A Step-By-Step Guide to Understanding Your Financial Aid Award Letter

The moment is here.  You click on your admission status. YOU’RE IN! YOU’RE IN!  YOU’RE IN!  You jump. You scream. You celebrate. You stop. “Can I afford it?” Joy drains. Reality hits you. You anxiously await your award letter. This is the piece of the puzzle that tells you how much it will really cost.  When you open it up, it can be confusing.  Like, REALLY confusing.

Here’s a step-by-step guide to help clear up the financial aid award letter confusion:

Step 1. Open the letter.

Don’t tear it. Be gentle. Take a deep breath. Look at the letter.  It might look a little confusing.  Be prepared. Different schools might use different terms and acronyms (TLA: they love acronyms).

Step 2. Find all that free money!

Look for scholarships and grants (sometimes called Gift Aid). You might qualify for grants or scholarships you never even knew existed on your campus. This is money you DO NOT need to pay back. It’s being handed to you. Congrats!

Step 3. Look for Federal Work-Study (FWS).

You might be eligible for Federal Work-Study jobs. This is NOT free money. You have to work to earn this money. The Federal Work-Study program gives you an opportunity to find a work-study job. If you don’t apply for a work-study job (positions aren’t guaranteed) or choose not to work in college, you will NOT get this money.

Step 4. Spot the loans.

Schools will list the federal loans you are eligible to receive. Sometimes this can be grouped with your scholarship and grants (confusing). Federal loans are subsidized or unsubsidized.  Subsidized loans do not accrue interest while you’re in school or during deferment periods. Unsubsidized loans begin accruing interest the moment you or your school receive it.  Subsidized federal loans are the most desirable.


Step 5. Find the Cost of Attendance (COA).

COA is tuition, room, board, and fees. To determine your net direct cost, you will use the COA and subtract scholarships and grants. If you’re going to work on campus, and are eligible for work-study, you can subtract work-study aid too. This will give you the net direct cost BEFORE factoring in loans. Depending on your budget, you may or may not need loans.

Step 6. Don’t let BIG scholarships confuse you. Do the Math.

For example, if one school is offering you $30,000 in award money and another school offers you $15,000, the school that’s offering you more money might actually cost you more money after you do the math.

School #1: Cost of Attendance (COA) $50,000 – $30,000 (award) =

$20,000 Net Direct Cost (What You still need to pay).  Total over 4 years: $80,000

School #2: Cost of Attendance (COA) $25,000 – $15,000 (Award) =

$10,000 Net Direct Cost (What You still need to pay). Total over 4 years: $40,000

Conclusion: In this example, the school offering twice as much aid costs you twice as much money (shocking!)

Step 7. Contact the schools that interest you and share the awards you’ve been offered.

Some schools will match other schools award packages or will offer you additional funds. You should also ask about additional scholarships or grants that might be available.

Step 8.  If you do take out a loan, understand EXACTLY how much you will need to pay each month when you graduate.

It’s easy to get money. Paying it back is when it gets challenging. Understand the total interest you will pay.  I suggest coming up with a sample budget based on your projected first-year earnings out of college. Do the math.

Step 9. If you have questions, contact the financial aid office at the schools that interest you.

Advisers want to help.  Do not hesitate to reach out. If your financial situation has changed, let them know about these changes and see if that impacts your award.


  •  Make sure the award is for all four years. Will the same scholarships and grants be available?  What will change? What will not change?
  • What cost increases can you expect? Will tuition, room, board, or fees increase? If so, roughly how much? Is this included in your award letter?
  • What loans are ONLY available to you because of your demonstrated need? What scholarships and grants are based on your grades?  What do you need to do in order to keep them?
  • Share any outside scholarships you already have secured to make sure you are still eligible for scholarships on the award letter.
  • Return all requested materials to the school by the deadline included in your letter.
  • You will need to complete the FAFSA every single year.  Some schools require you to complete college-specific financial aid applications too.



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