As the parent of a high school student or if you're looking to pay for your own education, you are about to learn a lot about the world of college financial aid. To help make sure you or 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 that 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 may 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 the FAFSA application 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 essential 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 specific 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 your family can contribute to the cost of education.
As part of the Consolidated Appropriations Act, the EFC will be phased out and replaced with the Student Aid Index (SAI). This is part of a FAFSA simplification process and begins with the October 2022 form applying to the 2023-24 financial award year.
Financial Aid Award Letter
Once 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.
This is a form of financial aid that is usually based on financial need. In most cases, grants do not have to be repaid unless your student withdraws from the school.
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 involve an application process. In most cases, scholarships are grants that do not have to be repaid.
This form of financial aid provides part-time employment opportunities for undergraduate and graduate students with financial need. This allows your student to earn money to help pay for their college expenses. The program usually encourages community service work and some type of work that is related to your student’s course of study.
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.