How to Analyze Your Financial Aid Award Letter

Financial Aid Award LetterIf you’ve completed all your applications and most of your requirements, by now you should start receiving some financial aid award letters from the universities and colleges you applied to. Essentially, the letter aims to tell you how much financial assistance you can expect from the university, plus how much you’ll have to cover on your own.

Understanding the financial aid award letter is important if you’re going to select the one that’s best for your situation. By analyzing the contents properly, you will be able to establish which institution can give you the best education possible for the least out-of-pocket cost. Of course, there will be other factors to consider when choosing your school, but at the very least the financial assistance offered is an important matter to think of.

Most of these financial aid award letters are different in template, format, and style. (Here are two examples of financial aid award letter formats currently in use: example 1 , example 2 .) However, learning to read these letters properly means you just have to know what you’re looking for. There are certain key items to look out for, and then you can use these to compare and determine which aid package is best for you.

Cost of Attendance

Cost of AttendanceThis is the first thing to look for the moment you open the financial aid letter. Usually, this will refer to the tuition fees, miscellaneous fees, and room and board expenses. Some letters will include other possible expenses like the cost of personal items, food, textbooks, and even transportation.

The cost of attendance will help you identify exactly how much money is needed to cover your schooling. Just one reminder: not all letters will discuss all of these expenses clearly. There are certain surprises costs of college that not all families are aware of and come as a shock later down the road. If you need more information, don’t hesitate to call the student office or check the university website.

Financial Aid Package

Financial Aid PackageThis refers to the percentage of the cost of attendance that the university can cover for you.

This is very important, because this is how you establish the level of financial aid that you can get and whether or not you can afford to go to the school.

There are two types of financial aid that can be included in your package:

1.) The first one is sometimes called “gift aid”, e.g. grants and scholarships. This means you usually don’t have to pay back the amount paid on your behalf. You should use this free money first before using the second type, which requires you to put in a bit of “effort”.

2.) The second type includes loans and work-study programs. You have to pay back the loans, and these can come from state financial aid programs, the Free Application for Federal Student Aid (FAFSA), or a loan from the university. Remember that the loan will have to be paid back under a loan repayment plan, no matter if you finish your studies or not. As for the work-study program, it’s self-evident. You will have to work for the university part-time in exchange for financial aid.

When applying for either, it is important to do everything you can to maximize your financial aid award.

Expected Family Contribution

Expected Family ContributionNow this makes things a lot more clear. The EFC will tell you how much your family is expected to contribute to the cost of your education. Remember that the EFC can increase over the years, so take this into consideration. The EFC across schools will likely be consistent, since they do use the information gathered by the FAFSA.


If you do think that there’s any information lacking from the financial aid award letters, you can always call the student office to clarify things.

Are you expecting a financial aid letter soon? Visit our CU Select Tool to help find a credit union near you that can help cover any of the Gaps or EFC needed this coming school year.