What Your Award Letter Means

The schools you included in your application will receive the results of your FAFSA. They will use this information and the cost to attend their institution to put together an award package for you which will include federal student loan and grant money you’re eligible for, state aid, institutional aid and other sources of aid to help pay your costs. Some schools might include private or commercial loans. Make sure you understand what you’re receiving and what the terms are

Every loan award package is individually tailored. Contact the school, your lender or the U.S. Department of Education, if you have any questions or need clarification. Everyone is here to serve you. You’re the customer and there are options out there for you.

Not all award packages are the same. You’ll receive different award packages from different schools.

Should I accept all the money included the award letter?

Only borrow what you need and what you’ll be able to repay. Remember that student loans have to be paid after your leave school, attend less than half time or graduate. When you receive your award letter, start by accepting scholarships and grants you’re eligible for—be sure you understand any conditions/requirements to receiving these “free funds.” Then accept the loans with the most comfortable terms; that is, federal student loans (subsidized and unsubsidized federal student loans from the federal government or guaranteed by the federal government), and state aid. If you see private or commercial loans in your award letter ask why this type of loan was included, find out the terms, and reject the private loan if the terms aren’t favorable. Exhaust all options before looking into private loans. Private loans and credit cards should be your last resort.

Before you accept any aid, you should

• get a breakdown of the direct expenses (tuition, room, board, and fees) and estimates of indirect expenses (travel, books, etc.) for one year of college;

• know the actual net amount (cost of attendance minus financial aid) that you’ll have to pay to attend one year of college;

• know what amount of awarded financial aid that doesn’t have to be repaid such as scholarships and grants and the conditions under which they are renewable each year;

• know the amount of work-study and the conditions under which one has to fulfill the work-study;

• find out which loans you’re eligible for;

• find out which loans your parents can get to help pay for your education;

• know the interest rates, loan terms, monthly repayment amounts, and total repayment amounts of your loans;

• know where you can get additional information or have your loan questions answered.

Always consider what you’ll have to repay. Repayment of student loans should only be a small percentage of your salary. If you expect to pay more than 15 percent of your annual salary for student loans, you might have difficulty making your monthly payments. Ask your school’s financial aid office for starting salaries of recent graduates in your field of study to get an idea of how much you are likely to earn after you graduate. Estimates of salaries for different careers are available in the Occupational Outlook Handbook at www.bls.gov/oco and research employment opportunities advertised in the area where you plan to live.

You should know the full cost of attendance for the total number of years you plan to attend school. This will give you an idea of the total cost of the federal student loans you may be taking out. Once you have an idea of the total amount you’ll end up borrowing, you can see what the estimated monthly payment amount will be under different repayment plans