Understanding What Your Financial Aid Offer Letter Is Really Saying

Financial aid offer 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 the wrong decisions. That can lead to a long-term impact on their finances. Understanding what your financial aid offer letter is really important.

Here are a few commonly used words in these letters and what exactly they mean:

An empty white envelope with a red pencil sitting on top of it.

What Your Financial Aid Offer Letter is Saying

There are multiple elements to an offer letter–let’s break down the basics.

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

The total amount you pay after subtracting the awarded scholarships and grants from the total cost of attendance.

Gift Aid

Includes all the gift money offered 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.

Comparing Offer Letters

If cost is an important factor in your college search, it’s vital to compare offer letters from the schools you’ve been accepted into. One school might offer more generous aid than another, after all.

College Raptor can give you accurate scholarship estimates to any 4-year college in the country. Just sign up for a free, secure account and get started!


Lender Rates (APR) Eligibility
Citizens logo.
6.98%-15.04%* Variable
5.99%-14.00%* Fixed
Undergraduate and Graduate
Sallie Mae logo.
6.37% - 16.70% Variable
4.50% - 15.49% Fixed
Undergraduate and Graduate
Credibe company logo.
4.98% - 16.85% Variable
4.07% - 16.49% Fixed
Undergraduate and Graduate
Lendkey company logo.
6.07% - 11.31% Variable
4.39% - 10.39% Fixed
Undergraduate and Graduate
Ascent company logo.
6.24% - 15.85% Variable
4.29% - 15.76% Fixed
Undergraduate and Graduate
6.54% - 11.08% Variable
3.95% - 8.01% Fixed
Undergraduate and Graduate
Earnest company logo.
5.62% - 16.85% Variable
4.39% - 16.49% Fixed
Undergraduate and Graduate
4.98% - 12.79% Variable
8.42% - 13.01% Fixed
Undergraduate and Graduate
College Raptor is not a loan lender and does not assume responsibility for suggesting a loan to a user who may not be eligible for it. Rates, terms, conditions, eligibility, approval, and other considerations are the decisions of the lenders and may vary depending on which lender or marketplace the user selects. We urge users to carefully consider and review all loan options and terms before committing to taking out a loan.

Subscribe to Our Newsletter

Join thousands of students and parents learning about finding the right college, admissions secrets, scholarships, financial aid, and more.