Creating Transparency for Families in the College Funding Process

Journal of Financial Planning: January 2021


Cozy Wittman is the education and partnerships manager for College Inside Track, an organization that helps families navigate the college search, application, and acceptance process ensuring right fit schools for students and families. She is a national subject matter expert on late-stage college planning and trains financial professionals around the country on strategies they can use to better serve clients.

Editor’s note: This article was adapted from Cozy Wittman’s FPA Annual Conference 2020 session titled “Interpreting Financial Aid Award Letters: Creating Transparency for Families.” This and other conference recordings are available at

When I sit down to chat college with families, I find that they have thought a little bit about how they’re going to pay for freshman year, but they don’t really know what comes after that.

We want to make sure that clients have a four-year game plan for paying for school and for budgeting. The budget piece is hard because colleges lack transparency in the pricing model during the application process. This lack of transparency is apparent in the financial aid award letter and you can create value for your clients by helping them interpret the award letter.

This article is going to explore how to interpret the financial aid award letter. It will dive into the elements of a bad letter, the elements of a good letter, questions families must ask before accepting aid, and when to appeal an award package.

Tips After Receiving the Acceptance Letter

First thing to note is that the acceptance letter/email is not the award letter. The acceptance letter will let your clients know whether their student has been accepted to a school. Often included in the acceptance letter is access to the student portal, which is important for students to log in to, so they can look at and evaluate their financial aid award package. Access to federal student loans also sits in the portal.

It’s important not to accept the financial award package right away as you may miss out on additional money that the college is going to bring to the table—and accepting the award package prematurely may affect your leverage in any appeal process. If the school offers a $7,000 presidential scholarship, for instance, and the student accepts it right away, there’s no reason for the college to bring more money to the table.

Elements of a Bad Award Letter

Colleges are less than transparent when it comes to financial aid award letters and what the cost to the family will actually be.

The financial award letter is sent by the office of financial aid. A full, transparent financial award letter should include the tuition, room and board, books, fees associated with going to the school, work study, grants and scholarships available to the student, and any loans being offered to the student (and the interest rates on those loans).

Every student should have their federal student loan listed somewhere on their financial award package because every student gets access to that.

Not all award letters are good. Here are things that make a bad award letter:

Using confusing jargon and terminology. Instead of stating “loan,” the award letter will simply put the letter L. One award letter listed a parent PLUS Loan as a “Parent Plus Award,” so the parents are thinking, “Awesome. This is some kind of grant that I’m getting for being such an awesome parent.” But it’s actually a loan.

Many schools are lumping grants, scholarships, and loans together. They’re all blended together, and it can be very confusing for families to distinguish what is what.

Omitting the complete cost of attendance. What you see often is only tuition and fees are included because those are the only stable costs for every student. They often don’t include housing or personal expenses.

In New America’s “Decoding the Cost of College” study, only 40 percent of award letters calculated what students would pay. Oftentimes, award letters leave out the cost of housing, food, and books.

Lack of clarity on next steps. Often, the award letter lists work study but doesn’t clarify what work study means or how to access it. The study found that 70 percent of award letters reviewed had no relevant next steps for students on how to go out and get work study.

There is no distinction between need- and merit-based aid. There is a lot of confusion about this when it comes to the family and the award letter.

Need-based aid is created by the outcome of the FAFSA. The FAFSA kicks out a number called the expected family contribution (EFC) that goes off to the college, and the college decides what portion of the sticker price families might need help paying for. Most schools in the country give some form of need-based aid.

Merit-based aid, on the other hand, is based on all things amazing and wonderful about the kids. It has nothing to do with income and assets. It’s important to note that need-based aid changes yearly, whereas merit-based aid will typically last for four years. Not all schools give merit-based aid.

Need- and merit-based aid both come to the family in the form of a grant or scholarship; therefore, it’s important for families to understand that there is potential here for misinterpretation.

All of these issues combined make the cost of college represented in the award letter often look shiny and prettier and less expensive than it is.

Exploring a Good Award Letter

The net price of college to the students is the difference between the sticker price of the college and gift aid. Net price is the actual cost to the family.

Net cost is the actual sticker price of the school, so net cost is the cost of college before any aid gets applied to tuition or room and board. It’s important that clients understand they should be looking for net price—not net cost—and, certainly, not whatever cost the college comes up with.

A good award letter will include:

The actual cost of attendance. It will be an estimate, of course, because it varies based on different things like which major the student chooses, or different food packages and housing options.

