How to interpret and compare them
How to interpret and compare them
  • You can find the cost of attending a school online, but you may pay less depending on your financial aid.
  • Your financial aid award letter will include grants, scholarships, work study, and loans.
  • You can appeal for your financial aid if you need more money to attend school.
  • Read more stories from Personal Finance Insider.

Opening a college acceptance letter is a high point in the college career of many students. There’s screaming, jumping up and down, and a frantic race to buy goods from the college store. But once the initial excitement wears off, there’s a reality check: How much will this school cost?

The answer may seem simple, as you can see the list price of most schools on their websites before applying. But depending on your financial needs and academic profile, schools will also offer different types of financial aid programs that could have a big impact on how much you actually pay.

What’s in a financial aid award letter?

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

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

Financial aid award letters are only good for one school year, and you will need to complete the FAFSA each year you are in school to determine what aid you are eligible for.

Rick Castellano, spokesman for student loan company Sallie Mae, points out that these letters vary in how they are written. Students may find it difficult to differentiate between financial aid programs due to the inconsistent presentation of financial aid scholarships from different colleges, Castellano says.

“There is no standard format,” says Castellano. “That can make it a bit confusing. You might get an offer of financial aid from one school and then another, and it might not be exactly the same. That’s why it’s really important for families to take a moment to read the fine print and understand exactly what is in this letter.”

For example, if you are offered a merit scholarship, you may need to maintain a certain GPA during your studies or risk losing the money altogether.

Some schools may list loans mixed with scholarships and grants, while others will separate the loans to more clearly show the money you will be borrowing. Some schools may detail the cost of attendance in your aid letter, while other schools omit this information.

What are the different types of financial aid?

Your financial assistance will be broken down into several parts: Grants, scholarships, work-study programs and loans.

  • Subsidies : These are often granted based on exceptional financial need or if you are a member of a designated group. Pell Grants, which are available to students with significant financial need, have a maximum amount of $6,495 for the 2021-2022 allocation year (from July 1, 2021 to June 30, 2022). The maximum award for the 2022-23 school year (July 1, 2022 to June 30, 2023) is $6,895. Learn more about types of federal grants.
  • Scholarships: These are generally not awarded based on your Expected Family Contribution (EFC), but rather based on factors such as academic merit, athletic achievement, or volunteer experience. You could even win a full turnwhere all your tuition is covered.
  • Work study: This is a type of financial aid that provides part-time positions for students in financial need to earn money for their 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 given to students in financial need, and the government will cover interest on the loans while you are in school and for a six-month grace period after you graduate. Direct unsubsidized loans are not made on the basis of financial need and interest will accrue once the loan funds are dispersed. Direct PLUS loans, granted to graduate students and parents of undergraduate students, may also be offered.

How can I compare awards from different schools?

Award letters can be difficult to compare because they do not have a standardized format. In one 2022 College Confidence Report from Sallie Mae and Ipsos, less than half of families and students surveyed were unaware that federal loans, which are included in many financial aid programs, must be repaid.

Sallie Mae Financial Aid Chart


Sally Mae


“A big offer from a school might seem like a big deal, but it might also include loans that you’ll have to pay back,” Castellano says. “Then you have School B which may appear to be offering less, but in reality it is more scholarships and merit aid and fewer dollars that need to be repaid. sitting down and comparing where the dollars are coming from is so important for families.”

4 steps to determine how much you will have to pay

To compare offers, make sure you understand how much of each type of assistance you receive and how much you will need to repay. Follow these steps to get a cost estimate for your school:

  1. Determine the cost of participation. Add up tuition and fees, room and board, cost of books, transportation costs, and miscellaneous personal expenses.
  2. Subtract “free money” from your aid package. This includes grants (federal, state, and institutional) and scholarships.
  3. Subtract the money you will be working for. This includes any type of work-study you plan to undertake.
  4. Subtract the money you will 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 close. You can do this with savings, outside scholarships, or private student loans.

If you prefer to use an online tool, Sallie Mae has a model which helps you easily compare different financial aid offers, broken down by type of aid in each package. This can give you a clearer idea of ​​the actual cost of each school.

When comparing the affordability of a school against a student’s academic preference, it is important to make a balanced choice.

“It’s a personal decision,” says Castellano. “You want to make the best choice for your student and your family and you want that choice to be responsible. You don’t want to wake up after college and realize that okay, great, my son or daughter went to a dream school, and now look at this bill I have to go through after school.”

What if I want to appeal my financial aid?

If you find that the money you need to pay is not within a reasonable range for you and your family, you may be able to appeal your assistance program.

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

Keep a professional tone, thank the school for accepting you, and express your enthusiasm for attending the school, she advises.

“You can include all sorts of new financial situations that may have arisen since you submitted your financial aid forms,” ​​Vallab says. “But the main factor is that you have better offers from similar universities? Can you pit one school against another? They don’t want to lose you to a school that they consider a peer school. ”

The Vallab website has a call letter generator which allows families to create customizable calls, if you’d rather not start from scratch.

Understanding the true 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.

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