Your Financial Aid Award Letter: It's Not Just an Offer

What is a financial aid award letter?

Opening a college acceptance letter is a high point in many students' academic careers. There's screaming, jumping up and down, and a frantic dash to buy merch from the college's store. But after the initial excitement wears off, there's a reality check: How much will this school cost?

The answer might seem simple, as you're able to see the sticker price of most schools on their websites before you apply. But depending on your financial need and academic profile, schools will also offer different types of financial aid packages that could have a big impact on how much you actually pay.

To receive financial aid, students will need to fill out the Free Application for Federal Student Aid around the same time they are submitting their college applications. 

Once you receive your acceptance letter, a financial aid award letter will likely follow shortly afterward. Sometimes it comes with the acceptance letter. Award letters will include scholarships, grants, work study, and loans.

Financial aid award letters are only for one school year, and you'll need to fill out the FAFSA each year you're in school to determine what aid you're eligible for. 

Rick Castellano, a spokesperson Sallie Mae Student Loans, points out that these letters vary in how they are written. Students may find it difficult to differentiate between financial aid packages because of the inconsistent presentation of financial aid awards from different colleges, Castellano says. 

"There is no standard format," Castellano says. "That can make this somewhat confusing. You might get a financial aid offer from one school and then another, and it might not look exactly the same. So that's why it's really important that families take a moment to read the fine print and understand exactly what is in that letter."

For instance, if you're offered a merit scholarship, you may have to keep up a certain GPA while in school or risk losing the money altogether.

Some schools may list loans intermixed with scholarships and grants, while others will separate loans to make it clearer what money you'll borrow. Some schools may detail the cost of attendance in your aid letter, while other schools omit that information.

What you'll find in your award letter

Your financial aid package will be broken up into several parts: Grants, scholarships, work-study, and loans. 

• Grants: These are often given based on exceptional financial need or if you are a member of a designated group. Pell Grants, which are offered to students with significant financial need, have a maximum award of $7,395 for the 2024–25 award year. Learn more about types of federal grants. 
• Scholarships: These aren't usually given based on your expected family contribution (EFC), but rather on factors such as academic merit, athletic achievement, or volunteer experience. You might even net a full ride, where your entire cost of school is covered. 
• Work-study: This is a type of financial aid that provides part-time positions for students with financial need to earn money for academic expenses. Your total package is based on when you apply, your level of financial need, and the amount of money your school has available. 
• Loans: Direct subsidized loans are made to students with financial need, and the government will cover the interest on the loans while you're in school and during a six-month grace period after you graduate. Direct unsubsidized loans aren't made based on financial need, and interest will accrue once loan funds are dispersed. Direct PLUS loans, made to graduate students and parents of undergraduate students, may also be offered.

On top of the included financial packages listed above, your letter will also include:

• Cost of Attendance: Tuition, fees, room and board, etc.
• Expected Family Contribution (EFC): What the school expects you/your family can contribute.

How to read your award letter carefully

When reading your financial aid award letter, there are three steps to take:

1. Compare to the Total Cost: How much of a gap is left after aid?
2. Check for Conditions: Maintaining a certain GPA, full-time student status, etc.
3. Deadlines: Learn when you need to accept or decline different parts of the award.

Figure out how much you'll have to pay

To compare offers, make sure you understand how much of each type of aid you're receiving and how much you'll need to repay. Follow these steps to get a gauge of the cost of your school:

1. Determine the cost of attendance. Add up tuition and fees, room and board, the cost of books, transportation expenses, and miscellaneous personal costs.
2. Subtract the "free money" in your aid package. This includes grants (federal, state, and institutional) and scholarships. 
3. Subtract money you'll work for. This includes any type of work-study you plan to take on.
4. Subtract money you'll borrow. This includes federal subsidized loans, federal unsubsidized loans, and federal PLUS loans. 

The remainder after following these steps is the total gap you need to bridge. You can do so with savings, outside scholarships, or private student loans. 

If you prefer to use an online tool, Sallie Mae has a template that helps you easily compare different financial aid offers, broken down by the type of aid in each package. This may allow you to get a clearer sense of the true cost of each school. 

When weighing a school's affordability versus a student's school preference, it's important to make a balanced choice.

"It's a personal decision," Castellano says. "You want to make the best choice for your student and family and you want that choice to be responsible. You don't want to wake up after college and figure out okay, great, my son or daughter went to a dream school, and now look at this bill that I'm having to navigate after school."

What if I want to appeal my financial aid award?

If you find the money you have to pay isn't within a reasonable range for you and your family, you may be able to appeal your aid package.

Neeta Vallab is the founder of MeritMore, a search tool that allows students to estimate the amount of merit aid they could receive from particular schools based on their GPA and test scores. Vallab says you can ask for more money from colleges in an appeal letter.

Keep a professional tone, thank the school for accepting you, and express your excitement to attend the school, she advises.

"You can include any sort of new financial situations that might have come around since you submitted your financial aid forms," Vallab says. "But the biggest driver is do you have better offers from similar colleges? Can you pit one school against another? They don't want to lose you to a school they consider a peer school." 

Vallab's website has an appeal letter generator that allows families to create customizable appeals, if you prefer not to start from scratch.

Understanding the actual cost of a school before signing on the dotted line will save you future financial headaches and help you make the most informed decision possible.

FAQs

What if the award isn't enough to cover costs?

If the award isn't enough to cover costs, contact the school's financial aid office, consider scholarships, or explore private student loans (use cautiously).

Can I negotiate my financial aid award?

Sometimes you may be able to negotiate your financial award. If you have a better offer from another school, or your financial situation changed, it might be possible.

Do I have to accept the entire award?

No, you don't need to accept the entire award. You can accept grants, decline loans, or take a smaller loan amount.

Where do I find my financial aid award letter?

Your financial aid award letter may be mailed, emailed, or accessible on the college's online portal.