Obtaining a financial aid award letter is the first step in making a college admissions decision.
You have been accepted into the school of your choice and received a financial aid package. Sure, this is an exciting time, but once you open your financial aid award and start reading, your excitement turns to confusion and frustration.
Welcome to the annual interpretation of your financial aid award. While there are some guidelines that schools must follow when creating financial aid awards, for whatever reason, there are not any strict standards regarding format. This often leaves many schools using unfamiliar formats and terminology.
Unfamiliar language and cryptic symbols can be found on many financial aid awards. Loans and grants can be combined together. Sometimes symbols like “L” or “LN” are the only indication that the amount is actually a loan. In fact, most of the financial aid students receive comes in the form of student loans.
Additionally, the true cost of attending school is often understated in award letters. This can leave students constantly short of money to pay for school.
This guide will guide you Exactly how to read, compare and evaluate your financial aid award letterno matter how confused he was. We’ll also show you how to spot red flags, determine your true costs, and decide if you should seek more aid.
How to Read a Financial Aid Package
Your financial aid award letter outlines the support the school provides for one academic year. But keep this in mind: There is no standard format. Two kidneys can display exactly the same information in completely different ways.
Most letters include some combination of:
Some messages clearly include all of this. Others bury or omit key details (like what counts as a student loan) — which is why understanding each piece is important.
Also, most award speeches are annual. So keep that in mind as you go through it.
Sample financial aid award letter
Below is a sample financial aid award letter to help you understand what you are receiving. This is from UC Merced, but it is very similar to what you would get from any college.
It starts with gift aid at the top (grants and scholarships), then loans and work-study programs, and then what you’ll actually pay at the bottom.
Cost of college terms
Understanding the terminology used to describe the cost of college can help you better interpret your award letter and ask questions when something doesn’t make sense.
Starting with “net cost,” this is the difference between the cost of attendance (all college costs) and total financial aid. For example:
Cost of attendance
- $45,000: Tuition and fees
- $15,000: Room and board
- $2,000: Books and supplies
- $1000: Transportation
- $3,500: Miscellaneous
$66,500: Total
Financial aid package
- $6,000: Federal Reserve Pell Grant
- $2,500: Perkins Federal Reserve.
- $13,000: Parent Plus L.
- $8,000: Fed Unsub Staf
$29,500: Total
$37,000: Net expected cost
From the above, the net cost subtracts all forms of financial aid, of which there are two types:
- Gift Aid:
Scholarships and grants (money that does not need to be repaid) - Self-help aids: Loans and student work-study (money that must be repaid)
The formula for “net cost” is: Net Cost = Cost of Attendance − Financial Aid (Full).
Net price only subtracts gift aid. Using the example above, it would look like this:
Cost of attendance
- $45,000: Tuition and fees
- $15,000: Room and board
- $2,000: Books and supplies
- $1000: Transportation
- $3,500: Miscellaneous
$66,500: Total
Gift aid
$6,000: Total
$60,500: Expected net price
The formula for “net price” is: Net price = cost of attendance − gift aid.
What do the differences between net cost and net price mean? The net cost can give the impression that financial aid covers a greater cost than the net price. This is misleading. The student will still have to repay any loans or participate in work-study programs included in the net cost.
The net price can be thought of as the discount rate on the cost of college. This is the number you will need to pay for one way or another.
Depending on the award letter, the net cost or net price will be used. Don’t let either of them throw you off. Now you know what it takes to reach both numbers.
The “Student Aid Index (SAI)” is another number that may be buried in your award letter. This can be included in the net cost figure because it is money that the student must receive.
You can check this Net price calculator here.
Get access to the true cost of college
No matter the format of your award letter, it is unlikely to show the true cost of college. In the examples above, the cost of attendance has several built-in items. Don’t be surprised if your school only lists tuition and fees. This can eliminate a $20,000 cost once you add the other expenses back in.
If a school calculates the net price based on only two cost of attendance items, this amount will be significantly underestimated. Many students are surprised by this fact and do not realize it until a few months into their education.
This creates a situation where the student seeks to find some way to finance the various costs associated with his or her education. In the worst cases, some students simply give up and leave school.
Front loading and special scholarships
Be aware that some colleges offer higher aid during the first year and much less after that. This practice is referred to as “front loading.” Check with the financial aid office for more information if this is something the school does. You may not get a direct answer. In this case, the US Department of Education College navigator It could be of some help. Either way, do your best to get an answer so you can plan properly.
