Making sense of college financial aid letters

Congratulations – you are considering college! But first, paying for it: Students who applied for financial aid through the Free Application for Federal Student Aid, or FAFSA, should be receiving their award letters right about now.

Different schools have different names for these letters: financial aid offer, merit letter, award letter or financial aid package. And there’s no standard format for them either, so deciphering how much assistance you’re getting and how much you’ll pay can be very confusing.

Here’s some help:


Generally speaking, there are three types of award: free money, such as scholarships and grants; borrowed money, such as loans that need to be paid back; and earned money, such as work study in which you get a work-study job, earn the money and don’t have to repay it.

The offer will vary from year to year.

It’s important to pay close attention to the details of each component too, urges Sallie Mae. Scholarships and work-study may be renewable or an offer for that year only. The nature of the loan may not be exactly clear either, drill down to figure out if they are federal loans, private loans or even loans for parents. The type of loan will determine the interest rate and repayment terms.

Eva Dodds, director of counseling at Collegewise in Detroit, suggests having the school’s financial aid website open as you review the offer. The webpage should have a complete definition of each financial aid option they offer.

If you’re still unclear, speak to someone in the financial aid office, Dodd said. Financial aid officers are the interpreters and navigators of the process. It’s their job to make sure offers are understood and fulfilled, she said. Don’t get off the phone until you understand each offer in the letter.


The cost of attendance, or COA, is an estimate of what you’ll pay for one year of school.

Again, there’s no standard for this so some schools may only include tuition and fees, while others estimate room, board, books and supplies as well. If the COA is not included, check the school’s website or contact their aid office. Consider additional expenses for travel and personal needs when judging your total costs.

Don’t confuse the COA with the expected family contribution, which is just a measure used internally to calculate aid, not what a family actually pays.


Sometimes there’s a gap between what’s offered in aid and the cost. The simplest way to calculate this is to subtract the cost of attendance from awards, and what’s left is what you must pay. If you have multiple offers, Sallie Mae suggests making a spreadsheet to compare them. Dodds also suggests highlighting loans in a different color from grants or other “free money” when comparing them.

If there’s a gap, you can pay out of savings or seek a private loan to cover it. You can also reach out to the financial aid office to ask for a reevaluation. This is particularly useful when someone’s financial situation has changed.


Follow Sarah Skidmore Sell on Twitter @sarahssell

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