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How to Decipher Your Financial Aid Award Letter

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How to Decipher Your Student Financial Aid Award LetterYou submitted your FAFSA, you received your financial aid award letter, you… can’t make head or tails of it. Not to worry - Blaine Blontz to the rescue.

Blontz, a financial aid counselor and owner of Financial Aid Coach, works with families and students to help maximize their aid package and brace for monetary impact. The Philadelphia-based expert has helped hundreds of students just like you decode SFA award letters.

“Award letters can be overwhelming,” says Blontz. There isn’t a single format, some colleges are better at explaining costs and net costs, and the letters are chock-full of confusing terms and acronyms. One of the most common mistakes he sees is when families think they understand the ins and outs of the award letter, but in the end, don’t. He says it’s vitally important to “understand what types of aid require repayment, which do not, and which have to be earned and aren’t counted directly toward the bill. Even if you’re slightly unsure, it’s always best to spend a few minutes on the phone with the school’s financial aid office to ensure you fully understand the offer as decisions are made.”

You can also spend a few minutes reading more of Blontz’s tips below about how to decipher your financial aid award letter.

Student Financial Aid Award Letter Sample What’s On an Award Letter
Once you’ve submitted your FAFSA application and been accepted to a college, you’ll receive a financial aid award letter from the school (see sample) with a summary of grants, scholarships, loans, and work study awards issued by the federal government, your state, and your school. Most schools will also outline tuition, room and board, fees, and other billed charges so you can see the bigger picture of out-of-pocket spending and net cost. Non-billable costs – such as books, supplies, and transportation – may also be listed. These are FYI only – they are estimated expenses not billed by the school but potential costs that a student should take into consideration.

What’s Not On It
Schools won’t show awards or aid that isn’t issued by the government or the school. If you applied for other grants or scholarships on your own, the granting institution or group will communicate with you directly. Private loans are also separate.

When You’ll Get Your Letter
Merit-based award offers are usually included with acceptance letters. You will likely receive your need-based awards - basically, the full student financial aid awards based on your FAFSA application - in late March or early April, according to Blontz.

Understanding Merit- vs. Need-Based Aid
Need-based aid - determined by the Federal Student Aid office and based on your FAFSA - is awarded based on family income, assets, and your overall financial situation. Merit aid may be granted based on academic performance, athletic or creative talent, or other associations. “Grants are awarded through the financial aid office since they are related to financial aid forms. These can change year-to-year as families file new and updated financial aid forms," he says. "For incoming freshman, scholarships are often awarded through the admissions office since they are related to merit. These awards are mostly unlikely to change over the course of the college career as they are tied to GPA and credit requirements that are usually easily attainable.”

Gift Aid vs. Loans vs. Work Study
Some financial aid, such as loans, is not “free money” and has to be paid back. Other “gift” aid, like most grants and scholarships, is considered “free money” but may have strings attached – like maintaining a GPA minimum or other caveats. Your eligibility for campus work study will be determined through the FAFSA process, but is not guaranteed, is considered "earned" money, and checks are issued based on hours worked. From there, it is up to you to apply work study earned-dollars to your school-related costs (you know, as opposed to a new outfit or Chance the Rapper tickets).

When to Negotiate and What Can Change
“Know who is awarding each type of ‘free money’ when it comes to negotiation and who to ask for reconsideration for additional aid,” says Blontz. “It is important for families to compare award letters and see if they notice one type of aid awarded by one school and not another. Common types of aid that could be increased or added are Perkins loans and work study. Scholarships are more likely to remain stable, while grants could change over the college career if there are changes to a family’s finances.” To that end, you’ll have to submit a new FAFSA each year you are in school, as your family may have changes in income or assets.

How to Accept and Decline Aid
Your award letter will direct you on how to accept - or decline - your aid offers, usually done online or via mail. Decline aid? Yes, it's common. “Some families choose to forgo student loans. Others prefer their students to not work for at least their freshman year of college," says Blontz. "Schools tend to require something in writing from students to remove aid from the award letter, most commonly student loans and work study. There may be additional requirements to accept things like loans, such as entrance counseling and the signing of a master promissory note.”

Looking for more information on financial aid and award letters? Connect with Blontz on FinancialAidCoach.com and Facebook.