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Figuring Financial Aid Awards

You have been accepted; can you afford to attend?

Financial aid awards can be tricky and confusing. There is no standard award letter format and not all colleges include enough of the necessary information. If the letter lacks information, call the college financial aid office and ask. To compare awards, create a table or spread sheet.

The information you need to compare financial aid packages include: how much money you do not have to pay back (grants and scholarships), how much money you and your family are expected to contribute (Expected Family Contribution plus funding gaps), how much can be financed through loans (from the government or the college), and how much the aid offer covers for the total cost of attending college for one year.

In particular:

  • Full cost of attendance. This must include: tuition and fees, room and board, textbooks and supplies, and travel expenses

  • Grants and scholarships

  • Types and amounts of loans. Interest rates may not be included and must be investigated.

  • Parent and student’s expected family contribution (“EFC”), not all schools list this.

  • Net cost. The amount that is left over after all financial aid is deducted from the cost of attendance. This is “gap” between what the family can afford and what a full year of college will cost. Remember to include the EFC in the total amount that the family/student needs to contribute.

  • Work Study (if eligible, students work a job offered by the college and earn money to be used for personal expenses.)

An easy visual reference makes the process easier. Create a copy of the award letter and get out the colored markers. Mark all grants and scholarships blue, for “free” money that does not have to be paid back. Mark all loans in red; these amounts must be paid back over time. Mark work study in green, this is pocket money. Pick a color and mark the total family contribution, for both family and student if included.

The financial aid award is based on the financial aid forms you submitted, the FAFSA and the CSS:Profile for certain private schools. Each award is crafted especially for the student and ONLY APPLIES TO THE COMING YEAR. In order to continue to receive any financial aid, students and families MUST FILE NEW FINANCIAL AID FORMS EVERY YEAR of attendance. Failure to file these forms will result in a loss of financial aid, so mark your calendars and do not miss any deadlines.

Here are some steps to figure out what is being offered, and how much the family and student are expected to come up with.

  1. Add the total of grants and scholarships. This is “free” money that does not have to be repaid. Note: if a student is awarded a scholarship like a community scholarship or from a private source, the student is supposed to report this to the school and the amount of grant and scholarship money coming from the school will usually be reduced. Please consult the college financial aid office to check on their procedures.

  2. Now add together all loans. Understand that federal and institutional loans are awarded to the student and becomes the student’s debt. Usually these loans do not have to be repaid until after graduation, but will become due if the student drops out or attends less than halftime.

  3. In order to understand the full financial cost of college, take this loan amount and multiply it by four, the four years of college attendance. This number will be an estimate of total college student debt upon graduation.

  4. DO NOT INCLUDE ANY PARENT LOANS like PARENT PLUS. Why? Once a family determines how much they need to pay through loans, make sure to look at all sources, such as home equity loans, public and private loans. Compare interest rates, fees, etc.

  5. Look for the Cost of Attendance (COA). If it is not included or is missing information such as room and board, contact the college and ask for the full COA. (This information is also available on the school’s website.)

  6. Now the hard part: do the math. Subtract the student and family contribution from the COA. Family contribution or the Expected Family Contribution (EFC) is the amount the powers that be figure a family and a student can pay out of pocket. COA minus family contribution = total financial need. Students from very economically challenged backgrounds will have a EFC of 0.

  7. Add the total amount of grants and scholarships to the total amount of student loans. Add any work study if offered. (Note this has to be earned by the student during the school year. If the student decides not to do work study, that amount should be taken out of the equation.) This is the financial aid package, the amount of money offered by the school through grants, loans or work study.

  8. Subtract the financial aid package from the total financial need. Total financial need minus financial aid package. Is there any amount left over? If so, the school expects the student to find a way to come up with the difference.

Here is an example:

Total grants and scholarship: $40,000

Total loans: $5,000 ($20,000 over 4 years)

COA: 65,000

EFC: $4,000

Total Financial need is COA of $65,000 minus EFC $4,000 = total financial need = $61,000

Grants $40,000 plus loans $5,000= $45,000

Total financial need $61,000 minus total financial aid package of $45,000 = $16,000 gap between need and aid package. In order to attend the student/family will have to find $16,000 plus the EFC of $4,000 in additional money, plus assuming $5,000 in loans each year. The family will have to come up with $20,000 plus student and or parent loans to pay for college.

If you are curious about how generous your school is, look up Financial Aid by the Numbers on the Big Future site for the particular college. It will show the average percentage of financial need that is met, the average first year package, average need based loan, average need based scholarship, average non-need based aid (merit, athletic, talent).

Regarding Freshman year financial aid:

  • Find out if the scholarships and grants are renewable

  • Find out if there are requirements for renewing, such as maintaining at least a 3.75 GPA or a particular course load.

  • Check out information about the school. Do they frontload the freshman aid, then decrease it in following years? This is an unkind tactic used by schools who are doing their best to get students to accept placement which in turn reflects well on their rankings.

  • If your circumstances change (like job loss, divorce) contact the school’s financial aid office.


Making the decision about which college to attend is a difficult and involved process. Make sure you understand the financial consequences as well as considering the degree of college fit for each particular school. Some schools may be truly worth the extra investments; others may not be.

So GET SMART and take your time making this decision. Do not be afraid to contact the financial aid office at the school. Some schools have larger endowments or banks of available money. Be professional, courteous, and informative.

Here is an example from Bates that covers all financial need.

For freshman year here is the outcome:

  • Family Contribution $831 for freshman year

  • Student contribution $1,800 PLUS $1,700/year in work study

  • Student loan: payable 6 months after graduation: $2,000. If the student continues to be eligible, the student can expect $8,000 in student loans after 4 years

  • Total scholarships $59,159

  • Cost of Attendance $65,490

Bates financial award

COA - Family & Student Contribution: $65,490-$2,631 = $62,859 Financial Need

Total Grants: $59,159 plus work study $1,700 = $60,859

Add Student Loan $2,000 = $62,859 Total Financial Aid Package

Financial Need $62,859 minus Financial Aid Package $62,859 = $0

Here's another example simplified:

Campus Scholarship: $6,000

Need Based Grant: $39,970

Federal Pell Grant: $5,730

Federal Work Study: $1,800

Fed. Direct Subsidized Loan: $3,500

Federal Unsubsidized Loan: $2,000

Total Financial Aid Package: $59,000

Total COA: $62,000

COA - Financial Aid Package = $62,000 - $59,000 = $3,000

Under this award there is a gap of $3,000 PLUS $3,500 in subsidized loans PLUS $2,000 in unsubsidized loans or $8,500. REMEMBER this amount is only for freshman year. The family and student now have to decide if they can afford

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