Deciphering Your Financial Award Letter

College debt can haunt you for years, following you around until that education of yours is completely paid off. Many apply for financial aid, but not everyone gets it. And the people who do receive aid almost have to find some sort of key to translate the seemingly encrypted document. According to Citizens Bank, these financial aid letters are a big part of choosing which college you can afford. Fortunately, they’ve provided the key to all the acronyms and an explanation of what each means for you.

  • COA: Cost of Attendance. This award letter provides information for one year at a time and includes estimated tuition, books, supplies, room and board. The cost of tuition can rise by almost 15% by senior year.
  • EFC: Expected Family Contribution. Based on your family income and college savings, this is the amount the government believes your family can contribute. Most schools subtract this amount before deciding the aid they can provide to you.
  • Out-Of-Pocket Cost. This is the remaining amount before any loans are applied. This is an important figure when comparing colleges because you will probably have to cover it with your savings, loans, or work study.
  • Net Cost. This is the out-of-pocket cost minus need based loans. You still have to pay back Perkins loans and subsidized Stafford Loans.
  • Scholarships and Grants. Sometimes called “gift aid”, you don’t have to pay these back. This includes need-based grants, school scholarships, or merit scholarships.

See more in the infographic below!