What Is an Award Letter?

A financial aid award letter is the notification that students receive informing them how much financial aid a school is willing to offer.

Screen Shot 2020-10-15 at 1.19.08 PM.png All students that submit a Free Application for Federal Student Aid (FAFSA), were approved for aid, and accepted by a school will receive a financial aid award letter from that school. You may find that this notice is referred to by names such as “financial aid offer,” “FAFSA award letter,” or “financial aid package,” but they are all basically the same.

An award letter is often received around the same time as college acceptance letters. This can vary depending upon the timing of your FAFSA submission and each school’s administrative process. Financial aid award letters are only for one year of school. You’ll need to complete the FAFSA every year to determine what aid you are eligible for and you’ll receive a new award letter every year with that FAFSA submission.

Since there is no standard format used by all schools, let's address the most important elements typically included in the letter.

Award Letter Definitions & Key Components

The first step to reading financial aid award letters is to understand the elements they include. Here are the main parts to look for:

Cost of Attendance (COA): A school’s cost of attendance, (COA) will also be included in your award letter. This is the estimate of what it costs to attend their institution for one academic school year. It usually includes average tuition and fees, room and board, transportation, and supplies. It’s just an estimate and is not what will appear on your actual tuition bill. Think of this as the sticker price of a new car at a dealership.
Standard Aid Index (SAI): Based on information provided in FAFSA, the government will determine your SAI or Standard Aid Index. This is the number that will be used to determine how much your family is expected to contribute to your education and is used by schools to determine financial need.
Financial Need: Financial need is the difference between your ability to pay for college and how much it costs to attend. Your financial need is determined by subtracting your EFC from the COA.
Gift Aid: Gift aid is money that students don’t have to pay back and can come as grants or scholarships. Your award letter will identify which types you’ve been awarded and how much you will receive.
Work-Study: Work-study programs provide you with part-time work on or near campus. Work-study programs are funded by the federal government but are operated by schools.
Student Loans: Financial aid award letters communicate which federal loans you qualified for. These loans are aid that students must repay with interest. You can choose to accept or decline them.

While your EFC is a fixed amount predetermined by FAFSA, your financial need is not. This can vary greatly, as depicted in this sample scenario:

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University B is clearly more expensive than University A, leaving the student with greater financial need. But when the schools' financial aid award offers are compared, the more expensive school becomes less expensive to attend:

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Once the details surrounding the amount of financial aid are received, you can compare offers from different schools by using a financial aid calculator.

Understanding College Financial Aid Packages

Screen Shot 2020-10-15 at 1.32.00 PM.png To fully understand the financial aid package being offered by a school, students must look beyond the basics contained in the award letter. There are significant costs that can be easily overlooked.

The university’s financial aid officer listed in your offer letter should be contacted to collect additional information like:

Additional Costs

The Cost of Attendance (COA) calculation can vary between universities. Make sure that all potential costs are included like: housing, food, transportation, books, supplies, additional fees, and other living expenses.

Out of state students should also consider travel expenses which are commonly overlooked.

Scholarship Terms

If scholarships are offered learn as much as possible about what they include. For example:

Will the scholarship renew every year?
Will it renew at the same amount?
What are your responsibilities to maintain it?

Although it’s not fun, consider worst-case scenarios when evaluating scholarship terms. For example, will an injury void an athletic scholarship?

Financial Aid Letters: Next Steps

After gathering the necessary information and performing the comparison, the next step is to make a decision. Congratulations! Screen Shot 2020-10-15 at 1.42.31 PM.png

Once you’ve made your decision, follow these three steps.

Contact the selected school to get details on formally accepting the financial aid award, including deadlines and instructions.
Contact the other schools to decline their offer.
Complete and submit any additional paperwork, such as loan applications.