Financial Aid Award Letter: What It Is and How to Read It

 August 25, 2020
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As you receive your financial aid award letters, you’ll notice that schools don’t use a universal award letter template. The various letter formats can be interpreted differently, making it harder to compare financial aid offers between the schools you’re considering.

But despite the visual differences you’ll encounter, a few similarities are consistent across any financial aid award letter. Let’s look at the following topics surrounding your financial aid award.

What is a financial aid award letter?

A financial aid award letter explains how much monetary assistance a school is offering you for the upcoming academic school year. It goes by a few other names, like a merit letter, school aid offer, financial aid package — or simply, an award letter.

In this letter, you’ll find detailed information, like a breakdown of the types of financial aid you’ve been offered and their respective award amounts. The financial award letter should make expectations clear about attendance costs, your net financial need and other aid offered by the federal government, state or school.

What information does a financial aid award letter contain?

  • Estimated cost of attendance (COA): The COA is an itemized list of school-related expenses that you might spend over the academic year. Some schools include everything from tuition and mandatory fees to room-and-board and textbooks, while others may not.
  • Expected Family Contribution (EFC): Your EFC helps your school identify how much financial aid you’re eligible for. This number is based on a federally established formula, which takes your family’s income, assets, benefits and family size into account. If you also have other family members attending college in the same year, this may also affect your EFC.
  • Aid that needs to be repaid: The financial aid award letter lists any aid offered by your school that needs to be paid back after a predetermined time — for example, direct subsidized or unsubsidized federal student loans. Some loans are need-based, while others do not require financial need.
  • Aid that doesn’t need to be repaid: You might also see other aid offers that generally wouldn’t need to be repaid (except in specific circumstances). Like loans, these aid types are itemized on the aid award letter with the amounts being offered. This can include grants, scholarships or work-study programs, which may be offered at the federal or state level or through your school.
  • Remaining balance: The remaining balance that’s on your financial award letter — after grants, scholarships, work-study, and loans — is the amount that you or your family will need to pay out-of-pocket as cash or through private student loans.

Financial aid award letter samples

A financial aid award letter might look visually different, depending on the school that issues it. Below is a financial aid award letter sample from Whitman College:
Image: Whitman College

How to read your financial aid award letter

Some schools clearly show your total financial need on your aid award letter. If your letter doesn’t show this number, use this simple formula to calculate it:

COA – EFC = Financial need

Take the cost of attendance that’s shown on your financial aid award letter and subtract the EFC that your school determined for your financial aid package. This result is your financial need; your need-based aid award can’t exceed this number.

With this information, you can then calculate your unmet financial need, which is the amount of financial gap you’ll have to pay, after grants, scholarships, loans and work-study aid. Calculate this number by using the following formula:

Financial need – Financial aid = Unmet need

Below are a few hypothetical examples to illustrate what the numbers could look like, based on your school’s COA, your EFC, and financial aid.

College A College B College C
Cost of attendance (COA) $9,500 $15,000 $21,250
Estimated Family Contribution (EFC) $7,000 $5,000 $11,000
Financial need $2,500 $10,000 $10,250
Financial aid $500 $9,200 $10,250
Unmet need $2,000 $800 $0

How to compare your award letters

With different schools handling the award letter in different ways, you’ll want to be careful when measuring your offers against each other.

Our aid award letter comparison tool is a great place to start — just enter the relevant information along with the name of each school and compare up to three letters at a time. Beyond that, take a look at our guide to deciding which financial aid award offer is best for you.

Meanwhile, consider some of the following moves when comparing financial aid award letters:

  • Identify all types of aid, so you understand what’s available.
  • Examine what’s missing (cost of attendance, etc.)
  • Assess items under the COA that don’t apply to you (e.g. room and board).
  • Enter all multiple aid award letters into your own spreadsheet, so you’re comparing your offers in an “apples-to-apples” format.

Questions to ask about your financial aid award letter

Scholarships and grants

  • Does my scholarship renew yearly?
  • Does my scholarship renew at the same amount each year?
  • What are the requirements I need to meet to renew my scholarship?
  • In what circumstances would my scholarship benefits expire?
  • What can I use my grant or scholarship funds toward?

Student loans

  • What interest rate will I owe on my loans?
  • When do I need to start making payments?
  • Which loans offer subsidized interest?
  • What benefits does the student loan offer?


  • How many hours a week will I need to work?
  • What are the weekly hours caps associated with the program?
  • Can I get a job on campus or off campus?
  • Will the school match me with a work-study employer?


  • Can my awards change if other students turn down aid?
  • How common are yearly tuition increases at the college I’m considering?
  • Have I recently had an extenuating circumstance occur that would affect my EFC and/or financial need?

Financial aid award letter FAQ

When will I get my financial aid award letter?

Generally, schools send newly enrolled students their financial aid award letter about the same time as their acceptance offer letters. However, the timeline may vary depending on factors including when you submitted your FAFSA and how many financial aid applications the school needs to review. Before every academic year, you’ll receive a new award letter to review.

When do I need to respond to my financial aid award letter?

The financial award letter will indicate the next steps to respond to the award and any deadlines that apply. Make sure to refer to the instructions carefully, and if a due date isn’t clear on the letter, contact your school’s financial aid office to clarify its deadlines.

Should I reject any loan money in my financial aid award letter?

Accepting a loan offer on your financial aid award letter depends on your personal financial situation. It’s best to prioritize aid that doesn’t need to be repaid, before resorting to loans. You can choose to accept the entire loan amount, accept a lower amount or reject it.

What are some common problems encountered on financial aid award letters?

Common challenges students and their families encounter on aid award letters include the different template formats used across schools, which makes it hard to compare award offers. Unclear abbreviations and remaining unmet financial need distinctions can also be problematic.

What are my options if I need additional financial aid?

If you need additional financial aid, a private student loan can be used to fill the financial gap. You can also talk to your family about other financial options, like personal savings or working a part-time job (not work-study) to help cover college expenses. You (or your parent, if you’re a dependent) can also write a financial aid appeal letter to your school.

What is a financial aid appeal letter?

A financial aid appeal letter is a letter written by you or a parent to your school’s financial aid administrators asking them to reconsider your financial aid award. The student, or parent of a dependent student, can share extenuating circumstances that the school might not be aware of and request that it reevaluate the award amounts.

Rebecca Safier contributed to this report.

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