Students and their parents are often confused by certain terms mentioned in the financial aid award letter that they receive. Unfortunately, misunderstanding some of the key terms can result in making wrong decisions that can have a long-term impact on their finances. Understanding what your financial aid award letter is really saying is important.
Here are a few commonly used words in these letters and what exactly they mean:
Learning My Student Loan Financial Aid Award Letter
Cost of Attendance – This is the total cost of attending that particular college and includes the tuition fees as well as other school-related expenses such as room and board, textbooks, transportation, and school supplies to name a few.
Net Costs – This is the total amount you will have to pay after subtracting the awarded scholarships and grants from the total cost of attendance.
Gift Aid – This includes all the money that you have been offered as a gift and will not have to repay. Your total gift aid is calculated by adding up all merit-based scholarship awards that you receive as well as the need-based grants that you receive.
Estimated Family Contribution – Most students and parents find Estimated Family Contribution or EFC the most confusing term of all. The EFC number is an estimate of what the government thinks that a student and their family can contribute towards their education. Schools use this EFC number to calculate how much need-based aid you need to go to school. This calculation is made based on the information provided on the FAFSA.
There are other terms that you will come across but these 4 are the most important to know and understand.
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