College acceptance season is an exciting time—high school seniors across the country find out which colleges and universities are offering them a spot, and start making decisions about where to attend. A big part of that decision-making is the financial aid award letters that students also receive. These can sometimes bring stress and confusion, especially since award letters can be difficult to decipher from one school to another.

Financial aid award letters generally include grants, scholarships, work-study programs, federal student loans, and your Expected Family Contribution (EFC). Because each school uses its own template for award letters, it can be challenging to compare college costs apples-to-apples. But evaluating them doesn’t have to be complicated. Just follow these five steps.

Step 1: Understand the Different Types of Financial Aid

Your award letter may contain a mix of different types of aid, each of which can help you financially in different ways.

  • Grants & scholarships: Financial aid that does not have to be repaid (i.e., gift aid).
  • Federal Work-Study: A part-time employment program funded by the government that allows students to earn money to be used to help pay for college. Generally the wages are paid directly to the student, and used to pay for books and living expenses.
  • Federal Loans: These are designed to cover the gap between cost of attendance and other financial aid and must be paid back. Federal student loans are made by the federal government. If you need to cover costs that federal loans can’t cover, you may want to consider private student loans. Private student loans are made by banks and financial institutions and are not included in your award letter (you’ll have to pursue them independently).

Step 2: Carefully Review Each Award Letter

When you're ready to compare financial aid, first gather all of your award letters and a highlighter. Carefully read each letter, highlighting each type of aid and the amount offered. You may want to use two different colors to highlight: one for loans that will need to be repaid and another color for scholarships and grants that do not need to be repaid.

Step 3: Compare Financial Aid Offers and Award Letters

There are tools, such as the Award Letter Comparison tool from Discover® Student Loans, which can help guide you through the process of comparing your award letters. It is important to understand and compare the various types of aid you are being offered (free money vs. money you must pay back) and how much money each school expects you and your family to contribute to your education.

Step 4: Find Out How Long the Financial Aid Will Last

Financial aid offers typically cover only one year in school, so families must complete the Free Application for Federal Student Aid (FAFSA®) every year. Some aid like scholarships or grants may be guaranteed for four years, though most are only guaranteed for the first year. Families should inquire with the college’s financial aid office about the likelihood of aid being extended and get the answers to their questions in writing.

Step 5: Research Other Funding Sources

Students can and should continue applying for outside private scholarships, since that is free money that doesn't have to be paid back. Leverage scholarship search tools, such as the Free Scholarship Search from Discover Student Loans, to help in your search for these scholarships.

Keep in mind that when you compare college costs, price isn't the only factor. You should also consider location, academic rigor, graduation rate and employment rate. Pick the school that will give you the best combination of education and experience and leave you with the least amount of debt.

FAFSA® is a registered trademark of the US Department of Education and is not affiliated with Discover® Student Loans.


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Award letters are sent from the schools where you are accepted and details how much financial aid you will receive. Discover Student Loans explains what to expect.


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