Financial Aid Packages 101

For many students, the financial aid package is a huge factor in determining which college they’ll attend. Financial aid packages differ by school, but the types of awards are similar. If you understand the awards, you can decide what financial aid package works best for you.

Here are three important terms to remember:

  • Cost of Attendance (COA)
  • Student Aid Index (SAI)
  • Need

The Cost of Attendance(COA) typically includes your estimated tuition and fees (generally based on full-time enrollment). It also estimates room and board, transportation, books, and other costs. Pay attention to the COA for each college because some include more factors than others. 

Your Student Aid Index (SAI) is the number your FAFSA application generates after you input your information. It’s used to determine how much financial aid you’re eligible for and which types. Since you renew your FAFSA each year, your SAI can change throughout college.

The difference between your COA and your SAI is known as need. Financial aid offices do their best to cover your needs by providing various forms of financial aid. 

Grants and Scholarships

Grants and scholarships are free money you don’t have to pay back. They come from colleges, the government, the state, and outside sources. Let colleges know if you earn any outside scholarships because they can impact your financial aid package. Some grants, such as the TEACH grant, convert to student loans if you do not fulfill the associated service obligation post-graduation. Make sure to read the fine print!

Direct Stafford Loans

Eligible students can receive Direct Stafford Loans to help fund their education. Backed by the federal government, these loans typically have lower interest rates and more flexible repayment options than most private loans. Students are capped on the amount they can take per year. For example, a first-time college freshman classified as a dependent can only utilize $5,500 per academic year. The amount increases each year, up to $7,500 per academic year. There are two kinds of Direct Stafford Loans: subsidized and unsubsidized.

Subsidized loans DO NOT accrue interest while you are in school (enrolled at least half-time) or during the loan’s grace period. The grace period is for six months after you leave school or drop below half-time status. A portion of your direct loans may be in the form of subsidized loans if you have a high financial need. 

Unsubsidized loans begin accruing interest as soon as they disburse (are applied to your bill or direct deposited to your bank account). All interest accrued while in school is added to your principal balance. It’s a good idea to make interest-only payments while still in school so the amount does not continue to grow. 

For Direct Stafford Loans, you must complete a master promissory note (loan contract) and entrance loan counseling (covers terms of loan, repayment, etc.)


The acronym PLUS means Parent Loan for Undergraduate Students. You may see a PLUS loan estimate on your financial aid package. This means your parents can apply for the PLUS loan to cover your remaining cost of attendance. The PLUS loan is solely in the parent’s name, and approval is based on a satisfactory credit check. If your parents are denied the PLUS loan, they may request an endorser, or you can receive additional Direct Stafford unsubsidized loans. Repayment for PLUS loans typically begins upon disbursement unless your parent applies and is granted deferment.


The Federal Work-Study Program provides part-time jobs for students with financial needs. These jobs are typically on-campus. If you are interested in work-study opportunities, indicate this on your FAFSA application. Your work-study opportunity has a specific amount of money you can earn, and your hours will be capped once this amount is reached. The school will pay you directly, or the payment can be applied to your student account for tuition and fees.

Understanding the different types of awards will help you evaluate your options. Talk with your school’s financial aid office so they can explain your package and answer any questions. You can pick and choose what aid to accept and even reduce amounts. For loans, it is wise to take only what you absolutely need and be sure to ask about payment deadlines and payment plan options. Do your research before you agree to any amount of money. Understanding financial aid packages will pay off!