Financial Aid Award Letters: 8 Things You Should Know

Posted by Lindie Johnson on Apr 27, 2011 9:42:00 AM

What all parents and students should know about comparing financial aid award letters before making a decision about where to enroll

Making sense of financial aid award letters can be a daunting task for families as they make college enrollment decisions. Schools don’t use a standardized form, so comparing financial aid offers from multiple colleges isn’t always easy. Dave DeBlois, Director of the College Planning Center of Rhode Island - the free college planning arm of the non-profit Rhode Island Student Loan Authority - offers his expertise:

  1. Calculate your self-help aid and gift aid. Financial aid comes in two forms. Gift aid is free to you and includes grants and scholarships. Self-help aid, such as loans and work study, requires something from you. The first step to comparing award letters is to sum up your total self-help aid by adding up any loans and work-study and to add together your scholarships and grants to determine your total gift aid.FreeMoneyFirst_v3
  2. Determine your out-of-pocket expenses. Subtract any grants, scholarships, and loans from the total billable expenses at each school (tuition, fees, and room and board). Do not subtract work study from the total school charges as this form of aid doesn’t reduce the amount you need to pay up front. Work study is provided as an hour’s pay for an hour’s work.
  3. Your end cost may be higher than your Expected Family Contribution (EFC). Most schools are not able to meet 100% of your financial aid eligibility. Think about how you will meet the difference. If you plan to borrow, remember to be a good consumer, explore rates and terms, and see where you can save most. Factor your borrowing into the whole picture when determining which aid package is best for your family. (Get help determing your costs with our calculator.)
  4. Focus on proportions. It is easy to get swept away by a big financial aid offer. But remember, it isn’t always the total award amount that is most important. Pay attention to how much of your financial need each college met and how they meet your need. The higher proportion of gift aid the better.
  5. Look out for PLUS loans in your financial aid package. Some schools include the Federal PLUS Loan in the financial aid package. Keep in mind that you can apply for this loan regardless of whether or not it is listed on the financial aid award package and you don’t have to accept it just because it is included.  
  6. Your financial aid award is not etched in stone. You do not need to accept the financial aid package as is. Loans need to be paid back with interest, so try to limit the amount you borrow by reducing your award amounts or declining loans if you don’t need them.
  7. Figure out if awards are renewable. Be wary of scholarships and grants that are only good for your first year.
  8. You must send in award acceptance forms by the deadline. If you do not, the aid awarded to you may go to another student.

Financial Aid Need Analysis

For free assistance comparing your award letters, make an appointment with the College Planning Center of Rhode Island at

Topics: College Financial Aid, Financial Aid Award Letters