Award Letter Basics
Quick tips for understanding your financial aid award letters.
March 04, 2014
Each financial award letter you receive is likely to feature gift aid, self-help aid and an offer of a work-study assignment. But how that award is offered, and even the format of the letter detailing it, can differ dramatically for each college and university.
The award letter can look exciting at first, considering that it lists much-needed money for college. But some of that college money comes with a catch, and some may be college aid you’d be better off without.
Self-help aid like college loans can be the key to paying for your college education.
Here’s how to make sure you get the money you need without leaving yourself in big debt after you get your college degree:
Scholarships and Grants
Gift aid, such as federal grants and college scholarships, are what you want to see a lot of in your award letter. Unfortunately, that doesn’t mean you should just accept them blindly.
Some schools will subtract certain college scholarships from the award money you’re offered, and there may be requirements and conditions you have to meet to keep receiving these funds, like maintaining a minimum GPA or what many schools call satisfactory academic progress. This can mean different things at each school. Contact the school’s financial aid office to find out what’s required of you before accepting any scholarships, federal grants or other types of gift aid.
Self-help aid like college loans can be the key to paying for your college education. But because each loan has its own repayment policies and interest rates, you’ll want to evaluate each one carefully before you accept. Federal loans tend to have better terms than private or commercial loans, so accept those first. If you find yourself in need of private loans, remember to choose loans with the best interest rates and repayment policies.
If you see private loans or commercial loans in your award letter, contact the financial aid office to find out why this type of loan was included over other types of aid. Look closely at the loan terms and only accept those loans if you truly need the college money and will have the means to repay it after completing your college program.
When considering any loan, here are questions you want to ask the loan provider or the financial aid office of the school offering it:
- Who pays the yearly interest (it’s either you or the government)?
- What’s the interest rate?
- When do I have to start repaying the loan?
- Will this loan increase each year, and what are the loan increases?
- What is the monthly repayment fee?
- Is this loan subsidized or unsubsidized (with unsubsidized loans, you’ll have to pay a yearly interest while you’re in school)?
Federal work-study programs can be a great way to earn money for college while you’re in school. You’ll usually be required to work a set number of hours each week during the school year, and the money you earn for your time will go toward paying for college.
The benefits of work-study are that you earned the money you receive, so it doesn’t need to be paid back. And the work itself can teach you valuable work skills that will help you in your college degree or in your future career.
The drawbacks, of course, are that you’ll have to take time from your studies and your social life to work, which can mean a lot of juggling and a bit of sacrificing of your free time.
Here are key questions to ask if you’re offered a work-study assignment:
- Does each college student have to find a job, or will jobs be offered to us?
- How are job assignments made?
- How many hours per week am I working?
- What will I be paid per hour?
- How and when will I be paid?
College Financial Aid Award Letters Tips & Tactics
- If it’s not clear from the award letter, contact the school’s financial aid office to find out if the cost of attendance (COA) includes only billable costs, like tuition and room and board, or if it covers billable and non-billable costs, such as books, supplies, transportation and living expenses. If it only covers billable school costs, the amount of money you will actually spend each year could be significantly higher. In order to budget your college money successfully, and make a smart decision about which college to enroll in, it’s important to know what’s included in the school’s COA so you can compare it to the college aid you receive.
- Borrow only what you need and what you can repay. Don’t accept loans if you can get by without the money, or consider accepting the loan for less money.
- Tuition waivers are another form of aid offered to students who demonstrate financial need. Some universities may offer a reduced tuition or no tuition costs. Tuition waivers qualify as gift aid, and do not need to be paid back. Contact the school’s financial aid office to find out if tuition waivers are offered and what you need in order to qualify for this assistance.