That long-awaited financial aid letter finally shows up in your inbox. You open it, expecting a clear answer about what college will cost — and instead, you’re staring at a spreadsheet of numbers, terms, and acronyms. Don’t worry — you’re not alone.
Here’s how to break it down, line by line, so you know what’s truly covered, what’s borrowed, and what’s still coming out of your pocket.
1. Start With the Cost of Attendance (COA)
Every award letter lists a Cost of Attendance, or COA — basically the school’s estimate of what one academic year will cost. It usually includes tuition and fees, room and board, books, transportation, and personal expenses.
Think of it as the school’s sticker price before any aid is applied.
2. Spot the Free Money First
Start by separating what’s free from what’s not.
- Grants and Scholarships – These don’t have to be repaid. They’re the best kind of aid.
- Work-Study – This isn’t upfront cash; it’s an opportunity to earn money through a part-time job during the school year.
- Loans – Borrowed funds that must be repaid with interest, even though they’re often listed right next to scholarships in your offer.
📍Quick Tip: Use two highlighters — one color for free aid, another for loans — so you can instantly see what’s yours to keep and what’s borrowed.
3. Understand the Loan Details
If your award letter lists federal loans, you’ll see either Direct Subsidized or Direct Unsubsidized loans (and sometimes both).
- Subsidized loans are for undergraduates with financial need. The government pays the interest while you’re enrolled at least half-time.
- Unsubsidized loans are available to both undergraduate and graduate students, regardless of need, but interest starts accruing the moment funds are disbursed.
Many first-year students receive a mix — for example, part of the $5,500 annual limit as subsidized and the rest as unsubsidized. That distinction matters because the unsubsidized portion will cost more over time.
4. Calculate Your True Out-of-Pocket Cost
After subtracting all your grants, scholarships, and accepted loans from the total cost of attendance, what’s left is your out-of-pocket cost — the amount you and your family will need to cover through savings, payment plans, or outside scholarships.
💡 Use the Edvisors Financial Aid Gap Calculator to compare award letters and see where funding gaps exist before making your final decision.
5. Ask Questions — and Keep Asking
If something’s unclear, reach out to the financial aid office. They expect questions and want you to understand what you’re signing.
Here are some smart questions to ask:
- Is each award renewable every year, or only for freshman year?
- Are there GPA or enrollment requirements to keep certain scholarships?
- Can I appeal for more aid if my family’s financial circumstances change?
- Are there additional scholarships or unclaimed funds available?
A simple conversation could uncover opportunities you didn’t know existed.
6. Take Your Time Before You Accept
Don’t rush to accept the first offer. Compare all your award letters side by side and look beyond the totals. A slightly larger scholarship at a higher-cost school might not actually save you money once housing and travel are factored in.
Ask yourself: How much will I owe when I graduate? That’s the real measure of affordability.
Bottom Line
Reading your financial aid award letter isn’t just about crunching numbers — it’s about getting a clear picture of what college will truly cost. Once you understand which dollars are free, which are borrowed, and what’s still missing, you can make confident, informed choices about your education and your future.
Sidebar: Common Misconceptions About Financial Aid
“Work-study is guaranteed money.”
Not exactly — you have to apply for and earn those funds through an eligible job during the school year.
“All loans are the same.”
Subsidized and unsubsidized loans differ in when interest starts — and that can add up to thousands of dollars over time.
“My award covers everything.”
It might not. Award letters often omit indirect costs like personal expenses or travel. Always double-check the full cost of attendance.
“You can’t ask for more aid.”
You can. If your financial situation changes, schools often allow appeals or have unclaimed scholarships available.
