loan. Additionally, some loans may have origination fees or other charges that can add up over time.

Take note of when the repayment of the loan will begin and how much your monthly payments will be. Depending on the type of loan, repayment may not begin until after graduation or may be required while you are still in school. Getting a clear understanding of these terms will enable you to plan accordingly and avoid defaulting on your loan.

Finally, you should be aware of any options for loan forgiveness or income-driven repayment plans. These can be helpful tools to manage your debt and ensure that you are not burdened with unmanageable payments after graduation.

Overall, when reviewing your financial aid award letter, it’s essential to pay attention to all of the types of financial aid being offered and their terms and conditions.


If you have any questions or concerns about your financial aid award letter, you can check out the school’s website or contact the financial aid office at the school for clarification. They can provide information on how to accept or decline the awards offered, as well as provide guidance on additional funding options if needed.

Receiving a financial aid award letter can be an exciting and relieving moment for students and their families. By understanding the different types of financial aid and how to compare and evaluate award letters, you can make informed decisions about which school to attend and how to manage your expenses while in college.

Look at De-Mystifying the Financial Aid Award Letter: Part 2 for more information on what to do after you receive your award letter and how to choose the best financial aid package for you.


Understanding Your Financial Aid Award Letter | Investopedia

When Will I Get My Financial Aid Award Letter? | CollegeAve

Guide to Financial Aid Award Letters | FastWeb

Guide to Financial Aid Award Letters |

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