Financial Aid Terms & Definitions: Understanding FAFSA
Paying for college can be confusing if you don’t understand the terminology. Below are some helpful financial aid definitions to common terms you might come across during the financial aid application process.
Let’s start off with the elephant in the room…
FAFSA is a standard form from the Department of Education that determines eligibility for all state and federal grants. Generally, you must fill out the FAFSA before a college can begin processing your request for financial aid. FAFSA’s are usually available in November, but most require current tax information to fill out fully.
Bursar is a college office that handles both the distribution of financial aid and payment of fees and tuition. The bursar may also be called financial office, or something similar.
CSS profile is a secondary financial aid form that the colleges use to help them determine if the student is eligible for their own money. Your CSS Profile should be filed early, along with the FAFSA, to receive early information regarding your status for financial aid.
EFC (EFFECTIVE FAMILY CONTRIBUTION)
EFC refers to the results from the FAFSA that shows what your family can contribute financially for educational expenses. In many instances, the EFC is calculated without taking into consideration any unexpected changes in income (not shown by the results from taxes) or other emergencies.
Federal Stafford Loan Program
The Federal Stafford Loan Program are government-subsidized loans that are adjusted by need. No repayment is required while the student is in school.
Financial Aid Package
A financial aid package is an offer of money for a student from a college. It usually consists of several kinds of aid, including loans, grants, campus jobs, and may or may not include scholarships. The financial aid package fills the gap between parent’s contribution and the total cost of college.
Merit scholarships are given to students on the basis of demonstrated ability—academic, performance, service, athletics, etc. Merit scholarships are not based on need, and do not need to be repaid. Most scholarships come from colleges themselves and vary widely from institution to institution. There are also some scholarships available from businesses, alumni organizations, and programs like the National Merit Scholarship.
PLUS Loans are government-subsidized loans that are limited to the cost of education. Parents do not need to demonstrate need. Interest rates can vary.
Pell Grants are government grants are awarded to students who need a great deal of financial aid. They do not need to be repaid.
Unsubsidized Stafford Loans
Unsubsidized Stafford Loans are loans that do not require demonstration of need, and for which interest must be paid while the student is in college. Repayment of the principal begins after graduation.
Work Study is a campus job that may be offered as part of a financial aid package. Work studies usually require 15-20 hours a week on campus and usually allow the student to do some studying while working. Examples might include proctoring a building, or working at a library desk.