Students and parents need a financial aid game plan to learn how the financial aid process works. First, they need to learn the terminology of financial aid!
Here are some common phrases to know:
Award Letter: The document a student receives from a college that explains the terms of the financial aid package the college is offering. The letter states the amount of the financial aid and the types of financial aid offered, what the student is expected to do to keep the award, and a deadline for accepting the award.
College Scholarship Service Profile (CSS/Financial Aid Profile): An online financial aid application offered by College Board and used by nearly 400 colleges, universities, professional schools, and private scholarship programs to determine nonfederal financial aid.
Cost of attendance (COA): An estimate of all educational-related expenses for the student for the entire college year. The costs consist of tuition, fees, room and board, books, supplies, personal expenses, and cost of a computer, and transportation to and from college.
Expected family contribution (EFC): The Federal and State governments’ estimate of how much money a family can afford to spend on their student’s college education for one year. Colleges also use this number in determining a student’s financial aid award.
Demonstrated Need: The difference between the total cost of attendance (COA) and a student’s expected family contribution (EFC).
Financial Aid: College financial aid is money given or loaned to students by the Federal and State governments, colleges, and private and social organizations to help them pay for the cost of a college education.
Financial Aid Office: An office on every college campus that serves as a resource for students who need help paying for college.
Financial Aid Officer: College employees at the Financial Aid Office trained to help students and families apply for and receive financial aid and answer any questions they may have.
529 Savings Plans: An education savings plan operated by a state or educational institution designed to help families save money for future college costs.
Free Application for Federal Student Aid (FAFSA): A free application form used to determine a student’s eligibility for federal financial aid and most colleges require it. The FAFSA may qualify a student for some state and private funds.
Grant: A type of "gift aid" that does not need to be repaid and are usually awarded based on need.
Interest: A fee for borrowing a loan.
Loan: A type of financial aid you borrow from the government, a bank, or another source that must be repaid with interest over an agreed period of time.
Merit Aid: Financial aid, mostly scholarships, awarded to students based on their personal achievements (scholastic, athletic, the arts, etc.).
Need-Based Financial Aid: Most financial aid given by the Federal and State governments, and by colleges are based on the financial need of the student and their families to not be able to pay the full cost of attending a college.
Net Price: The actual amount a student will pay for a college. Net Price Calculator: A free online tool on all colleges’ websites, which is required by federal law, that gives a student a personalized estimate of how much it will cost their family to pay for a particular college.
Outside Scholarship: A “private scholarship” offered by a private organization that include different kinds of groups, individuals, corporations, and nonprofit organizations.
Scholarship: A kind of "gift aid" financial aid based on merit or ability. Scholarships do not have to be repaid and usually come from colleges, universities, or private sources.
Student Aid Report (SAR): A report a student receives after submitting the Free Application for
Federal Student Aid (FAFSA) that indicates a student’s expected family contribution (EFC). SAR is used by colleges and universities in determining how much financial aid a student is eligible to receive.
Tuition: The fee charged by a college or university for instruction.
Work-study: A student jobs program that allows a student to work part-time on-campus or off-campus as part of their financial aid package. In order to qualify for the Federal Work-Study Program, which is funded by the federal government, a student must complete the Free Application for Federal Student Aid (FAFSA). Some colleges and universities have their own work-study programs available for their students.