Making sense of college financial aid letters

Congratulations - you are considering college! But first, paying for it: Students who applied for financial aid through the Free Application for Federal Student Aid, or FAFSA, should be receiving their award letters right about now.

Different schools have different names for these letters: financial aid offer, merit letter, award letter or financial aid package. And there’s no standard format for them either, so deciphering how much assistance you’re getting and how much you’ll pay can be very confusing.

Here’s some help:

Award components

Generally speaking, there are three types of award: free money, such as scholarships and grants; borrowed money, such as loans that need to be paid back; and earned money, such as work study in which you get a work-study job, earn the money and don’t have to repay it.

The offer will vary from year to year.

It’s important to pay close attention to the details of each component too, urges Sallie Mae. Scholarships and workstudy may be renewable or an offer for that year only. The nature of the loan may not be exactly clear either, drill down to figure out if they are federal loans, private loans or even loans for parents. The type of loan will determine the interest rate and repayment terms.

Eva Dodds, director of counseling at Collegewise in Detroit, suggests having the school’s financial aid website open as you review the offer. The webpage should have a complete definition of each financial aid option they offer.

If you’re still unclear, speak to someone in the financial aid office, Dodd said. Financial aid officers are the interpreters and

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AP PHOTO/JEFF CHIU, FILE Pedestrians walk on the campus at Stanford University in Stanford, Calif.