Financial Aid Glossary
Let’s Take the Mystery Out of Applying for Financial Aid
We know. Applying for financial aid can be confusing. But it doesn’t have to be that way.
We’ve put together a glossary of some of the most common terms you’re likely to come across during the financial aid research and application process. We hope this helps, but remember: we’re always here to help.
Common Financial Aid Terms
- Cost of Attendance: Includes tuition, fees, and a standard allocation designed to cover reasonable living expenses while attending school. The cost of attendance is determined by the school using guidelines established by federal regulations.
- Default: The failure to repay a student loan according to the terms of the loan. If you default, your school, the organization that holds your loan, the state, and the federal government can take action to recover the money, including notifying national credit bureaus of your default.
- Estimated Family Contribution (EFC): The total amount you and your family are expected to pay toward college costs. This is determined from family and student income and assets for the prior year. The amount is derived from a need analysis of your family’s financial circumstances.
- FAFSA: The Free Application for Federal Student Aid determines your financial aid. Apply online at fafsa.gov. Forms may be filed anytime after October 1.
- Federal Direct Student Loan Program: Federally sponsored loan programs, which include the Stafford Loan and the Parent PLUS Loan (for parents of undergraduate students).
- Financial Aid Package: The total financial aid you receive. Federal and non-federal aid, such as grants, loans, work-study, and scholarships are combined in a “package” to help meet your need.
- Financial Need: The amount by which your family’s contribution falls short of covering your college expenses. It is determined by subtracting the expected family contribution (EFC) from the total cost of attendance.
- Gift Aid: Financial aid that does not have to be paid back, such as scholarships and grants.
- Grant: A type of financial aid award based on need or merit that does not require repayment.
- Interest: A fee charged when you take out a loan. Interest is calculated as a percentage of the principal loan amount. The rate may be constant throughout the life of the loan (fixed rate) or it may change at specified times (variable rate).
- Merit-Based Aid: Financial aid that is awarded based on your academic, leadership, or artistic talent, or some other criteria. Merit-based aid may consider your grades, test scores, special talents, or extracurricular activities to determine eligibility.
- Need Analysis: A process of reviewing your financial aid application to determine the amount of your financial aid eligibility. Completing a need analysis form is the required first step in applying for most types of financial aid.
- Need-Based Financial Aid: Financial aid that is awarded based on your financial circumstance. Need-based aid can be awarded in the form of grants, loans or work-study.
- Offer Letter: A letter from the college financial aid office listing all financial aid they are offering you. Offer letters vary among institutions, but they generally list the expected family contribution, cost of attendance, and the terms of the aid awarded.
- Student Aid Report (SAR): A form you’ll receive after submitting the FAFSA. The SAR shows the information that was processed and indicates Pell Grant eligibility.
- Work-study: An opportunity for you to work part-time and attend college. Work-study is designed to help fund your college education and graduate with reduced debt.
We're Here to Help
Call the Financial Aid Office at 701-355-8142 or email us.