How to Read Your Award Letter
Decode grants, loans, and work-study — and find your actual net price
The Three Types of "Aid" in Your Letter
Free Money — Keep It All
- • Federal Pell Grant
- • Federal SEOG Grant
- • Institutional need-based grants
- • Merit scholarships (renewable)
- • State grants
- • Outside scholarships
These reduce what you owe. Subtract these from COA to find your net price.
Earned Money — Work for It
- • Federal Work-Study
- • Institutional employment programs
You earn this through a part-time job. It does not reduce your bill automatically.
Borrowed Money — Repay with Interest
- • Direct Subsidized Loans
- • Direct Unsubsidized Loans
- • Parent PLUS Loans
- • Institutional loans
- • Private loans
These must be repaid. Do NOT count them as aid when comparing schools.
How to Calculate Your Real Net Price
Work-study ($2,500) and loans ($5,500) are in your letter but NOT subtracted above. You still owe $29,500 from savings, income, or loans.
The net price — not the sticker price, not the "total aid" — is the number you should use when comparing schools.
Step-by-Step: Reading Your Letter
- 1
Identify all aid types in the offer
Separate every line item into: grants/scholarships (free), work-study (earned), and loans (borrowed and repaid with interest).
- 2
Calculate your true net price
Subtract only grants and scholarships from the Cost of Attendance. Do not subtract loans or work-study — those must be repaid or earned.
- 3
Verify the Cost of Attendance used
Check whether the COA includes room and board. Some schools use a lower COA (tuition only) that makes their offer look more generous than it is.
- 4
Check if aid is renewable
Ask whether grants require maintaining a minimum GPA or enrollment status. Merit scholarships often have renewal conditions that many students miss.
- 5
Compare net prices across schools
Build a spreadsheet comparing net price (COA minus free money) at each school — not the sticker price and not the total aid package.
- 6
Appeal if your situation changed
If your family's income or circumstances changed after filing FAFSA, contact the financial aid office and request a professional judgment review. Schools regularly adjust offers.
Award Letter Red Flags
Loans listed without being labeled as loans
Some letters mix grants and loans in a single 'financial aid' total. Always check line items.
Work-study included in 'total aid'
Work-study must be earned through a part-time job. It's not deposited to your account.
COA excludes room and board
A lower COA makes the offer look better than it is. Always use the full COA for comparison.
Merit scholarship with hidden GPA requirement
Losing a $10K/yr merit award in year 2 can be catastrophic. Get renewal requirements in writing.
One-time grants in year 1 only
Some institutional grants are only for freshmen. Year 2 costs could jump significantly.
Parent PLUS Loans listed as 'aid'
Parent PLUS Loans are parent debt, not student aid. Treat them the same as any other loan.
Comparing Multiple Award Letters
| Item | School A | School B | School C |
|---|---|---|---|
| Cost of Attendance | $62,000 | $32,000 | $48,000 |
| Grants & Scholarships | $32,500 | $10,000 | $18,000 |
| Work-Study | $2,500 | $1,500 | $2,000 |
| Loans | $5,500 | $5,500 | $5,500 |
| 'Total Aid' in Letter | $40,500 | $17,000 | $25,500 |
| Net Price (real cost) | $29,500 | $22,000 | $30,000 |
School B has the lowest net price despite appearing to offer far less "total aid." School A's prestigious private price is actually competitive after large institutional grants.
When to Appeal Your Award Letter
You can ask a school to reconsider its offer. This works best when:
- →Your family income dropped after the FAFSA was filed (job loss, divorce, medical expenses)
- →You have a competing offer from a comparable school with a lower net price
- →A sibling just graduated, reducing your household dependents
- →You have unusual expenses not captured by FAFSA (elder care, disability costs)