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.
Find Your Matches FreeA 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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