understanding the financial aid award notification
Posted : March 4, 2003
Last Updated : February 10, 2015
Once a financial aid administrator at your school(s) reviews your SAR, you will be notified regarding your eligibility and the amount of aid you may receive.
Financial Aid Awards
There are two types of financial aid awards: gift aid and self-help aid. Gift aid does not usually have to be paid back. Self-help aid must be repaid through money or labor.
Scholarships are based on merit (for example: good grades, music ability, or athletic skills). Some are also based on need. Scholarships are offered through colleges, the community, and other organizations.
Grants are awarded by the federal or state governments or by the school and are usually based on financial need.
Remember that the financial awards listed above do not usually have to be paid back. Some exceptions may apply.
Federal Work-Study is awarded to students with financial need. Students can work part-time to earn this award money to help with the cost of attendance. Work-study jobs can be found on or off campus through the school's Financial Aid Office.
Federal Perkins Loan is a low interest rate loan that aids students with a large financial need. This loan has a 5% fixed interest rate and no loan fee. Financial aid officers at each college determine which students receive these loans and how much they receive.
The Federal Subsidized Stafford Loan is a need-based loan for students enrolled at least half-time as an undergraduate student in an eligible institution. "Subsidized" means that the federal government will pay interest (up to 150% of program length) on the loan. Once the student reaches the 150% limit, he becomes ineligible for the interest subsidy benefits on all Federal Subsidized loans disbursed to him on or after July 1, 2013. Here are the loan limits effective July 1, 2014. Please note: As of July 1, 2012, graduate and professional students are no longer eligible to receive Federal Subsidized Loans but will still remain eligible for Federal Unsubsidized Loans.
The Federal Unsubsidized Stafford Loan is non-need based. All students, regardless of need, can receive this loan. Students are responsible for paying the interest while enrolled in school and during any grace period or deferment. Here are the loan limits effective July 1, 2014.
The Parent Loan for Undergraduate Students (PLUS) is non-need based. These loans are available to parents of undergraduate dependent students, but the parents must have a good credit history. Parents can borrow up to the cost of education as determined by the school minus any financial aid received. Repayment usually begins within 60 days after funds are disbursed. However, rates, benefits, and deferment options vary for each organization or bank offering the PLUS Loan.
Alternative or Private Student Loans are offered through organizations and banks. Rates, repayment plans, and borrowing limits vary for each organization or bank.
Remember that any self-help aid must be repaid through money or labor. For more information about Subsidized and Unsubsidized Stafford loans, PLUS loans, and private student loans visit the Student Loan section of this site.
Comparing Financial Aid Award Packages
Once you receive financial aid award notifications from the schools to which you have applied, it's time to compare the financial aid packages offered by each school. In order to make comparisons, you should follow these guidelines:
Compare like terms. Make sure that the cost of attendance is the same for each school before comparing. Some schools may not include transportation or personal costs in their estimated cost of attendance.
Compare ratio of gift aid to self-help aid. Generally, packages with a higher proportion of gift aid are more appealing because students may have less debt when they graduate. However, more gift aid may mean a larger family contribution at some colleges.
Compare the terms of any loans included. Will the payments be affordable? Student loans with low interest rates and no repayment until after college may be more affordable than private loans or other consumer loans.
Compare the effect of scholarships on other aid. If you are applying for or will qualify for outside scholarships, you should determine if it is possible for a scholarship to reduce your financial aid package.
Check on future packages. What part of the financial aid award is renewable from year to year? Are there requirements for maintaining the awards?
Although very important, the amount of financial aid you receive isn't the only factor you should consider in choosing a college. Neither the school that offers you the most financial aid nor the most popular school among your friends is guaranteed to provide the right fit for your personal and academic goals, so try to keep an open mind when weighing your options. There may be several schools on your list of choices that balance academic, personal, and financial needs.
After Receiving the Financial Aid Award Notification
After reading the financial aid award notification, you may realize that the awards listed are not enough to cover all expenses. However, there are other loan options that may not be shown on the notice. Your parents may be eligible for the Federal PLUS Program or you could consider getting a private student loan.
After receiving the financial aid award notification, you must let the school know whether or not you are accepting or declining the awards. Not everything that is offered has to be accepted. Declining an award will neither help nor hurt the award. Pay close attention to deadlines for accepting the award package. Deadlines are usually within two weeks after receiving the award notification. If a deadline is missed, you may risk losing a scholarship, grant, or loan assistance.
For more information about the financial aid award notification, contact the Financial Aid Administrator from the college.