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Reading a financial aid letter

Grants, loans and work-study are not the same money. Here is how to tell them apart and compute what you will actually owe.

6 min read · Updated September 2026

An award letter lists everything the college is offering, but it rarely separates money you keep from money you repay. Start by sorting every line into three buckets: gift aid (grants and scholarships), self-help aid (loans and work-study), and everything else.

Compute the net price yourself

Take the full cost of attendance, including housing, food, books and travel. Subtract only the gift aid. What remains is your net price. Loans reduce what you pay today, not what you pay.

Watch for one-year awards

Some merit awards are for the first year only or require a GPA to renew. Ask the aid office in writing whether each award is renewable and on what terms.

Compare offers on the same footing

Put each school's net price in a single row of a spreadsheet next to its four-year graduation rate. A cheaper school that takes five or six years to finish is not cheaper.

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