When you’re new to the financial aid process, some terms may sound like a different language. Here we define a list of financial aid vocabulary to help you through this process. The terms listed below are universal among colleges in the USA, but there may be terms specific to each college. Don’t be afraid to ask your admissions counselor or financial aid counselor to explain certain terms to you.
Financial Aid Vocabulary:
The document you receive from a college that outlines the term of the financial aid being awarded to you. The letter includes the types and amounts of financial aid offered, what you’re expected to do to keep the award and a deadline for accepting the award.
Cost of Attendance (COA)
COA is more than just your tuition. It includes the cost of tuition, room and board, books, laptop, transportation, and other personal costs.
Some schools require a CSS (College Scholarship Service) Profile for scholarship consideration. Check your schools of interest to see if they require a CSS Profile from you.
Expected Family Contribution (EFC)
The EFC is the total out-of-pocket amount that your family can contribute towards your college expenses. This amount considers factors such as your family size, the number of family members already enrolled in college (if any), and taxable and non-taxable family income or assets. The EFC uses the information you include on your FAFSA.
Money given or loaned to you to help pay for college. Financial aid can come from federal and state governments, colleges, and other organizations.
Free Application for Federal Student Aid (FAFSA)
Each year in college you will fill out the FAFSA for need-based aid. You will also need fill out the FAFSA if you wish to take out federal student loans to fund your education. The FAFSA typically opens October 1st for the following school year. If you’re unmarried and under the age of 24, be sure to have your and your parents’ tax info from two years ago. More about the FAFSA here.
A kind of “gift aid” – financial aid that doesn’t have to be paid back. Grants are typically awarded based on financial need.
Money you borrow from the government, a bank, or another source. Loans needs to be paid back, typically over an agreed period.
Financial aid given to students based on their personal achievements. Most scholarships are considered merit aid and can be awarded for success in a variety of areas including the arts, athletics, or academics.
The practice of making college admission decisions without looking at students’ financial circumstances.
Need-Based Financial Aid
Need aware is the opposite of need-blind. Colleges that are need-aware will take students’ ability to pay tuition into consideration when they are making admissions decisions.
Net price is the actual amount a student will pay for college. Typically, this means the published full cost of attendance (tuition, fees, room and board, supplies, and other expenses that are billed by the college/university) minus the amount of gift aid a student receives.
Net Price Calculator
An online tool that gives you a personalized estimate of what it will cost to attend a specific college. Most colleges are required by law to post a net price calculator on their websites.
Pell Grants are federally funded, need-based grants for students who submit their FAFSA application. You do not need to pay back Pell Grants.
Parent Loans for Undergraduate Study (PLUS Loans)
Parents can apply for a PLUS loan up to the Cost of Attendance minus any other aid. To qualify for this loan, parents must have a positive credit history. PLUS loans begin accruing interest and require repayment as soon as they disburse.
Another kind of “gift aid” – financial aid that doesn’t have to be paid back. Scholarships can be awarded by private organizations, governments, and colleges or universities. They are often based on academic merit, talent, particular areas of study, athletic ability, or other criteria.
Student Aid Report (SAR)
You’ll receive this report via email after submitting the FAFSA that details your expected family contribution (EFC). The SAR is your opportunity to review the information you have submitted and make sure it is accurate.
Subsidized loans are offered by the federal government and DO NOT accrue interest while you are still enrolled in college. Repayment begins 6 months after either graduation or dropping below half-time status.
Unsubsidized student loans from the government begin accruing interest immediately upon disbursement. Repayment will begin 6 months after graduation or after dropping below half-time status. If you have the ability, consider making interest-only payments while you are in school so that interest won’t capitalize.
Work-study provides the opportunity to earn money for school by applying for on-campus jobs. Your work-study program will provide you with a certain amount that you are eligible to earn, and you will receive those funds in the form of a paycheck as you would with any other type of job. You can use these funds to help you pay for other costs associated with attending college, like transportation, food, social activities, and other living expenses.
We hope that familiarizing with financial aid vocabulary will ease any anxieties you may feel about the process. Good luck!