Broker Check

Trying to read Financial Aid Letters is a fool’s game. Be prepared.

July 06, 2020

As if the college decision process wasn’t hard enough, when schools finally send out their financial aid award letters, you are going to find that they are not standardized.  So, it is going to be difficult for you to compare and contrast between the various offers you get from the colleges you applied for. 

The first recommendation we always make to our clients is to make a friend in the financial aid office at your favorite colleges. The reason is because you are going to have questions when it comes to interpreting what they are offering you. 

Your first goal is to separate the components of your aid offer into the money that you won’t have to pay back and the money that you will have to pay back in the form of loans.  I know it’s hard to believe, but on many financial aid award letters, we have seen loans offered to our clients where the word loan wasn’t ever actually used! 

Here are some things you should look for: 

  1. See if the letter includes reference to your expected family contribution, which is a number that would’ve been calculated for you when you file the FAFSA form. This will tell you what percentage of the difference between what your expected family contribution is, and the retail cost of college, that this aid offer is actually meeting. 
  2. If you have applied to a college that also require you to fill out a form called the CSS profile, you will likely discover that the expected family contribution has been calculated by a formula that is specific to just that school.  This is when you should contact your new friend in the financial aid department and ask them to tell you exactly what their computation of the expected family contribution for you actually is. 
  3. Once you have identified the portions of your aid offer that are grants it is important that you confirm what the terms of those grants are. For example, you may be offered an annual grant that is contingent on you maintaining a certain grade point average. 
  4. Make sure that you check on every grant to find out how many years that grant is going to be offered. Many colleges engage in a practice called front loading, where grants and scholarships are offered for just the freshman year. 
  5. As far as loans, the ideal financial aid award letter would only include loans offer to the student. However, many financial aid award letters have included the offer of Federal loans to the parent (called PLUS loans).  This gives the false perception that a greater percentage of your need has been met. 
  6. The ideal financial aid award letter should also reference the entire retail cost of attendance of the college. Many letters include tuition room and board but exclude other fees books and estimates of miscellaneous expenses that are just as important. 

For these and more useful tips on this topic, see this web page from Edvisors. 


If you need help interpreting these letters you have received, please reach out to us.