Financial Aid Definitions: Understanding Key Terms for the College Application Process
Last updated January 24, 2023
Here are some important financial aid definitions you'll likely come across during the college application process!
A plan for how you spend your money. Your budget should show you how much you make compared to how much you spend in a given week/month, how much you can afford to save, and what expenses you can or should cut out to save money. Your budget should ensure you have enough money to cover your living expenses and in case of emergency.
Money used to pay for while in college - living on campus, food, transportation, books and class fees, personal expenses like laundry, eating out, and more.
Cost of attendance (COA)
The COA is an estimate of what you can expect to pay for one year of college. This includes tuition and fees, room and board, books and supplies, transportation, and more.
Expected family contribution (EFC)
A number that a school uses to determine how much financial aid you’re eligible for. Despite its name, it’s not how much your family will have to pay for you to attend. The lower your EFC, the more financial aid you'll typically be eligible to receive.
Federal student loans
Loans from the federal government that need to be repaid with interest over time after graduating. These loans typically offer borrowers lower interest rates and have more flexible repayment options than private loans. 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). (Source: PSSCN Financial Aid Toolkit Definitions)
Program at participating colleges in which you can work part-time jobs - both on and off campus - to earn money for fees associated with attending college or living expenses.
Any grant, scholarship, loan or work-study job offered to help you pay for college expenses.
Financial aid award letter
An official letter from a college or university you’ve been accepted to that breaks down the details of your financial aid package. It may include financial aid from a variety of sources including grants, scholarships, work-study and loans.
Financial need is the amount calculated by taking the cost of attendance at a college minus your expected family contribution as calculated by the FAFSA.
Free Application for Federal Student Aid (FAFSA)
The FAFSA is an online form students must complete to apply for federal, state-based, and campus-based financial assistance for college.
Amounts of money given to students with financial need by their state or federal government. Grants never need to be paid back.
The net price is an amount of money that a student pays to attend an institution in a single academic year AFTER subtracting scholarships and grants they receive.
Parent PLUS loans
A loan your parent or guardian can take on your behalf to pay for your college expenses. They are legally tied to the loan and its repayment.
Loans that 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.
Sums of money to help pay for college. These can be need, merit, or interest-based and can be awarded by a school, company, or private organization. Like grants, scholarships never need to be paid back.
State-based financial aid
Financial assistance for eligible students awarded by the state rather than the federal government. Undocumented students may be eligible for financial aid in certain states, which you can find more information at the Higher Ed Immigration Portal.
Subsidized loans do not accrue interest while you are attending school. After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you are required to begin repayment.
Unsubsidized loans accrue interest from the moment the loan is granted to you. After you graduate, leave school, or drop below half-time enrollment, you will have a six-month grace period before you are required to begin repayment. While it’s not mandatory, some students begin making payments on the interest while in school.
Any questions about financial aid? Text #Hello to 33-55-77 to speak with one of our College Advisors!