Understanding Financial Aid Award Letters
When you receive financial aid award letters from colleges, they can be confusing, misleading, and difficult to compare. This guide teaches you how to decode them, calculate your true cost, and even negotiate for more aid.
What's in an Award Letter
Every financial aid award letter should include:
The Critical Number: Net Cost
Net Cost = Cost of Attendance – Grants – Scholarships
This is the number that matters. A school with $60,000 tuition and $45,000 in grants (net cost: $15,000) is cheaper than a school with $30,000 tuition and $10,000 in grants (net cost: $20,000).
**Warning**: Many award letters include loans in their "aid" total, making the package look more generous than it is. Loans are not aid — they're debt. Always separate grants/scholarships (free money) from loans (borrowed money).
Comparing Award Letters Side by Side
Create a spreadsheet with these columns for each school:
Use our free Financial Aid Comparison Worksheet (available in our Downloads section) for a printable version of this table.
Common Tricks to Watch For
**1. Missing or underestimated costs**: Some letters exclude books, transportation, or personal expenses from the COA, making the school look cheaper.
**2. Including loans as "aid"**: The biggest red flag. A letter showing "$50,000 in financial aid" might include $20,000 in loans.
**3. One-year vs. four-year estimates**: Most letters show one year of aid. But will the aid renew? Ask about the school's policy on renewing merit scholarships and need-based grants.
**4. "Gapping"**: Some schools leave an unfunded gap between aid offered and total cost, expecting you to cover it through additional borrowing or family resources.
**5. Parent PLUS loans**: Some schools include Parent PLUS loans in their aid package. These are high-interest loans that parents (not students) must repay.
How to Appeal for More Aid
Yes, you can negotiate. Schools call it a "professional judgment review" or "financial aid appeal."
When to appeal:
How to appeal:
Sample email opening:
"Dear Financial Aid Office, I am grateful for my admission to [School] and the financial aid package offered. [School] is my top choice, but after careful review, I've found that the net cost presents a significant challenge for my family. I'm writing to respectfully request a review of my aid package based on [reason]."
Renewable vs. One-Time Aid
Always ask:
A $10,000/year renewable scholarship is worth $40,000 — far more valuable than a $15,000 one-time award.
Making Your Decision
After all adjustments, your decision should be based on the four-year net cost, not the sticker price or the first-year package. Calculate:
4-Year Net Cost = (Annual Net Cost × 4) + Estimated Annual Increases
The school with the lowest four-year net cost, combined with strong outcomes (graduation rate, median earnings), is usually the best value.