Understanding Financial Aid Offers | Scholarship America

Understanding College Financial Aid: Financial Aid Offers

Paying for College  |  5 minute read

Already filled out your FAFSA? Get help understanding college financial aid and how to interpret your Student Aid Report and Financial Aid Offer documents.

Once you’ve submitted your FAFSA, you’re going to be waiting for two very important documents. The federal government will send you one, called a Student Aid Report (SAR). The other, called a Financial Aid Letter (or Financial Aid Offer), will come from your current or future college. Here’s what to know about those two documents.

What to expect from your Student Aid Report (SAR)

The Student Aid Report (SAR) is delivered electronically to the email address used on your FAFSA, and it can take anywhere from three days to a couple of weeks, depending on system traffic. We recommend adding “ed.gov” to your email safe sender list so you don’t miss out on your SAR—and keep an eye on your junk mail and spam folders just in case. Once the SAR arrives, carve out some time (with your family, if possible) to go over it carefully. Mistakes on your FAFSA aren’t the end of the world and can be corrected online by students or their schools—but if you don’t catch them right away, the process is a lot more complicated. (If you want to give a college access to change FAFSA information, look for the Data Release Number, a four-digit reference number found below the Expected Family Contribution box.)

The SAR’s most important number is the Expected Family Contribution (EFC): the amount of money that your family is expected to contribute to your education.

The SAR’s most important bottom-line number is the Expected Family Contribution (EFC): the amount of money that your family is expected to contribute to your education. This is the number that statewide and college financial aid offices will use to calculate how much financial aid they’ll give you. The lower the EFC, the more financial aid you’re likely to qualify for.

If that EFC number seems higher than you thought, here’s a good explanation from FinAid:

“You may find your EFC figure to be painfully high. This often occurs because the need analysis formulas are heavily weighted toward current income. In addition, the formulas consider your income and assets without taking many common forms of consumer debt into account, such as credit card balances and auto loans. Finally, student income and assets can add significantly to the EFC figure.”

FinAid does list some strategies for reducing your EFC and maximizing financial aid eligibility at this stage, but keep in mind that these may take months or years of long-term planning to put into effect. For most families, it’s best to work with the EFC you receive, and figure out how to maximize aid from your college. That’s where the Financial Aid Letter comes in.

Making sense of financial aid letters and “unmet need”

The financial aid letter is a document that comes from your college or university that outlines the cost to attend, as well as the federal, state and school-funded awards you’re eligible to receive to help pay for it. The dollar amount offered in a financial aid letter makes it a powerful piece of correspondence that has the potential to make or break enrollment decisions.

Although financial aid letters vary from school to school, there’s one important phrase that your family should consistently be thinking about related to them, and that’s unmet need. Unmet need is the amount that’s left to be paid after financial aid is awarded. It’s the amount that the college says you and your family can actually afford topay. Here’s a helpful sample financial aid letter (view the full interactive tool here):

In this example, you’ll need to do some digging to find the unmet need. The Cost of Attendance (COA) is $38,250, and the Expected Family Contribution (EFC) is $4,500. The EFC can be combined with grants and scholarships as well as Federal Work-Study to get a total of $19,926 in financial aid.

Pay close attention to the details of the line items as the total aware amount can be misleading. The bottom of the letter makes it seem like the awards total $38,250: enough to cover full tuition with no unmet need. However, loans that need to be paid back are included within the line items. 

Upon closer look, the letter contains $19,926 in grants and scholarships, which don’t need to be repaid. However, the last five lines are all different types of student loans, which do—potentially leaving you with considerable debt after graduation. The awards list doesn’t separate these options, so it would’ve been up to you and your family to figure out if you really want to rely on loans to cover the $13,824 in unmet need.

Most schools don’t have the funds to cover the financial needs of every student enrolled. Rather than being surprised by the unmet need, use the number as motivation to find “free money.”

This is just one way in which financial aid letters can be confusing. They vary by school, they can be hard to interpret and can be overwhelming. To ensure you’re not missing anything major, sit down with your family or a mentor to compare financial aid letters from your potential schools, and to see what your unmet need really is at each institution. Researching and discussing both your financial aid letter and your scholarship options will reduce stress and ensure you’re prepared for fluctuations in future years.

Most schools don’t have the funds to cover the financial needs of every student enrolled. Rather than being surprised by the unmet need, use the number as motivation to find “free money.” You’ll notice on the sample letter that private scholarships—those from businesses, competitions and organizations like Scholarship America—aren’t listed, and those can go a long way toward reducing unmet need.

Never stop searching for free money!

You can help minimize your student loan debt with these tips – and don’t forget, as you consider ways to pay for college: scholarships are out there for every kind of student at every stage of your education.

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