Understanding Your Financial Aid Offer Letter

Last updated November 20, 2024

Not sure how to read your financial aid offer letter? We'll break it down for you to help you make the right college decision!

Terms you'll see on your financial aid offer letter

Need a refresher on what these terms mean? Click here!

Total Cost of Attendance (COA)

The COA is an estimate of what you can expect to pay for one year of college. In addition to tuition costs, the COA also includes:

Food and housing
Textbooks and supplies
Lab and course fees
Transportation
Health and medical care
Personal/miscellaneous living expenses

The things listed above won’t be specifically mentioned or broken down in your financial aid package, so it’s important to dig into how much these might cost over the course of your time in college.

Student Aid Index (SAI)

The SAI is the formula that a college uses to determine how much financial aid you’re eligible for. This number is calculated based on the information you provided on your FAFSA.

Scholarships and Grants

This section lists the scholarships and grants offered to you that you will not need to repay.

Net price

Also referred to as “net cost,” this number is an estimate of the cost of attendance minus total scholarships and grants received. The net price is what you’re expected to pay while attending college, either out of pocket or with the help of aid.

Loan and work options

This section will list available federal loan options, including loan types, available amounts, and interest rates. If you're considering student loans, it's important to keep in mind the amount of debt you would be taking on at the schools you’ve been accepted to. This can help you can make an informed comparison.

This section also indicates whether you qualify for work-study and an estimate of how many hours you'll be able to work per week. Keep in mind that work-study can only be accessed by securing an on/off campus work-study job. Check with your college’s financial aid office or career center for available positions.

Click the image below to review the Department of Education's annotated sample financial aid offer letter for the 2024-2025 school year!

A note about accepting financial aid

It's important to know that you are not required to accept all–or any–of the aid you’re offered from colleges in your financial aid offer letters. If you're unsure about which aid you need to accept to be able to attend college, we advise you to talk to a parent/guardian, your college counselor, or a financial aid professional at the college you want to attend. They can help you make an informed decision that works best for your situation.

Comparing your offer letters

To determine which school is offering you the best financial aid package, we recommend using Scholarships360’s free Financial Aid Award Letter Comparison Tool. This tool will help you compare your offer letters to help you determine which college might be the best financial fit for you.

While reviewing and comparing your letters, consider the factors below to come closer to making your college decision.

Which college is overall most affordable?

Which college is offering you the most scholarships and grants (aid that doesn't have to be paid back)? Will the scholarships be offered every year or only one time?

This can get tricky for two reasons. The first is that some colleges have higher tuition rates than others, so they may offer you more grants and scholarships, but still leave you with significant unmet need. Second, if a college only offers you a huge scholarship for the first year, you’ll need to figure out how you'll pay for your remaining years in school.

Financial fit matters

While you may have a dream school in mind, it may not be realistic to attend if it's not a good financial fit. A school that's a good financial fit will not leave you with significant unmet need after scholarships and grants have been awarded. While it's a difficult decision to make, it doesn't make financial sense in the long run to attend a school that will leave you with significant unmet need or require you to take out a lot of money in loans.

Know your numbers

Cost of attendance is merely an estimate of average costs per year. Creating a budget can help you determine if you will actually need all the aid that is offered to you.

For example, let’s say you decide to attend a local college not far from home and you ride the city bus for free with your student ID. In addition, your financial aid package has $3,200 in loans, and a transportation cost estimate of $1,200. It’s likely you will not need the additional $1,200 for transportation costs offered in your package, which gives you the ability to decline $1,200 of your loans. No need to take out the full $3,200 in loans to cover an expense that doesn't apply to you!

Don't make this decision alone!

Determining where you will go to school based on the financial aid packages you received can be overwhelming! We recommend seeking support from parents, educators, or family members who attended college and are familiar with this process. We can also support you in making your decision! Text #FAFSA to 33-55-77 to chat with one of our advisors. If you're using a mobile device, click here to have the text message set up for you!