Financial aid award letters often confuse students and their parents, with unfamiliar terms mentioned in the letter. Unfortunately, misunderstanding some of the key terms can result in making wrong decisions. That can lead to a long-term impact on their finances. Understanding what your financial aid award letter is really important.
Here are a few commonly used words in these letters and what exactly they mean:
What Your Financial Aid Award Letter is Saying
Cost of Attendance – A particular college’s total cost of attendance. It includes the tuition fees as well as other school-related expenses. For example, 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 offered as a gift that you do not need 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. Schools calculate EFC 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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