Getting accepted to college is exciting—but that excitement often turns into confusion the moment a financial aid award letter arrives.
Families regularly ask:
Is this my final offer?
What’s the difference between a grant and a scholarship?
Why does this college say I owe “$0” when I clearly can’t afford it?
And what exactly am I supposed to pay—now and over four years?
In this episode of Ol’ College Try, Matt Carpenter and financial aid expert Peggy Keough walk families through how to decode financial aid award letters, avoid common traps, and understand what colleges are really offering. Whether your student is in the Class of 2026 or you’re planning ahead with a younger student, understanding this step is critical.
Below, we break down the biggest takeaways every family should know before making a college decision.
First Things First: Is This the Final Financial Aid Offer?
One of the most common sources of confusion is timing.
When a student is accepted, they may immediately receive a merit scholarship offer—sometimes right in the acceptance letter. While that’s great news, it is not the full financial aid picture.
Here’s the key distinction:
A reliable indicator that you’ve received the final offer?
Most financial aid award letters include the federal Direct Student Loan, typically $5,500 for first-year students. If you see that line item, you’re likely looking at the complete package.
Grants vs. Scholarships: Why the Difference Matters
At first glance, free money is free money. But not all free money behaves the same way over four years.
Merit Scholarships
Awarded based on academics, talent, or leadership
Usually guaranteed for all four years
Often require maintaining a minimum GPA
Typically don’t change unless academic requirements aren’t met
If your student earns a $25,000-per-year merit scholarship, that amount is often a stable part of your long-term affordability plan.
Need-Based Grants
Based on your family’s financial situation
Reassessed every year
Can go up—or down—depending on income, assets, or changes like another child entering or leaving college
This distinction matters because families often assume a strong freshman-year grant will repeat for four years. That’s not always true. Promotions, bonuses, or changes in household income can significantly reduce need-based aid in later years.
Bottom line: merit aid is usually predictable; need-based aid is not.
Loans Are Financial Aid—But They’re Still Loans
One of the biggest red flags on award letters is how colleges present loans.
Many schools subtract loans from the total cost and label the result as “your cost” or “remaining balance.” That can be incredibly misleading.
Here’s what to watch for:
If a college says your cost is dramatically lower because of loans, that doesn’t mean the school is cheaper—it means you’re borrowing more.
Families should always ask:
How much of this package is free money?
How much needs to be repaid?
What does this look like over four years, not just one?
Work-Study: Helpful, But Not a Discount
Work-study is another line item that often causes confusion.
While it appears in financial aid packages, work-study does not reduce your bill. Instead, it gives your student the opportunity to:
Important things to know:
Jobs are not guaranteed
Earnings depend on hours worked
Money is paid to the student, not credited to the account
Funds can easily turn into everyday spending if not managed intentionally
Work-study can be valuable—especially for jobs that allow studying during downtime—but families shouldn’t count it as money already applied to tuition.
Why Cost of Attendance Matters More Than the “Net Price”
Another critical piece of the award letter is the Cost of Attendance (COA).
This should include:
Some schools only show partial costs or outdated estimates, which makes the offer look more affordable than it really is. Always verify that the COA is:
If the cost side of the equation is wrong, the entire comparison falls apart.
Think Beyond Freshman Year
College is a four-year financial commitment, not a one-year purchase.
Families should consider:
Whether need-based aid is unusually high (or low) this year
Upcoming changes in household income
Siblings entering or leaving college
Whether merit scholarships are renewable—and under what conditions
A strong freshman-year offer doesn’t always translate into long-term affordability. Understanding this early can prevent painful surprises later.
The Big Takeaway
Financial aid award letters are confusing by design—but they don’t have to derail your decision-making.
Before committing to a school:
Make sure you’re reviewing the final financial aid offer
Separate free money from loans and work-study
Understand what’s guaranteed versus reassessed annually
Evaluate affordability over all four years, not just one
Once you understand the offer, then it’s time to explore your next step: appealing for more aid. And yes—appeals are possible, even for merit scholarships.
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