Understanding Your Award Letter

It's important that you understand all parts of your award letter so you know exactly how much financial aid you're being offered, and from what sources.

Your award letter comes after a few things have been completed:

  • You’ve been accepted for admission.
  • You’ve completed and submitted your FAFSA.
  • You’ve submitted any other materials that your school has asked for.

At this point, your college financial aid office will provide you with your award letter, which contains a list of aid programs you are eligible to receive.

If you’ve been accepted to several colleges and listed them on your FAFSA, you’ll receive award letters from all the schools you’re eligible to attend. To be in the best position to compare your options, make sure to meet deadlines and submit all colleges’ required forms and supporting information.

Each school will also provide a deadline by which you must respond to your award letter, letting them know whether you accept the program.

Types of Financial Aid

There are several different types of financial aid that you may be offered, and all come with different pros and cons. Make sure when you review your award letter that you understand what is required of you for each form of aid.


Grants are often based on financial need. Grants do not typically need to be repaid, and may include funds from federal, state, and institutional sources. These are applied to your college bill. There may be occasions where you will need to pay back part or all of a grant. For example, if you withdraw before finishing an enrollment period, or, if you accept a TEACH Grant and fail to teach for the required number of years.


Scholarships do not have to be repaid, and are based on academic performance, financial need, or a combination of both. Scholarships usually come from institutional or private sources, and are applied to your college bill.

Federal Work-Study

Federal work-study may be listed on your award letter, though it’s up to you to obtain a qualifying job and work to earn this type of financial aid from federal and institutional sources. Your financial aid office posts eligible jobs, and you’ll receive paychecks throughout the year for hours worked. This type of aid is not be applied to your bill.


Loans are funds you borrow now and pay back with interest after you leave school. They may come from federal, institutional, or private sources. If you receive a loan, then it is applied to your bill. Some types of loans also charge fees, which are deducted from your loan amount. Be sure to read all the fine print before you borrow.

Determining the Amount You Owe after Financial Aid is Applied to Your College Bill

You’ll be billed for some costs directly. This typically includes tuition, and fees, plus room and board charges if you live on campus. You’ll also have additional expenses like books and incidentals like transportation and personal expenses. When schools are determining your overall Cost of Education, they’ll factor this in, and the total will accompany your award letter.

What to do when you still need additional funds

Private Scholarships

There are a number of private scholarships available, which you can search for with Peterson's College Scholarship Search. If you are awarded private scholarships, the amount you need to borrower will be reduced.

Direct PLUS Loans

These are federal loans that some schools may include in an award letter. Subject to certain eligibility requirements, graduate or professional degree students or parents of a dependent undergraduate student are eligible to receive a Direct PLUS Loan.

Private Loans

Private loans can also assist with the Student and Family Contribution. Creditworthy students or cosigners are required.