Intimidated by your financial aid package? Don't be. This explainer can help you interpret your college financial aid.

The arrival of your financial aid award letters marks an important milestone in your college selection process: not only do you know which institutions are offering you a seat, but with your award letters lined up in front of you, you’ll also 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 your financial aid letters are really telling you:

The Real Cost of Attendance

Tuition is usually what comes to mind when you think about the cost of attendance, but there’s more to it. The Cost of Attendance (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 dorm, how far away your choice college is, and the cost of living in the area you’re considering.

A large scholarship offer says that a college is very hopeful that you’ll choose to attend.

How Much Financial Aid You’re Getting

Grants, federal loans, work-study, scholarships — these are all the different types of financial aid that will be tallied up on your award letter. Keep in mind that some financial aid is gift-aid, meaning you don’t have to pay it back. Scholarships and grants usually fall into that category. Student loans do have to be paid back after you graduate or leave school. And work-study allows you to earn income that is applied to your school expenses. 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, and that you don’t have to work for — although there might be a GPA requirement you must maintain. A large scholarship offer says that a college is very hopeful that you’ll choose to attend. 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 know the COA and the amount of financial aid you’re receiving, you’ll be able to determine how much you’ll have to pay out of pocket or borrow. This amount will come from your own savings, outside scholarship awards if you have them, and/or private loans.

Compare your award letters and see which school offers the best deal. Understanding cost, aid, scholarships and financial obligations will give you the last piece of the puzzle for making your final college decision.