If you receive private scholarships, they may have a negative impact on your need-based financial aid. Depending on the school, gift aid or self-help aid may be reduced. Again, you’ll need to check with the school to see how any private scholarships will impact your financial aid.
Is your financial aid award “good”?
Now that you know how to read your financial aid award, the real question to ask is: How do I know if I will actually receive a good financial aid award?
It’s really hard to know! You know that some students pay full price, and you know that there are students who get a full scholarship. But most students pay somewhere in the middle.
One easy way to find out if you’ll get a good financial aid award is to use a free tool like TuitionFit. TuitionFit collects financial aid awards anonymously, then shows you where you stand. All you have to do is upload your own award, and they will tell you to compare it.
Check out TuitionFit here.
How to appeal your financial aid award
You’ve received your admissions package, toured the campus, and even purchased a t-shirt, but your financial aid package doesn’t live up to expectations. Maybe you didn’t get any scholarships or grants – just student loans. Or perhaps you were expecting a much larger amount than what was offered.
It is important to note that successfully appealing a financial aid award is very rare. However, that doesn’t mean you can’t try. The earlier you try, the better. Here’s what you need to do to appeal your financial aid.
Make an appointment with a financial aid officer
Before you appeal a financial aid award, review your school’s financial aid website. Larger schools typically publish a formal process for appealing financial aid decisions. If the school posts a process, follow it. Small schools may not deploy this process. In this case, call to schedule an appointment.
Once you know your school’s policies, communicate them. It is best to call rather than email the financial aid officer. Why? It’s easy for overworked financial aid staff to miss an email or even two. A few people can serve thousands or tens of thousands of students.
When you call, request an appointment to meet with a financial aid officer. An in-person meeting is the best way to get a financial aid officer to become your advocate. If you can’t meet in person, set up a phone call to review your award.
While you’re making calls, consider contacting the admissions office as well. The admissions office may have information about unclaimed merit scholarships that can help you.
Prepare for your meeting
When you meet with a financial aid administrator, you will ask to have your financial aid award re-evaluated. If you’re going to get more aid, you’ll need to be prepared.
Here are some things you need to know before your meeting:
- How does your school calculate expected family contributions? Your university may use the EFC number from your FAFSA, or it may use a number calculated from your CSS profile. Either way, you need to know how much your university expects from your family
- What unmet needs do you and your parents think you have? Keep a specific number in mind.
- Gather documentation explaining why you and your parents cannot cover this gap. A family budget, or documentation of a family change (e.g. divorce, job loss, etc.) goes a long way in changing aid.
- Do you have a better package elsewhere? One school may increase your merit aid if it learns that another school has offered you more money.
- Has your situation changed since you first applied? This can be helpful in understanding any changes.
What to discuss
During a meeting with a financial aid officer, you need to be careful about how you proceed. Financial aid officials won’t feel comfortable calling the meeting a negotiation. You and your parents should be careful to keep the tone of the meeting firm but non-confrontational. You want your financial aid administrator to become your advocate and partner.
Start the meeting by saying: “I would like you to re-evaluate my financial aid award package for (Reason 1) and (Reason 2).” Would you like to see documentation about these reasons?
Then take the time to listen. You should look to your financial aid administrator as a partner. A financial aid officer should be able to explain what they can and cannot do. If you are an accepted student, they will want to work with you. However, if enrollment is high, they may not have more merit awards or subsidized loans to apply for.
If your financial aid officer is unable to offer grants or scholarships, ask him or her to keep an eye out for opportunities. Remember, the financial aid administrator is your advocate, not your opponent.
Most of the time, a financial aid administrator will not give a specific answer about a financial aid adjustment during the first meeting. Instead of pressing for an immediate answer, ask when and how you should follow up with them.
How to proceed next
Once the meeting is completed, thank the financial aid officer and immediately follow up on any documentation they request. Sending a thank you note in the mail is also a thoughtful gesture.
If you do not hear back about the re-evaluation, follow up via email and phone call. The financial aid officer may not modify your award, but must tell you a definitive yes or no.
Students who do not receive enough aid from their school still have options. Some schools will push you to take out expensive private loans, but that should be a last resort. Consider these options first. You can work more during your education. You can choose a less expensive school. You can postpone enrollment for a semester to work and save money. Finally, you can find external grants and scholarships.
If you do end up enrolling at the school, stay in touch with your financial aid officer. They can help you navigate tuition increases and changes in their aid policies. College lasts four years, and you have to prepare for all four years.
Final thoughts
Navigating your financial aid award can be difficult and confusing. They don’t make paying for college easy! However, you owe it to yourself to work hard to get any free money you can to pay for school.
