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  • Writer's pictureJennifer Tracewell

How do I understand my financial aid award letter?

You’ve been accepted at a few different colleges and have received financial aid award letters. They each look different, and it feels impossible to understand which is a better deal and if you can even afford to attend. It’s like you need a special college degree to even decipher this! We hope this post can help you understand and compare your financial aid offers from the particular institutions you’re interested in attending next fall.

If you’ve applied to several colleges and universities, and received acceptances and financial aid offers, you need to compare them to see which school is most affordable. This is one very important aspect of your decision! Yes, there are other considerations, such as location, size of the school, majors available, and campus activities, but finances are huge, we know that! Just like any other major purchase, cost must be analyzed from every angle by every person involved, so this is where it’s critical that both students and parents/guardians have the understanding and tools necessary to make a wise choice that impacts your future for years to come.

The financial aid packages you receive will be based on the information you submitted on your FAFSA form. The award you receive is based on the cost of attendance at each particular school, and each school will present the information in a slightly different way, so it’s good to know what to look for!

Here are the key terms you need to know: Cost of Attendance, Expected Family Contribution, Grants, Scholarships, Federal work-study, Federal student loans, and Net Cost.

Cost of Attendance (COA): this is the total amount you can expect to pay for one year of schooling. The COA includes tuition, fees, room and board, books and supplies, personal expenses, transportation. This will vary depending on whether you live on campus, off-campus, or at home, and type of meal plan.

Expected Family Contribution (EFC): this amount is based on your FAFSA filing, and is calculated based on your family income and asset information, as well as family size and the number of family members in college. It’s not necessarily how much your family is expected to pay for the student’s education costs, but it is an indicator of your net cost...basically, the lower your EFC, the more federal and school-based aid you will receive. The EFC Formula guide shows you how this number is calculated.

Cost of Attendance - Expected Family Contribution = Financial Need

Financial Need: So, once you know the particular school’s COA, and subtract your EFC, you arrive at your Financial Need, which is how much money you need to pay for college. Based on your family finances, some of you will qualify for need-based federal student aid, or need-based state or institution aid. And some of you will not. Here’s what you need to know about need-based federal student aid - some are free, some are not!


For need-based financial aid, the federal government determines whether you qualify for this help based on your family's financial situation as presented on your FAFSA. This can include grants, need-based scholarships, student loans, and work-study.

  • FREE: (you do not repay) Federal Pell Grant

  • FREE: (you do not repay) Opportunity Grant (FSEOG)

  • NOT FREE: Direct Subsidized Loan - you do not pay interest on this loan until six months after you graduate or leave school. Your school determines the amount you can borrow, with a limit of $3,500 for first-year students.

  • NOT FREE: Direct Unsubsidized Loan - you do pay interest on this loan while you are still in school. Your school determines the amount you can borrow, with a limit of $2,000 for first-year students.

  • NOT FREE: Federal Work-Study - you work for this at a campus job, and you do not need to repay this earned money, but it is calculated into your overall financial aid package.


Other types of financial aid are merit-based, and will be categorized as scholarships or gift aid of some kind. You typically apply for scholarships ahead of time, but many schools will automatically award certain scholarships based on your GPA or test scores.

  • FREE: Scholarships - you do not need to repay scholarship money.

Okay -- now you know about the different types of aid included in a financial aid offer. How do you compare offers? Here’s the 1-2-3 on how to do this:

  1. Find the total cost of attendance on each award letter

  2. Subtract all grant and scholarship amounts on your award letter from the cost of attendance. The remaining amount is your net cost (out-of-pocket cost).

  3. Compare the net costs for each school. Your net cost is what you’ll have to pay for school, either from your own savings, earnings from work, loans you borrow, or money from parents.

Be especially careful in how schools present their aid letters, because some will lump the loan amounts in with the grants, and it’s confusing! For example, look at this award letter from Willamette University that one of our students received last year — it’s not actually clear which money you have to repay, because the loans are included in the “total aid available” columns. Be like a detective when you’re looking at these!

Tools to Compare Offers

There’s a number of tools out there to compare financial aid offers. Here are three of the best free services.

Big Future, run by The College Board nonprofit. Big Future allows you to compare costs for up to four colleges at a time. Create an account and save your results! This cost comparison tool is easy to use and can help you narrow down to your best choice.

Consumer Finance, a government agency called the Consumer Financial Protection Bureau. Consumer Finance lets you compare three schools and also helps you calculate your debt at graduation and your estimated monthly student loan payments. It’s wise to check out the impact down the road.

Oregon Gear Up College Workbook, run by Oregon State University, is a Google doc worksheet for those who like paper and pencil. Click on the tab called Comparing Costs and Financial Aid. You can track up to five financial aid awards from colleges:

If you’re still just researching schools, be sure to check out College Scorecard to get a snapshot of costs along with other admissions and program info.

When do I have to decide? May 1 has typically been college decision day, however, this is an exceptional year, with the COVID-19 pandemic upending literally everything, including college admissions and student decisions. Many colleges are moving their decision day from May 1 to June 1, and you can visit this regularly updated document to see if your college is on the list.
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