Applying for financial aid can be confusing and daunting when filling out applications, providing financial data, and gathering important documents that colleges request. There is most likely unfamiliar terminology you will encounter on schools’ forms, applications, or checklists provided by the college financial aid office.
The following is a helpful list of terms to understand when applying for financial aid or speaking to someone in obtaining funding for your educational goals:
- Financial Aid: Financial aid is often used in a variety of ways to describe federal, state, or private funding to assist you with educational costs. Though it is often grouped together there are various forms of financial aid: Scholarships and Grants is free money you do not have to pay back. Loans, you have to pay back. Work-study jobs at a school allow you to work and earn money while going to college.
- Free Application for Federal Student Aid (FAFSA): The FAFSA is an online or paper document that the United States Department of Education uses to determine your need for funding. Most colleges encourage all students to fill the FAFSA out when seeking financial aid.
- Expected Family Contribution (EFC): EFC is the amount of money your family is expected to contribute towards the cost of attendance based off their tax information.
- Need: Need is the amount of funding a student is eligible to receive. This is calculated by using the EFC and considering the cost of attendance.
- Student Aid Report (SAR): A SAR report is issued after you file a FAFSA.
- Pell Grant: The Pell Grant is a federal-funded, need-based grant program for undergraduate students. No repayment is required and is generally for low-middle class families.
- Direct Loan Program (previously known as Stafford Loan): Direct Loan Programs are Federal loans offered with low-interest rates to undergraduate or graduate students attending colleges that are accredited. There are two types of direct loan programs: subsidized and unsubsidized. Subsidized loans are need-based loans and the federal government pays the interest while you are in school. The unsubsidized is non-need based and interest accrues while you are in school.
- Parents Loan for Undergraduate Students (PLUS): A PLUS loan is a federally sponsored loan program which allows parents to borrow up to the total attendance cost deducting any other aid received.
- Perkins Loan Program: The Perkins Loan Program is a federally funded need-based loan program to graduate or undergraduate students. It is administered by the college’s financial aid. There is no interest while you are in school and this loan has a fixed rate of 5%.
- Federal Work-Study (FWS): FWS is an employment program designed that is federally funded and usually on campus.
In addition to these terms, visit our Fund College page for more detailed information. It has information on Need-based or Non-need based Financial aid resources, scholarships, grants, and employment.