A financial aid award letter tells you what a college will actually cost your family. But the letter is designed to be confusing — it bundles free money, loans, and work-study together in ways that obscure the real bottom line. Here's how to decode it.
Build a college shortlistA typical financial aid award letter contains four types of financial aid, often presented together in a way that makes the total look more generous than it is:
| Type | What It Is | Do You Pay It Back? |
|---|---|---|
| Grants | Free money from the school or federal government (Pell Grant) | No |
| Scholarships | Merit-based free money; may require maintaining a GPA | No |
| Work-Study | Part-time campus job; you earn it by working, it's not automatic | No, but you earn it |
| Loans | Borrowed money — subsidized or unsubsidized federal, or Parent PLUS | Yes — with interest |
Key insight: Many schools present total "financial aid" by adding grants + work-study + loans together. This inflates the headline number. Only grants and scholarships reduce what you owe.
To find your actual out-of-pocket cost:
If the letter shows $45,000 COA, $10,000 grant, $3,500 work-study, and $5,500 in loans: your net price is $35,000 — not $19,000 as the letter's "total aid" of $19,000 might suggest.
When comparing multiple award letters, standardize them: strip out loans and work-study, and compare the grants-only net price. A private school offering $35,000 in grants against a $55,000 COA ($20,000 net) may be cheaper than a public school charging $22,000 with no aid ($22,000 net).
Admit Coach estimates financial aid by income bracket for every school in our database, helping you forecast what each school will cost before award letters arrive — and rank your options objectively after they do.
Grants and scholarships are gift aid you never repay, while loans must be repaid with interest, and work-study is money you earn through a part-time job. To find your real cost, subtract only grants and scholarships from the cost of attendance — not loans, which just spread the cost over time. Admit Coach helps you calculate true net price and compare offers across schools.
Compare offers on net price — cost of attendance minus grants and scholarships only — not the total 'aid' figure, which often bundles loans that inflate the number. A school offering $40,000 in aid with $25,000 in loans may cost more than one offering $25,000 in pure grants. Admit Coach standardizes each offer to a real net price so you compare fairly.
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