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 school will cost to attend. But not all financial aid award letters are created equally. Understanding your financial aid award letters will help you determine what the bottom-line cost of attendance will be. Using a financial aid award letter tool can help you compare gift aid (the money you don’t need to pay back, like scholarships and grants) with aid you’ll need to repay when you graduate. 

To understand what your financial aid award letter is offering, you need to understand the information contained within it. Here’s a breakdown. 

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, books, supplies, and transportation. Some schools also include expenses like loan fees, computer costs, and eligible study-abroad program expenses. Keep in mind that other factors can affect your expenses, as well. For example, 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. You may not see these expenses outlined in your award letter, but you should know they will impact your overall college expenses.

How Much Financial Aid You’re Receiving

Grants, federal student loans, work-study, and institutional scholarships—these are all the different types of financial aid that will be tallied up on your award letter. And 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 you can use for 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. Just because you’re awarded a certain amount of financial aid does not mean you need to accept all the federal student loans you’re offered.

Your award letter also won’t tell you about private student loan opportunities. If your award doesn’t fully cover the cost of college, you may consider exploring private student loan options. 

How Much You’ll Have to Pay or Borrow

Once you have all of your award letters, you can use an online award letter 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 versus with federal and private student loans. You can also search and apply for outside scholarships. Remember: It’s your responsibility to let your school know about any outside scholarships you receive, because they may affect your financial aid package.

Understanding your true COA, the amount of aid each school is offering, and your financial obligations will help you make a better decision.