The rates are usually much lower than regular unsecured loans. In most cases, no interest is charged while the student is in school, and no repayment is required until the student has graduated or left college. After looking at your financial information, they might decide your EFC should be lower or higher than the need analysis processor computed it originally. More important, the package the FAOs put together will reflect how badly the admissions office wants that student. Your award will also reflect the general financial health of the college.
Some schools have large endowments and can afford to be generous.
Other schools are financially strapped and may offer only the minimum. If the school is truly anxious to get a particular student, it may sweeten the deal by offering a grant or scholarship not based on need. A non-need scholarship may actually reduce your family contribution. In other words, they were unable to supply the full difference between the cost of their school and the amount they feel you can pay. What the college is telling you is that if your child really wants to attend this college, you will have to come up with even more money than the college's need analysis decided that you could pay.