Deciding which college is right — academically, socially and financially — is an important step in your child’s college admissions process.

And while all three are vital components, financial aid can be a deal-breaker or a deal-maker. That’s why it’s important to scrutinize your child’s award letters, which may look different from one school to another. To help you understand and compare award letters, here’s what to do after you receive them.

Understand Scholarships and Grants

Scholarships and grants are free money that doesn’t need to be paid back. Scholarships can be merit-, interest- or need-based and grants are generally need-based. They can cover one year to all four years as long as the student maintains the eligibility requirements. For example, scholarships usually require the student to maintain a certain GPA, or may have income requirements. It’s important to know the difference and terms of your scholarships and grants. If your award letter is unclear, Jodi Okun, founder of College Financial Aid Advisors, recommends searching the college website for the grant or scholarship name or calling the financial aid office.

Understand How Work-Study Works

The Federal Work-Study Program is a need-based program subsidized by the federal government, and eligibility is determined by information from your Free Application for Federal Student Aid (FAFSA®). Students work at a college or qualifying business for wages that are paid to them directly versus being applied to their tuition bill. “It’s a part-time job, and the money has to be earned,” says Okun. “Plus, being eligible for work-study does not guarantee a job, so students should apply early.” If work-study is on your award letter, look up how to apply for a job on the school’s website before getting to campus in the fall.

Understand the Types of Federal Loans Offered

The two most common federal student loans are the Direct Subsidized and Unsubsidized loans. Both are taken out in the student’s name and a credit check is not needed. Subsidized loans are need-based and the government pays the interest while the student is in school at least half-time and during the grace period. Unsubsidized loans are not based on need, and the student is responsible to repay all of the interest accrued. These loans have fixed rates and each charge an origination fee, which is deducted from the loan amount. Students can defer payments until 6 months after graduation or when enrollment drops below half-time. There are several different repayment options, including income-based and pay-as-you-earn plans.

For undergraduate students, parents can take out Direct PLUS Loans to pay for their child’s education. Graduate and professional students can also borrow PLUS Loans to pay for their graduate studies. All borrowers must pass a basic credit check. These loans are usually offered when a student has unmet need. “Look for the ‘gap amount’ on an award letter,” Okun says, noting it might not be clear the PLUS Loan is in fact a loan. Parents can apply for this loan at, but some schools may have additional steps. PLUS Loans have higher fixed rates and origination fees than Subsidized and Unsubsidized loans. Repayment starts immediately for undergraduate PLUS Loans and offer a variety of repayment plans, but you can request in-school deferment.

In-school deferment may seem like a convenient option for students while they’re in school, but unless you have Direct Subsidized loans, waiting to start repaying loans until after the grace period ends means they are paying more back in interest. Making even small payments while in school can help reduce the cost of any loan.

Factor in Indirect Costs

While award letters may not include all indirect college costs, it’s something to think about when evaluating aid packages. These costs can vary greatly depending on location, school and major. “What a student is majoring in can have an impact on indirect costs,” says Joanne Wilson, a financial aid consultant at Barry Fox Financial Consulting who recommends setting aside $4,000 for the first year. “An art major may incur more indirect costs than a history major because they’d have to purchase additional supplies.” Think about what your student plans to do while at school and research those costs individually. Include that number in your estimated total costs and plan your budget accordingly.

Calculate Total Costs for Each School and Compare

Once you know what everything is on your award letters, you’ll want to compare the costs of schools with each other. Comparing several schools can get tricky, so you’ll want to have a system. You could plug all the numbers into a spreadsheet or use this helpful award letter comparison tool that can do the work for you. Ultimately, you want to figure out the total net cost for each school and compare those numbers.

Appeal or Negotiate Your Financial Aid Offer

If your financial situation has changed since completing the FAFSA, you can file an appeal with the college financial aid office. If your financial situation remains the same but your award package is not what you hoped for, you can negotiate it. “The best way to negotiate an offer is to go to it with another offer,” says Julie Gross, vice president of College Financial Consultants. “A lot of people [try to negotiate] as soon as they get the award letter — especially if it’s their child’s number 1 choice — but schools are going to be much more motivated if they see there is a better offer.”

Have the Money Talk with Your Teen

If your teen’s first choice is not the best choice financially, you may need to sit down and have that discussion. “I would offer a good, long lesson on what debt looks like once they’re out of college,” says Gross. Explain how debt can impact your teen’s future decisions about their career and lifestyle if they take on too much. With that clear understanding, you can decide together what you and your student can reasonably afford.

FAFSA® is a registered service mark of the US Department of Education.