Financial Aid Definitions
Last updated September 27, 2020
Net Price: is the amount that a student pays to attend an institution in a single academic year AFTER subtracting scholarships and grants the student receives. Scholarships and grants are forms of financial aid that a student does not have to pay back. (Source:Sallie Mae)
Cost of attendance (COA): an estimate of what you can expect to pay for one year of school. This includes tuition and fees, room and board, books and supplies, transportation, and even personal expenses.2 If the COA isn’t included in your letter, check the school’s website or call the financial aid office.
Expected Family Contribution (EFC): a number that your school uses to determine how much financial aid you’re eligible for. It’s not (despite its name) how much your family will have to pay for college.3
College grants: are typically need-based and can be given by state or federal governments.
College scholarships: can be need-, merit-, or interest-based and are awarded by a school, company, or private organization.
Federal work-study: is a program, implemented by the school, where you work to earn your financial aid.
Federal student loans: let you borrow money directly from the federal government; you pay this financial aid back with interest. A financial aid award letter may also list the amount you can borrow with a credit-based loan (like a federal Direct PLUS Loan or a private student loan). (Souce: PSSCN Financial Aid Toolkit Definitions)
Grant: A form of gift aid, usually based on financial need. A grant does not need to be repaid, unless, for example, you withdraw from school and owe a refund.
Scholarships: Money awarded to students based on academic, merit, service or other achievements to help pay for education expenses. Scholarships generally do not have to be repaid.
Work Study: A financial aid program (federal or state) that allows a student to work on-campus or with approved off-campus employers to earn money to pay for college expenses.
Free Application for Federal Student Aid (FAFSA): the standard online form students must complete to apply for federal and state need-based assistance/and programs and, in some circumstances, campus-based assistance/aid.
Cost of Attendance (COA): The total amount it will cost you to go to college each year. This can include tuition and fees, on-campus room and board (or a housing and food allowance for off-campus students); books, supplies and transportation
College Budget: The amount of money that you are able to pay for college expenses.
College Expenses: Money used to pay for living on campus, food, books and supplies, personal expenses and transportation.
Financial Need: Amount calculated by taking the cost of attendance at a college minus your expected family contribution as calculated by the FAFSA or WASFA.
Financial Aid: Any grant, scholarship, loan or work study (paid employment) offered to help you meet your college expenses.
Federal Loan: A loan is money you borrow and must pay back with interest. Loans made by the federal government, called federal student loans, usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources.
Financial Aid Award Letter: An official notification from a school where you have been accepted, that outlines your financial aid award package. It may include financial aid from a variety of sources including grants, scholarships, work-study and loans.
Subsidized loans: The government pays the interest while you are in college. If you qualify, this is your best option.
Unsubsidized Loans:Interest gets added to the amount you borrow as soon as you begin college.
Parent loan: A loan your parent can take on your behalf to pay for your college expenses. Your parent is legally tied to the loan and its repayment. A federal loan has lower interest rates and better repayment options than a private loan and is determined by completing the FAFSA.
Private Loan: Can come from banks, colleges and private organizations. Typically, they have higher interest rates and less favorable repayment options. Like unsubsidized loans, private loans gain interest as soon as you borrow the money