Tuition, fees, room and board, books, supplies, transportation costs and personal expenses. A good award letter will include costs for these things. If they don’t factor in personal expenses—such as traveling home for breaks and entertainment—you can help your clients figure that out.

A clear distinction between gifts and loans. You don’t have to pay back gift aid. A good letter will separate gifts from loans. It will also include the loans and the interest rate that goes with that loan. It will explain the difference between subsidized (the interest on the loan is not accrued while the student is in school at least half-time or during deferment periods) and unsubsidized (interest is accumulating the second you take out the loan), so families can decide for themselves what they want to do.

Explanation of Parent PLUS loans. A good award letter will note that they’ve incorporated a Parent PLUS loan and will call it as such. They’ll include the interest rate on those and not weave it into the gift aid to make their bottom line look less expensive.

Key Questions Families Should Ask

Families have a tendency to want to accept what colleges give them because they’re afraid to put ripples in the water, but they are not afraid to walk onto a car lot and challenge the pricing of a car if they’re really interested in the car.

People forget they are buying this college experience. It’s important to ask questions of the people who are presenting the price to start treating their college education like the purchase it is and get really good information before they make any decisions.

The first thing families should ask is for a full demonstration of financial need being met—meaning what percent of need is the family getting covered by the school? In order to know that, they actually have to understand what the outcome of the FAFSA was, or their expected family contribution. I am not exaggerating to make my point—99.9 percent of families have no idea what their expected family contribution was. They just believe that the college is going to treat them fairly.

The second thing families should ask about is the impact of outside scholarships on a college’s financial package. Many colleges around the country ask about outside scholarships students bring with them. When a student reports they’re bringing a $2,000 outside scholarship with them, the school reduces their merit package by $2,000—for each of the four years. So that student didn’t just lose $2,000 from their aid package—they lost $8,000 total.

Third, families should ask about how college costs have increased year over year in the last few years. College costs are probably going to go up over the course of time, so it’s important to understand the history of tuition increases and the anticipated increases coming in the timeframe the student will be at that school. Not all schools will share, but your clients can ask.

Fourth, families should ask about residency requirements. I can’t tell you the number of families I’ve spoken with who were planning to apply to an out-of-state school, intending to get residency to pay in-state tuition, but didn’t qualify due to the school’s residency requirements. The reality is that colleges get to decide what residency looks like for the purpose of their school, so before clients plan to send their child out of state, they should understand exactly what they need to do to get that residency, including whether getting residency is even possible.

Fifth, families should ask about work study at the schools. Is the job assigned to the student? Do they have to go to a portal? Do they have to apply to multiple jobs? What are the deadlines to apply? At what point are those jobs open to everybody else? You need to understand that because you want to understand what your student has to do to secure work study—because even though it’s in their financial aid package, it’s not a guarantee. It’s good to ask whether the student can work more to earn more; it is often possible.

Sixth, families should ask how many years students are required to live on campus. In some cities, it’s less expensive to live off campus and in some cities it’s less expensive to live on campus. For example, in New York City, it’s actually less expensive to stay in the dorms.

Let’s Talk Appeals

In some cases, the number in schools’ financial aid award packages is not firm. There are opportunities to negotiate. Here are some cases where an appeal may be warranted:

If you’ve had changing financial circumstances. We are seeing an awful lot of this during the pandemic. I recently talked to a financial adviser who was working with parents who had both been laid off from their jobs, so their 2019 year looks really different than their 2020 year. There are opportunities to do financial appeals based on changing income. Schools are not under any obligation to grant the appeal, and you will need to show proof, but you won’t get what you don’t ask for.

Appeal based on a better deal elsewhere. This is why it’s important not to accept the financial aid award package right away. Don’t commit until all award letters are in. If there’s another college where your client’s student got a better financial package, but they’re interested in this other school, they can use school A to potentially appeal to their desired school, school B. In this case it is important to know your EFC, so you can know definitively whether a school is covering a larger percentage of your need.

Note that at selective schools there are almost no opportunities to appeal because there are not merit scholarships in play—and if you don’t want your package, there are always kids lining up at those schools to go. Public institutions do not appeal as a general rule of thumb.


The college planning process starts in freshman, sophomore, and junior years.

Clients should be talking to their student about funding during these years and about what they expect of their children. They should also explore what they, as parents, will bring to the table.

Planning this budget is difficult due to the lack of transparency in what colleges are actually charging and what it will actually cost your clients. Really working with your families to understand what they can afford to pay for school is a value add you can bring to your clients. 


Find an on-demand recording of the FPA Annual Conference session with Cozy Wittman. This session qualifies for 1 CFP CE.

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