The Varsity Letter Patches from Extreme Largeness are great for creating this look and customising something plain. My grey hoodie is an old faithful, I wear it everyday. It has hair bleach on the hood and a hole in the sleeve, so it definitely needed some sprucing up. I ironed 2 of the patches onto the hoodie paying homage to varsity jackets and stitched around the edges to make it extra secure.
You can get 3 of these patches for only £5 online. They're really easy to apply, there's a blog available if you need a few tips.
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