Understanding financial aid award letters

Understanding Financial Aid Award Letters

A “financial aid award letter” notifies you of your financial aid eligibility. You will get an award letter every year that you apply for and receive aid. You need to read and understand your award letter so you know how much and what kind of aid you’ve been awarded.

Award letters are not standardized, so the contents may vary. Here's what to look for.

Components of award letters

The total estimated cost of attendance should be included. Look here for a list of typical cost of attendance components.

Possible issues with the cost of attendance include:

• Definitions of components and cost categories are not standardized across schools.
• It may not include all costs.
• It may not be based on actual costs or may not be the most recent data.
• It may appear somewhere other than on the award letter—on the financial aid Web site or in a brochure, for example. If you can't find it, ask the aid office.

The expected family contribution (EFC) is the amount you-and your parent(s) or guardian(s), if you're considered dependent-are expected to pay.

• The EFC is calculated from information reported on the FAFSA (ie. parent income, parent assets, student income, student assets).
• The EFC is generally consistent from school to school, though it may increase if your school uses CSS Profile. Contact your financial aid office for guidance.

Your financial aid award package lists all the aid you are being offered or are eligible for. Financial aid can be divided into two major categories:

• Gift aid is free money, including grants and scholarships, that doesn't have to be repaid as long as you meet the stated requirements. It may be awarded on the basis of:
• Need
• Merit

• Self-help aid includes:
• Need-based and non-need-based federal loans
• Work-Study employment
• Private ("alternative") loans; look here for precautions on this type of loan.

Loans must always be repaid, even if you don't complete your program of study. Work-Study must be earned through work on a part-time job. Check out "Understanding Financial Aid" for more information on the types of financial aid.

Any unmet need or "gap" may or may not be shown on the award letter. Unmet need is calculated by subtracting the EFC and all financial aid from the cost of attendance. If the result is a positive number, you have unmet need and will need to figure out how to make up for it. Look here for some tips on how to pay for college when you don't have enough aid.