As high school seniors wait to receive their college decision letters, parents wait for other equally important news: financial aid award letters.

If you’re a parent, it may seem like there’s little to do until those fateful letters arrive, but you can take steps to prepare yourself on how to read financial aid award letters like a pro. Here are five things you should do or be aware of before award letters arrive.

 1. Your Student Aid Index

Your Student Aid Index (SAI), formerly known as the Estimated Family Contribution (EFC), is based on the information submitted on the FAFSA® (Free Application for Federal Student Aid), and colleges use it to determine how much financial aid you will receive. You can find it on your FAFSA Submission Summary, previously called the Student Aid Report (SAR), which you should receive within three to five days of submitting the FAFSA online. If you don’t know your SAI, visit the FAFSA website to log in.

2. Your Actual Family Contribution

The SAI is an index number colleges use to determine your financial aid package, but it is not necessarily what you pay for college. If you haven’t already, now is the time to look at any savings and your budget and set limits on what you’ll spend. When thinking about how much to borrow in student loans, you shouldn’t borrow more than your annual income and if you’re retiring soon, you should cut that in half. Your student shouldn’t take out more than their expected first-year salary. Keep in mind, these guidelines are for an entire college education, not just the first year.

Your student should also continue to search for scholarships since they are sources for free money that don’t have to be paid back.

3. Block Off Some Research Time

All award letters provide you with scholarship, grant, work-study, and federal student loan amounts. However, because there is no standard award letter template, it can be difficult to figure out what needs to be paid back and what doesn’t. Scholarships, which are usually merit-based awards, and grants, which are typically need-based, are both free sources of money that do not need to be repaid. Work-study, if listed on the award letter, reflects the maximum amount of money your student can earn during the school year but the funds are not a guarantee. And federal student loans need to be paid back.

4. Private Scholarships Can Affect Aid Packages

One thing that surprises many families is the impact private scholarships—money from organizations other than colleges—have on financial aid packages. Accepting this money effectively increases your SAI, potentially reducing your family’s eligibility for financial aid. If your student has been awarded an outside scholarship, find out how the school will apply it because it may reduce your financial aid.

5. You Can Appeal or Negotiate Your Financial Aid Offer

If there has been a change in your financial situation since filling out the FAFSA, there are options to appeal your award letter. If you’re disappointed by a financial aid package you received, you can negotiate. While schools are under no obligation to change their financial award offer, negotiating could gain you some additional aid. Since each school has an internal process for negotiating financial aid, it’s worth checking with the individual school to understand their protocols.

Waiting for award letters can feel overwhelming, but there are things you can do during this period of limbo. Learn everything you can before your award letters arrive so you and your student can compare your options and make the best decisions for your family.

FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover® Student Loans.

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