Guide · Money
Your letter says award. Some of it says loan.
Every financial aid offer mixes three different things into one envelope: money you keep, money you repay, and a job. Here's how to tell them apart in about five minutes — before you accept anything.
Sort every line into one of three buckets
Read the offer top to bottom and label each line. If a line isn't clearly one of these, it's probably a loan wearing a friendly name.
| Free money | Grants and scholarships — Pell Grant, state grants, institutional scholarships, merit awards. Reduces your cost. Never repaid (some require keeping a GPA or major). |
|---|---|
| Debt | Direct Subsidized, Direct Unsubsidized, Parent PLUS, institutional loans, private loans. Every one is repaid with interest. The only question is how good the terms are. |
| A job | Work-study: campus employment up to a stated amount. It's a paycheck, not a discount — you work the hours to get the money. |
When you do borrow, borrow in this order
- Direct Subsidized — the government pays interest while you're enrolled at least half-time. The best loan in the offer, if you qualify.
- Direct Unsubsidized — interest accrues from day one, even in school. Consider paying the interest as it accrues; it's small monthly and saves a lot at the end.
- Parent PLUS / private loans — highest costs, least flexibility, often need a cosigner. Take these last, smallest, and only with a clear repayment picture.
Accept loans in that order and only in the amount you actually need — you are allowed to accept less than offered.
Compare offers by net price, not by the biggest number
For each school: cost of attendance (tuition + housing + food + fees + books) minus grants and scholarships only = net price. That's what your family pays or borrows. A $30,000 "award" at a $70,000 school with $28,000 of loans inside is worse than a $12,000 award that's all grants at a $40,000 school. Run all your offers through the same arithmetic — the winner is often not the one with the flashiest envelope.
Before you commit anywhere, also check: does the grant renew every year, or is it a first-year teaser? What GPA keeps a merit scholarship? Is housing guaranteed all four years at the stated price?
Do this before the deposit deadline
- Label every line of every offer (free money / debt / job).
- Compute net price for each school on the same basis.
- Ask the financial aid office about anything unexplained — awards are negotiable more often than people think, especially with a competing offer in hand.
- Accept free money fully, work-study if you want the job, and the smallest loan amount that closes the gap.
Pair this with the odds side of the process: our acceptance odds calculator and the school pages help you build the list; this page helps you pay for it.