Receiving your financial aid letter is a huge milestone in your college journey, but it can also be overwhelming and confusing. Understanding your financial aid award letter and knowing what’s actually free money and how much you are required to pay now, or pay back later, is key to making the right decisions for your future. Here’s how to read and understand a financial aid award letter.
Look at the Free Money First: Grants and Scholarships
Grants and scholarships are the best parts of your financial aid package because they don’t require repayment. These are the numbers to focus on first. Grants are often based on financial need, while scholarships can be awarded for academic achievement, athletic ability, or other criteria. Be sure to check if any scholarships are renewable, meaning they can continue each year as long as you meet certain criteria.
Money You Have to Pay Back: Loans
Loans are the money you borrow to help pay for school, but remember: this is money you’ll have to repay, with interest. There are federal student loans, which often come with lower interest rates and better terms, and private loans, which can vary in cost and typically have higher interest rates. Always be aware of how much you’re borrowing and how it will affect you after graduation.
Work-Study
Work-study is a great way to earn money while in school, but it’s not free money. These are part-time campus jobs that you can use to cover some of your living expenses or other costs, but remember that you’ll have to work for this money. Therefore you will need to factor in your schedule and if you have the time to make it all work. There are limits on how much you can earn through a work-study program, and your school will set a maximum number of hours per week you can work. It’s still a good opportunity to gain experience and earn money without taking on more debt.
Understanding Your Financial Aid Award Letter
While loans, work-study, and grants are the main components of most financial aid packages, your award letter should include other information, like renewability, deadlines, and other eligibility criteria. Ensure that you understand what you’re signing on for and if this funding will help you through your college journey.
As you prepare for college, understanding the world of finances can feel like learning a new language, especially when you start looking at your financial aid award letter. But don’t worry, you’re not alone! Understanding the differences between grants, loans, and work-study will help you make an informed decision about which offer is best for you. Don’t be afraid to ask questions if you’re unsure about any part of your financial aid letter. Knowing what’s free and what’s not will set you up for success in the future!
Take your time to read through all the details, ask questions if you don’t understand something, and make sure you’re clear on how each type of aid works. Paying for college is a big responsibility, and it’s important to know exactly what you’re agreeing to.
More about Jodi and College Financial Aid Advisors
Jodi is a FAFSA financial advisor who helps with the financial aid process to help families of college students maximize their financial aid. From completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options, Jodi is a fantastic resource when it comes to student financial aid. Schedule a 15 Minute Power Chat to learn more about finding ways to pay for college.