Break down of a financial aid award letter

Mariah Davis
Mariah Davis is a freshman at Hamline University in St. Paul, Minn. Photo courtesy of Mariah Davis
Don't look at the sticker price for a university as your main factor in deciding whether or not to attend.

Probably the most important letter your college will send you to will be the financial aid award letter. Admission Possible coach Eagan Heath says not to look at the sticker price for a university as your main factor in deciding whether to attend. Instead, look at the cost after subtracting the help outlined in the financial aid award letter.

The letter will show the federal, state and institutional financial aid offered to you for the upcoming school year. It’s important to understand all the information in the letter to make an informed and responsible choice.

1. Total Cost of Attendance — This gives the total cost of attending the school. states that the total cost should include tuition and fees, room and board, books and supplies, transportation and personal expenses. This is the number you’ll be subtracting all the financial aid from.

2. Outside Scholarships — This is how much of your tuition you have covered from sources other than the university or the government. This could be scholarships such as the Target Scholarship or the Page Scholarship. You do not need to pay this back.

3. University Scholarships (Institutional Grant) — Some universities will give you scholarships for your academic performance or for participation in certain programs during your high school years (for example, Admission Possible or Upward Bound). You do not need to pay this back.

4. Federal Pell Grant — This federal grant is offered to undergraduate students who are trying to earn their four-year degree. The amount is determined by your financial need. According to, your school should tell you how much you are awarded. You do not need to pay this back.

5. Federal Perkins Loan — This loan has a 5 percent interest rate and is available to both undergraduate and graduate students with exceptional financial need. Your school is your lender and determines the amount needed. You need to pay this back upon graduation.

6. Federal Stafford Loan — There are two types of Stafford Loans: subsidized and unsubsidized. Subsidized loans do not start collecting interest until you finish school. Unsubsidized loans start collecting interest right away. You need to pay them back upon graduation.

7. Federal Work Study — This allows you to get jobs on campus and certain jobs off campus. This money is paid out like a regular paycheck and you can use it for tuition, supplies or whatever else you need to get through college.

8. Total Award — This is the full amount of aid being offered to you. However, this number includes loans as well as grants and scholarships so the highest award may not be the best deal for you.

After understanding all the pieces of the Financial Aid Award letter, analyze the numbers and try to get as much of your education covered as possible.

Heath advises students to add up grants and scholarships. You can use online calculators on sites such as to help you determine which school offers you the best financial aid package.