Beyond FAFSA: How to Read Your College Financial Aid Award Letter

College acceptances, and rejections, are being revealed this month and so are the financial aid award offers. If you filed the FAFSA, you already received notification of what you can expect to pay for your child to attend college.  This amount is called the Expected Family Contribution (EFC) and was based on income from the previous year.

fafsa award letter


The financial award letter lets your family know how much aid they will be offered to help pay college costs beyond the EFC.  This award usually consists of a mixture of grants, scholarships, work-study and loans. It is important to understand the different components before accepting all or parts of the financial aid offer.

  • Grants, and scholarships are considered “gift aid” and do not need to be repaid.   This is the best kind of aid and may be financially need-based or merit based.  Merit based scholarship is granted for exceptional talent or academic performance in your area of study such as math or science.  This free money is usually granted for one year and the amount may change year to year depending on family income.
  • Work-study is an offer of employment to the student, usually a job on campus.  Students most often use this money to pay for personal items, books and travel.  The good news is that any money earned on work-study will not be calculated in the FAFSA as student income.
  • Subsidized loans need to be repaid, but this is the best type of loan for most students. The federal government issues these loans to the student and the interest on the loan is deferred until after the student graduates.
  • Federal Parent Plus Loan is one of the best loans for parents to take out because it has the lowest interest rate and a reasonable re-payment plan.  Note, that you need good credit to qualify for this loan.
  • Private loans should be considered as the last option as they will have higher interest rates and interest will begin accruing immediately.

Financial aid awards vary from college to college and will contain different types of aid.  Students and parents can accept all or part of a loan package (by tania).  It is important to examine each offer carefully and choose the best offer for your family.

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