How to Read Your Financial Aid Award Letter

Comparing college award letters isn't an easy task. This is because colleges typically write their own award letters, making it hard for families to compare apples to apples. While one school may include student loans as financial aid, another may consider it "self help". Before comparing college costs, make sure each letter is clear and if you have any questions, contact the school's financial aid office for clarification.

Once you have a clear breakdown of costs, it's time to compare. Follow the steps below to compare your financial aid awards or download our excel template and simply plug in your own numbers.

1. Compare Cost of Attendance (COA)

To get a true sense of what the total cost is at a school, make sure you include more than tuition and fees. When determining the total COA for a school, add in expenses for the following items:

  • Tuition and Fees
  • Optional fees (such as student health insurance)
  • Room and Board
  • Books and Supplies
  • Travel Expenses

A school's financial aid office should be able to provide you with the average cost for books and supplies.

»Add all of these costs to get your total Cost of Attendance.

2. Determine Gift Aid

Gift aid refers to any aid you do not have to repay, such as scholarships and grants. Add together all of your scholarships and grants to get an idea of how much "free" money you received at each school. Include items such as Pell, FSEOG, TEACH Grants, merit scholarships, private scholarships, and state grants.

»Subtract the amount of gift aid received from your total Cost of Attendance.

3. Include Work-Study

Work-study is a program where students work at an on- or near-campus job to earn money towards school. While considered a part of the financial aid package, it is not "gift aid", but it also does not need to be repaid. When accounting for work-study funds, it's important to keep in mind the number of hours required to work — too many hours can lead to poor academic performance.

»Subtract all federal and institutional work-study aid.

The remaining amount is what will need to be covered by family savings, student loans, and other self help.

4. Add Up Federal Student Loans

When determining which student loans to take out, always start with federal. Perkins loans and Direct Subsidized Stafford Loans should be used first, as the interest is subsidized while in school and during grace periods. Next, include Direct Unsubsidized Stafford Loans.

»Subtract all Perkins and Stafford loans from your COA..

5. Cover Remaining Costs

The remaining amount (if any) will need to be covered by the family, and potentially, other forms of student loans. Listed below are some different options for families to cover this financial aid gap.

Appeal the Offer

If a financial aid package is insufficient, the first thing families should do is contact the school's financial aid office to request it be reconsidered. In some cases, schools may be able to adjust their award to make it attainable for the family. This is especially true if a family has recently encountered a hardship such as a lay-off or other extenuating circumstance. It never hurts to ask the financial aid office to reconsider an award package based on reasons X, Y, and Z.

Parent PLUS Loans

PLUS Loans are federal student loans that parents may choose to take out on behalf of their student. Families may see this listed on the award letter, but the thing to note about this form of aid is that it is in a parent's name. These loans can help to cover the COA, but are not mandatory and with a 7.21% interest rate, should be one of the last resorts.

Private Student Loans

A private student loan is the last option for families to cover COA. Similar to the PLUS loan, they can cover up to the cost of attendance, but are in the name of the student. To learn more about this option, visit