Comparing college award letters

Mother and daughter holding a letter, hugging and smiling

While receiving an award letter is exciting, it’s important that you understand how to read and interpret your awards.

At this time of year, you seniors are probably anxiously awaiting award letters from the schools you applied to. While receiving an award letter is exciting, it’s important that you understand how to read and interpret your awards.

Your award letters may all present the information a little differently, but the key fact you want to find out is how much you may need to borrow to cover your costs. Your “Expected Family Contribution” may only be part of that figure.

When schools list your aid package, they may include student loans as part of the aid they’re awarding. But remember, that student loans have to be repaid. Look closely at how much of the award package is made up of student loans and how much is made up of aid that doesn’t have to be repaid (grants and scholarships, typically). One school may award you more aid that doesn’t need to be repaid, and less in student loans that do have to be repaid. Keep a careful eye on those figures. If you’re not sure whether an award is a loan, grant or scholarship, contact your school’s financial aid office to clarify.

When comparing award letters, there are four main things you’ll want to understand:

  • How much of the aid awarded is money that doesn’t have to be repaid? This type of aid is usually in the form of grants and scholarships.
  • How much of the aid awarded is in the form of loans? This money will need to be repaid, with interest.
  • After tallying the total aid package (including all grants, scholarships and loans), how much is your family expected to pay? This is sometimes listed as “Expected Family Contribution.”
  • What are your total expenses for college? This should include tuition, room and board, books, fees, and personal living expenses.

Once you know these numbers, you can use this simple equation:

Total expenses – Free aid = Total amount you’ll need to borrow, work to earn, or get from your family contribution

Using this simple math, you can more easily compare your award letters by looking at how much you may need toborrow to attend each school.  Remember to contact your school’s financial aid office with any questions you may have about your award letter.

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