One way to interpret a financial aid award notification from a college or university is to calculate the net price, which is equal to the total cost of attendance minus gift awards, and indicates how much the student or family must pay in income, savings and loans, states Edvisors. When determining the cost of attendance, the student should include all direct and indirect expenses, which the college may or may not include on its award notification.
Examples of expenses that a student should include in the cost of attendance include tuition, fees, room and board, textbooks and personal expenses, such as travel costs, explains Edvisors. Different colleges include various expenses in its total cost of attendance estimate. The gift aid subtracted from this amount includes scholarships and grants, which the student does not have to pay back.
A student may also interpret his financial aid award letter using net cost instead of net price, notes Edvisors. Net cost is equal to the total cost of attendance minus the entire financial aid package, which includes gift aid, loans and student employment. The net cost is often very similar to or equal to the expected family income, which is determined by information the student filled in on his Free Application for Federal Student Aid.
When comparing colleges, it helps to compare the net cost and net price even if the colleges have very different total costs of attendance and gift aids, explains Edvisors. A student should also determine if the college in question front-loads grants and scholarships, meaning it offers more in gift aid in freshman year than in subsequent years, or displaces outside scholarships, meaning it offers less in financial aid if the student has a private scholarship.