Consider learning financial aid terms and acronyms a sort of boot camp for financial aid beginners. Once you have these linguistic basics under your belt, you’ll understand how the jigsaw puzzle of financial aid all fits together. Pieces of this puzzle might include Pell grants, scholarships and work-study programs. Other pieces might include Stafford student loans or PLUS loans for parents. You’ll need to know what all of these are and how to apply for them. This article supplies the financial aid term definitions, so keep this close to hand when your award letter from the college comes.
Since financial aid begins with the FAFSA application, we’ll define this acronym first. FAFSA (Free Application for Federal Student Aid) is a multipage form that parents and students complete to apply for federal student aid. The FAFSA should be completed and mailed, or submitted online, around January 1st of the year that you will be applying to colleges. Keep in mind that the federal government, states and colleges all have specific deadlines to receive your FAFSA. Mark these deadlines on your college application calendar. See our article with tips and hints on filling out and completing the FAFSA.
Sometime in April, financial aid award letters begin arriving from colleges. Your award letter will outline the financial aid you’ll be receiving in the form of grants, scholarships, work-study or loans. The letter will also contain information about all college costs, including tuition, room and board, textbooks, travel, fees and personal expenses. It will also include the terms and conditions of the financial assistance, if any. Each college composes award letters its own way, so check all the letters you receive carefully. You may have to read these letters attentively in order to compare different financial aid packages from different colleges. If you or your parents have questions about what aid is being offered, call the college’s financial aid office to clarify.
Campus Based Aid
Each college and university receives federal funds in an annual allocation. The financial aid administrator (FAA) at the university allocates these funds to students in the form of a Perkins loan, a Supplemental Education Opportunity Grant (SEOG) and work study programs. All are examples of campus based aid.
Cost of Attendance at each particular school. COA includes all of the expenses of attending the school, including tuition, room and board, fees, books, living expenses, potential study abroad programs, personal expenses, laptop purchases and any other cost incurred. This is the college’s sticker price. There are far more costs to attending college than tuition, room and board.
College Scholarship Service Profile is a financial aid application provided by College Board. By filling out the CSS profile, you can apply for non-federal financial aid from colleges and scholarships. More detailed than the FAFSA, it allows member colleges to assess your family’s financial need to a greater degree. Your college may not require the CSS profile, so check to see before applying. A fee is charged for filling out the CSS profile.
Expected Family Contribution: This is the amount your family is expected to contribute for your college education. As determined by the FAFSA, it is based on family earnings, savings, assets, number of kids in college and size of the family. You will be notified of your family’s EFC when you receive your Student Aid Report from the federal government.
Federal Work Study program
The federal government pays for part-time student jobs for undergraduates and graduates on campus. Examples of work study jobs include library, labs, tutors, residence hall security, bus drivers and work in campus center hotels and dining areas.
Financial aid that doesn’t have to be repaid. Federal government, state agencies, colleges and other institutions provide grants to students with financial need. The federal government provides Pell grants to freshmen with financial need, for example. A SEOG grant for financially needy students is based on a college’s available funds. Both Pell and SEOG grants are credited to the student’s account at the college.
Financial aid available for students and parents, including private loans, federally subsidized loan programs such as the Perkins and Stafford, and PLUS loans for parents of undergraduate students. All education loans must be repaid. They all have various interest rates and loan repayment periods. Repayment is spread out over a period of years, with a grace period immediately after graduation of six to nine months.
A loan insured by the federal government awarded to a student with financial need. The loan amount depends on the student’s need. A low interest rate and repayment period of years make these loans attractive. The loan is made through the school and must be repaid to the school, generally over a period of 10 years.
Low interest rate educational loan with borrowing limits based on the student’s year in college. Two types of Stafford loans exist. Subsidized Stafford loans are awarded to students with demonstrated financial need. The federal government pays the interest while the student is in school and during grace periods. Unsubsidized Stafford loans are available to all students, even those without financial need, but the student pays the interest while in school. Payment of the interest may be deferred until graduation, but then the loan and accrued interest must be repaid.
Parent Loan for Undergraduate Students: Federal loans for parents of undergraduate dependent students. Parents may borrow enough to cover the student’s college costs.
Merit Based Aid
Merit based aid is determined by a student’s academic achievement, specific accomplishment or talent, rather than financial need.
Student Aid Report: Report provided by the federal government that summarizes the financial information received on the FAFSA. The student’s need for financial aid or eligibility is expressed in the EFC, the expected family contribution.
Scholarships are generally merit based aid and are available from colleges, organizations, corporations, banks, foundations and cities. A huge variety of scholarships are awarded each year. Students should complete a thorough search for scholarships that might help to pay for his or her education.