Glossary of Financial Aid Terms for Parents

Understand the Language of College Financial Aid to Help Your Child Get the Most

GettyImages

As the parent of a high school student you are about to learn a lot about the world of college financial aid. To help make sure your child gets the most out of college financial aid, here are some terms you’ll need to know.

  • Federal Student Aid: This is financial aid from the federal government which is designed to help families and students pay for education expenses at an eligible college or career school. It consists of grants, loans and work-study programs. You always want to maximize the amount of federal student aid before moving on to other college financing options.
  • FAFSA - Free Application for Federal Student Aid: This document is a summary of your current financial situation. It provides an overview of your family’s ability to pay for a college education. Completing and submitting this information correctly is the first step to gaining access to federal financial aid. It may also be used by your state, college, and some private providers to determine your student’s eligibility for additional types of aid.
  • SAR - Student Aid Report: Federal Student Aid will provide a summary of the information you submitted on the FAFSA. It is important that you review the SAR to make sure it is correct and complete, as many financial aid decisions will be based on this information. If you find a mistake, you will need to correct or update your FAFSA. If your financial situation has changed since you filed the FAFSA, you may be able to make certain updates.
  • EFC - Expected Family Contribution: This number is used to determine your student’s eligibility for federal financial aid. It shows how much money the government expects that your family can contribute to the cost of your child’s education.
  • Financial Aid Award Letter: Once your child’s selected colleges have reviewed the information on your FAFSA, they will provide you with a financial aid award letter which will detail the expected Cost of Attendance (COA) at their institution, as well as any financial aid for which the school believes you are qualified. Be aware that some schools may include student loans as part of their financial aid package.
  • Grants: This is a form of financial aid which is usually based on financial need. In most cases, grants do not have to be repaid unless your student withdraws from the school.
  • Scholarships: This is another form of financial aid, but scholarships are usually based on merit, activities, group memberships, medical conditions, or some other factor. They are made available by the school, community and religious groups, non-profit and for-profit organizations, and usually involve some type of application process. In most cases grants do not have to be repaid.
  • Work-Study Programs: This form of financial aid provides part-time employment opportunities for undergraduate and graduate students with financial need. This gives your student an opportunity to earn money to help pay for his or her college expenses. The program usually encourages community service work and some type of work which is related to your student’s course of study.
  • Student Loans: This is money that is borrowed from the federal government, school or a private lender that will need to be repaid with interest. Both federal and private student loans are available.

    Continue Reading...