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Financial Aid Award Letter

Financial Aid Award Letter

Once the student is admitted, each college or university listed on the Free Application for Federal Student Aid (FAFSA) will send an award letter. The award letter notifies you of the financial aid the college can offer and may include scholarships, grants, loans and/or work-study. The offers you receive from each college may vary due to cost of attendance and availability of funds. When you receive the award notification, review it carefully. Consider the following information:

Source of Aid
The source of the financial aid you receive may be from the federal government, the State of Iowa, the college or university, or private sources. The college will attempt to put together the best package possible with the funds that are available. What you receive will be based on your financial need, enrollment status, and other qualifying factors.

Types of Aid
There are two types of financial aid. Gift aid, such as scholarships or grants, is money that does not have to be repaid. The other type of aid, self-help aid, can include student loans, parent loans, or work-study. Any loans that you borrow must be paid back.

Merit versus Need Based Aid
Eligibility for financial aid programs vary. Some aid may be awarded based on merit (ability), such as academic achievement, musical talent, athletic ability etc. Other aid may be need-based, which is awarded according to financial need (as determined by the results of the FAFSA ).

Loan Eligibility
Your award package will probably include one or more types of loans. The award letter will outline the loan programs for which you qualify and the maximum you are allowed to borrow. Create a budget to determine if it is necessary for your family to borrow the entire amount offered. You may find you can borrow less. All loan programs are not the same. Be sure you understand the terms and conditions of each loan and choose the one best for your family situation. [More Information]

Loan Options
Your package will likely include one or more types of student or parent loans for you to consider. Always exhaust your federal loan options before borrowing private loans. Private loans can be expensive - many have a variable interest rate with a rate cap that may be as high as 20%. Federal loans offer better terms and conditions for the borrower, making them a lower cost option for most families. You can help your student avoid being overwhelmed by too much debt by borrowing Federal PLUS Loans. Students can assume some loan debt, but parents must play a role as well. If both students and parents borrow responsibility, both are more likely to successfully repay their loan obligations.

Evaluate the Offer
When comparing aid packages from more than one college, consider how much assistance is from scholarships or grants (which don't have to be repaid) and how much is loan support (which must be repaid). The largest financial package is not always the best- it may have the largest gap between your cost of attendance and the financial aid offered.

Ask Questions
Know the terms or conditions attached to each award. Some aid may renew automatically from year to year, some renew under certain conditions (such as living on campus, maintaining a required GPA, demonstration of financial need, or declared program or major), and others are one-time awards. Know what to expect. [Questions To Ask]

Follow Directions
Follow all directions given by the college. You may be asked to provide additional documentation or sign and return the award letter accepting the offered aid. Note the deadline for your response to each award letter. Missing a deadline could result in the loss of funds. If you have difficulty meeting deadlines, speak to a financial aid officer.

TIP: If you must borrow a student or parent loan, borrow wisely! You should be careful to never borrow more than you need. All loans are not alike in terms of the fees charged to borrowers and repayment conditions. Be a smart consumer - plan your debt carefully. Education is one of the best financial investments you can make!