You’ve applied to several colleges, filled out the Free Application for Federal Student Aid (FAFSA), and now, you’re receiving college acceptance letters and financial aid award letters.
Since your financial aid offers partially depend on the cost of the school you attend and partially on how much money the state and school can offer you, your financial aid amounts can vary between schools. One school might offer you scholarships, while another might offer federal subsidized student loans.
Information gathered in 2018 found that 24% of families cite cost as the leading factor when making their final college choice. Student financial aid is often vital to getting through each year of your postsecondary education, so understanding your financial aid award letter will help you make the best decision for your college career.
Most schools send out financial aid award letters along with acceptance letters. In some cases, the award letter may come after your acceptance letter. Timing can also vary based on when you submitted your FAFSA and how long it takes for schools to process all students’ FAFSA information.
The majority of schools give students until May to respond to acceptance and financial aid award letters.
First, the different schools you applied to may have different names for the financial aid award letter. These may include:
There is also no standard format between these letters. As you review your acceptance letters and information packages, read each page to see how financial aid is reported.
Graduate students will receive financial aid award letters like undergraduate students, except they can receive information about fellowships and assistantships rather than work-study programs. Both fellowships and assistantships are awarded by the school, or sometimes through a research organization, rather than the federal government.
These programs are sometimes based on teaching positions and sometimes based on research. Often, there is a stipend to offset the cost of living.
As you look at the dollar amounts, compare free money to borrowed money. Your financial aid award letter may not list credit-based or private loans, but most students qualify for federal student loans.
Often, a scholarship or grant will have specific requirements that the student must maintain, including a set number of credit hours and satisfactory academic progress (SAP).
Most loans have a standard repayment plan of 10 years, but for some loans, you can request an extended repayment period due to financial hardship, low income, high debt, or other causes. You can also consolidate your federal loans, or refinance your federal or private loans, and extend your repayment period this way.
Financial advisers recommend accepting as much free money as you can to cover your school expenses, and then accepting earned money like work-study. Next, look at borrowed money.
Accept federal subsidized loans first, as these forgive interest while you complete your four-year degree. If you are a graduate or professional student, you do not qualify for subsidized loans, but you qualify for unsubsidized loans. Examine the amounts and repayment schedules.
Finally, look at private student loans if you have any gaps in coverage.
A method for understanding how much money you receive from each school is to make a chart to compare each school’s total cost and the amount they offered you to attend.
You can decline any part of your financial aid award letter. For example, if you do not want to take out any loans, you can accept any free money you have been offered and then turn down the loans.
Typically, if you are offered more scholarship or grant money than you need, the remainder can be applied to any further education costs when you give the school permission to use this overage. You can also accept the money and use it for your living expenses, but you will need to report it to the IRS as income.
The financial aid award letter you receive from each school will provide instructions on how to respond. Just like responding to the acceptance letter, you must respond to the award letter. Accepting loans requires some additional steps, depending on which loan you receive.
Your school will disburse financial aid once they have taken their costs out. You will receive detailed information after you accept the school’s offer. If there is any remainder, you can pick up a check or have the school hold it for you.
Financial aid award letters typically show the highest amount of money for which you qualify. You can ask your school if there are additional merit-based scholarships for which you can apply, and you can research scholarships outside of your institution online.
If you do not receive these, or the amounts do not cover all the gaps, private student loans can help you complete your education for a semester or longer.
