Intimidated by your financial aid package? Don't be. This explainer can help you understand your financial aid award letters.

The arrival of your financial aid award letters marks an important milestone in your college selection process. Now you know which institutions are offering you a place, and you’ll have an idea of what each one will cost to attend.

However, your award letters reveal a lot more than a number. Here’s what they are really telling you.

The Real Cost of Attendance

Tuition is usually what comes to mind when you think about the cost of attendance (COA), but there’s more to it. The COA is actually the total of tuition and fees; on-campus room and board; and books, supplies, and transportation. Some schools factor in other expenses like loan fees, computer costs, and eligible study-abroad program expenses. Keep in mind that other factors can affect your expenses as well, including whether you’ll live at home or in a dorm, how far away your college is and the cost of living in the area you’re considering.

How Much Financial Aid You’re Getting

Grants, federal student loans, work-study, and scholarships — these are all the different types of financial aid that will be tallied up on your award letter. Not all aid is created equally. For instance,  grants and scholarships are gift-aid, which means you don’t have to pay them back. Work-study allows you to earn income that is applied to your school expenses, but it is your responsibility to find a qualifying job. Student loans have to be paid back, so you should borrow only what you can’t cover through other means.. The best-case scenario is having the bulk of your financial aid offer comprised of gift-aid.

How Much the School Is Willing to Invest in You

Part of your financial aid may include institutional scholarships. This is money that does not have to be paid back, but there could be conditions you must meet to keep the scholarship such as  a GPA requirement. These offers can be based on financial need, merit or a combination of both.

How Much You’ll Have to Pay or Borrow

Once you have all of your award letters, you can use an online comparison tool to look at them side by side to see what each school will cost. Then you can determine how much you’ll have to pay out of pocket with savings or with federal and private student loans. You can also search and apply for outside scholarships. 

Understanding your true COA, the amount of aid each school is offering, and your financial obligations will give you what you need to help make your final college decision.

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