How to Evaluate Your Financial Aid Award Letter
Alongside your acceptance letter from your top-choice colleges, you should be looking forward to your financial aid award letter–the document that tells you how much an individual school will cost you to attend (aka your net price), based on the financial aid you receive.
A student (and parents) may find financial aid award letters confusing because–believe it or not–they’re not standardized. There’s no template that all the universities and colleges adhere to. As such, your acceptance letter from UC Berkeley may look very different from Berklee College of Music. And after all the stress of studying hard, taking the SAT and ACT, and finally getting in to college, it’s especially frustrating to parse out a confusing financial aid letter.
Luckily, we’re here to help you make sense of your financial aid award letters. Here is a step-by-step guide to get started.
1. Am I Getting Free Money in my Financial Aid Package … or Not?
Look at your financial aid award letter. For every line item, ask yourself, “Is this free money?” That way you can compare apples to apples between schools. For the first step, you’ll want to understand the categories of financial aid packages–need-based versus merit-based. And you’ll want to ignore anything that is not free money (e.g., grants and scholarships, and tuition discounts).
- Need-based financial aid is awarded to students based on financial need and their inability to afford the college sticker price. Eligibility for need-based aid is determined via the FAFSA or CSS Profile, depending on the institution. Most often these awards are called “grants” or “aid” whether awarded from the federal government (federal Pell Grants) or from the university or college itself.
- Merit aid is awarded on the basis of other characteristics. The most common reason you’d get merit aid is if your grades, test scores, or extracurriculars are above the college’s standard. But there are many factors – sometimes it’s more like a standard discount, or other times colleges are using merit aid to shape their class by incentivizing certain students more than others.
Both need-based aid and merit aid come in a variety of packages and can be called different things. Look for the language used: “Grants,” “aid,” and “scholarships” do not need to be paid back. They are free money. Those are the costs to deduct from the total tuition and cost of attendance.
2. Get the Full Cost Picture
When you get your bill covering college expenses, it’s not just tuition–there are fees for room and board, books and supplies, and other personal or travel expenses. Many schools will give you the estimates, but for others you may have to do some research. (Edmit has all of the information you need on costs.)
We recommend you create a spreadsheet or other visual way to put similar numbers (your specific net price) from each college side by side. Here is an example of the type of cost comparison charts Edmit’s data can provide:
The goal is to compare the financial aid award letters from the schools you’ve been accepted to, plus their estimated costs, so you can get a truer picture of what you’ll actually pay for college.
3. Make up the Difference
Your net cost is the amount you need to contribute on your own, assuming you don’t submit a financial aid appeal letter and then get more financial aid. Once you have your specific net cost you have to think about how you’re going to pay it. Aside from savings that you might have, here are a couple of ways to cover your net cost of college (note that some of these “not-free money” items may be on your award letter):
Federal student loans are sometimes listed in financial aid award letters. But no matter the type of loan, they must be paid back in full, with some amount of interest. Federal loans are subsidized or unsubsidized and come with their own terms. Note: If a PLUS loan is included in your financial aid award letter, this does not automatically mean that you qualify. There is a separate application process for PLUS loans, so be aware of any deadlines and disbursement timelines that may apply.
A work-study program indicates you’ll be able to get a job on campus and earn money. Usually the estimated amount would be included in your financial aid award letter. But keep in mind: Being eligible for a work-study job may not be a guarantee that you’ll find a job you want with the right schedule for you: You may still need to search and apply for it. And you may not be using that money for tuition–there’s a chance you’ll want to use your work-study job earnings for other expenses like books or travel. Plus, work-study jobs are usually not guaranteed year to year.
4. Think Ahead
College is more than a year: it’s usually at least four to get a bachelor’s degree, and every year has tuition and costs associated. Think about changes year to year with inflation. The school tuition can change and is likely to, though some schools freeze tuition or commit to making up the difference in financial aid. (Check your financial aid package or ask the college’s financial aid office.) In the case of work-study jobs, the time you have to work or the work-study jobs available can change. Make sure you know what will it take to maintain your scholarships (e.g., demonstrating your financial need annually or showing satisfactory academic progress by maintaining a certain GPA).
Most financial aid award letters with a need-based aid component have a clause stating that awards are contingent on further verification (even if you haven’t received that request yet). Additionally, need-based aid awarded in future years is likely to require re-verification. So if there’s anything that has changed in your financial situation as represented in your FAFSA, you’ll want to make sure you think about the impact on your financial aid awards.
Last, don’t stay in the dark. Still confused? Always ask questions if something is not clear. Get in touch with the financial aid office of your specific colleges or speak with a financial aid counselor. You have the right to understand every component of your financial aid award letter!