5 Tricks for Understanding Financial Aid Letters

So if you’ve applied to college and it’s around April, there’s a chance that you’re starting to get Financial Aid Letters from them. This can be an important factor when trying to decide what school to go to (although not the only factor). Here are the 5 Tricks for Understanding Financial Aid Letters.


There are a couple of types of loans that are usually on the Financial Aid Letter:

Unsubsidized Loans: Most people prefer these loans because the interest doesn’t start until you stop attending school (college). After you are out of college then you are given a 6-month period before the interest begins. This period is usually given for you to find a job and get a source of income in order to pay off the loan.

Subsidized Loans: These loans do build up interest throughout the four years. Some schools will sometimes move money from a Parent Plus Loan if your parents don’t accept it.

Parent PLUS Loans: These loans can ONLY be taken out by your parents but if they choose not to take it, then it goes to your subsidized loans, but it depends on the school.

Federal Perkins Loan: These loans are given out by the school themselves, but are currently in the process of being phased out.

Work Study

Some schools will offer work study but it isn’t always guaranteed. Work Study does have to be reported for taxes but is not calculated as income when you apply for Financial Aid. This money isn’t given to you all at once though because it's like having a job. So this money will most likely go towards personal expenses like books, food, or transportation.


Federal Pell Grant

This is from the FAFSA and will always be based on parent contribution. It is usually the first financial aid listed in the Financial Award Letter. The highest amount awarded by the Federal Pell Grant (if the family contribution is 0) is about $5,775. Remember Grants aren’t paid back! So always accept this financial aid.

Always Think About Outside Scholarships!

You always have to report outside scholarships to your Financial Aid Office! If you do not then you could get your financial aid revoked. If the scholarships surpass the family contributions/ what the financial aid office gives you, then they have to reduce the financial aid given.

Additional Costs

Some Financial Aid Letters have “shopping sheets” which include all the costs for the school but some of them do not include the additional costs like books, transportation, food, and other personal expenses. Also, some schools need you to confirm your residency of the state or else the estimate given in the “shopping sheet” is usually the out-of-state cost.