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Financial Aid Award Letter

Financial Aid Award Letter

Once you are 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, work-study, and institutional aid. The offers you receive from each college will vary due to the 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 that you qualify for and the maximum you are allowed to borrow. Create a budget to determine if it is necessary for you to borrow the entire amount offered. You may not need all or a portion of the loans. Don't borrow more than you need to cover your education costs. 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 loans for you to consider. Remember a loan is borrowed money that must be repaid with interest. Consider your options, ask questions and choose carefully. You should 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 than private loans, making them a lower cost option for most students.

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 and conditions attached to each award. Some aid may renew automatically from year to year, some renew under certain conditions (such as maintaining a required GPA, demonstration of financial need, or declared program or major), and others are one-time awards. Know what is required to renew any awards offered. Failure to pay attention may cost you money!

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 at the college.

TIP: If you must borrow a student 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, if you borrow wisely! You may need to borrow additional loans each year. Keep track of your total accumulating loan balance. Figure out what your minimum monthly payment will be during repayment so you don't get in over your head.