When you’re new to the financial aid process, some terms may sound like a different language. Here we define a list of terms 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:
Award Letter: 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.
CSS Profile: 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.
Financial Aid: 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 and if you want to take out federal student loans to fund your education. The 2024–25 FAFSA will be available in December 2023. If you’re unmarried and under 24 years old, make sure you have you and your parents’ tax info from two years ago.
Grant: A kind of “gift aid” – financial aid that doesn’t have to be paid back. Grants are typically awarded based on financial need.
Loan: Money you borrow from the government, a bank, or another source. Loans needs to be paid back, typically over an agreed period.
Merit Aid: 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.
Need-Blind Admission: 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: 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: 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.
Scholarship: 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 Index (SAI): The SAI is the number colleges use to determine how much financial aid you’re eligible for and which types. The SAI is an important financial need calculation on the Free Application for Federal Student Aid (FAFSA), the form used by colleges, states, and other scholarship providers to determine financial aid packages. Since you renew your FAFSA each year, your SAI can change while you’re in college.
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: 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 Loans: 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: 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!