How to Read a Financial Aid Letter

When you fill out your FAFSA, you can­­ elect to send that information to your perspective colleges and universities. After you file your FAFSA, those schools will send you a financial aid letter in return. This letter will tell you much financial aid the school can give you for the upcoming year based on the information you provided on your FAFSA.

Anything containing the words “aid” and “award” must be promising, yet for some students it can be overwhelming and confusing.

It’s important to know how to read your financial aid letter so you can determine not only how much aid you’re receiving, but what kind. The type of aid varies, and it’s important to distinguish free money from money that has to be repaid. Understanding how your financial aid is determined is also important.


You want to see big numbers in the grants section. Grants are money that does not have to be repaid. Grants come from the federal government, the state government, and the college you are attending (institutional grants).

Work Study

It’s exactly what it means. Study as you work. Work as you study. Either way, you’ll earn money that will go towards your tuition. Work study can be done either on campus for the school or off campus for a private nonprofit organization or public agency.


Like grants, scholarships are you new best friends. A scholarship is a generous gift an organization gives you to apply towards your tuition that does not need to be repaid. Any scholarships you informed the school about, as well as scholarships the school is offering, will be listed on your award letter.

Student Loans

This is money that must be repaid with interest at some point in the future. Types of loans you’ll find listed are the Federal Stafford (subsidized and unsubsidized), Federal PLUS, Federal Grad PLUS, Federal Perkins, and state loan programs. Subsidized loans are for students with demonstrated financial need, as determined by federal regulations. No interest is charged while a student is still in school. An unsubsidized loan is not based on financial need and interest is charged. A Federal PLUS loan is an unsubsidized loan taken out by the student’s parents; interest is charged, and a credit check is needed to qualify.

How the Amount of Aid is Determined

If after you read your letter you feel like you didn’t receive enough aid, consider how the amount of aid offered to you was determined.

When you filed your FAFSA, you should have received an email with you SAR (Student Aid Report). This included your EFC (Estimated Family Income). The school subtracts your EFC from the cost of attendance (tuition, room and board, textbooks, transportation, and personal expenses) and determines your financial need in order to attend. Once they figure that out, they build your financial aid package based on your financial need. This is why the total amount of aid in your financial aid letter will never exceed your actual financial need.

Other Aid Options

Sometimes the financial aid you are offered is not enough to cover full tuition. There is also the possibility that a poor credit score may disqualify your parents from taking out a Federal PLUS Loan. Here are some options for additional aid:

  • Investigate tuition payment options with your school. Some schools offer payment plans where you can pay tuition over the span of a specified time period.
  • Some schools have special circumstances under which students can qualify for financial aid, such as the death of a parent or a parent’s job loss resulting in a deduction in income. If you have any special circumstances, contact your school, and they may re-evaluate your financial aid offer.
  • Get a summer job. Save all the money you earn and put it towards your tuition and books. Also find out if your employer has any educational benefits; some employers offer tuition reimbursement.
  • Scholarships, scholarships, scholarships. Apply for any and every scholarship you can find that you are qualified for. Lucky for you, you’re on a scholarship site right now!

Now that you know the ins and outs of your financial aid award letter, you can tally up the total amount of financial aid you are offered and figure out just how much out-of-pocket you may still need to pay. If you do still need to pay your way to school despite the financial aid offered, there are thousands of scholarships right here on Scholarship Spotlight just waiting for you apply! Go get ‘em!