Understanding Financial Aid Terminology
Navigating the world of college costs can feel confusing. Before you decide whether to apply for financial aid, do your research. If applying for aid, make sure to keep track of form submission dates. Parents should make sure their teen is sharing financial aid emails with them. Have discussions with your teen about college affordability. If you are considering a student loan, one rule of thumb is to never borrow more than the student expects to make in their first-year salary after graduation. Here is a glossary of terms to help you better understand financial aid:
Cost of Attendance
The estimated cost of attending a university for one year. This includes tuition, fees, transportation, student health insurance, books, food, and housing.
Demonstrated Need
Your demonstrated (or financial) need is the difference between the cost of attendance (COA) and your student aid index (SAI).
Student Aid Index
(SAI) Replacing the expected family contribution(EFC). It is a measure of your family's ability to pay for college.
Net Price Calculators
A free online tool available on university websites. It allows parents or students to input information about themselves, then provides an estimated net price of attending that particular college. The actual cost of attendance is determined when the financial aid package is received.
FAFSA (Free Application for Federal Student Aid)
The form uses Federal Methodology which considers parental gross income as the main factor in determining aid eligibility such as grants, work study, and federal student loans: https://studentaid.gov/
FAFSA ID
A username and password which allows students and parents to identify themselves electronically to access Federal student aid websites. This is your legal signature. Both the parent and student must create their own ID.
CSS Profile (College Scholarship Profile)
Issued by the College Board and is used to determine a student’s eligibility for non-federal financial aid. The CSS Profile is a much more comprehensive look at a family’s financial situation than the FAFSA. There is a fee for each application and not all colleges require this form - https://cssprofile.collegeboard.org/
Grants
Usually based on demonstrated financial need. They are usually awarded by the state or federal government and by the universities and colleges. Understand that a minimum GPA is required to remain eligible.
Scholarships
Based on merit, scholarships can be awarded for academic success, athletic ability, artistic talent, diversity or leadership. There are numerous private foundations and community organizations that award scholarships. Students usually need to fill out an application and may need to write an essay or submit a letter of recommendation. https://www.fastweb.com/
Student Loans
Required to be paid back, often with fees and interest rates. Stipulations about college enrollment apply. Here are some of the different types of federal loans that might be offered:
Direct Subsidized:
These loans are based on financial need, and the federal government pays the interest that accrues while the borrower is in school.
Direct Unsubsidized Loans:
These loans are not based on financial need, and the borrower is responsible for all interest, including interest that accrues while in school.
Direct PLUS Loans:
These loans are available to graduate and professional students, as well as to parents of dependent undergraduate students. They have higher interest rates and require a credit check.
Work Study:
Financial need must be demonstrated to qualify for this program. Work study is an opportunity to work part-time on or near campus. Employers understand you are a student and will give you flexible hours. It is also a great way to gain some work experience that can be added to your resume.
