The financial aid process can be confusing, so we broke down terms that you will be hearing a lot. Frank knows you will have questions about different parts of the process, like wanting to know the difference between a scholarship and a grant, how loans work, and why is FAFSA® important. Here is our guide on the confusing financial aid terms you will encounter.
FAFSA® (free application for federal student aid): First step in the financial aid process; determine student grants, work-study, and loan amounts. Frank will prepare your FAFSA® in two minutes and help make college more affordable for you and your family.
Federal student aid: Federal aid programs come in the form of government grants, loans, and work-study assistance for college.
Award letter: Outlines financial aid package from all of the colleges you applied to.
Expected family contribution (EFC): Measures family’s financial strength, and how much of your college costs it should plan to cover; based on FAFSA® results.
Financial need: Amount of a student’s total cost of attendance that is not covered by the expected family contribution or outside grants and scholarships.
Grants: Come from the state or federal government, from college, or from private sources. They provide money that does not have to be paid back.
Loans: Money that has to be paid back after college with interest.
Scholarships: Money that does not have to be repaid. They are primarily awarded for academic merit, such as good grades, or for something you have accomplished.
Tuition: Sticker price of education, which does not include other fees such as textbooks and room and board. (Frank tip: when looking at the price of colleges, look at the net-price instead)
Work-study: Provides funds to eligible students for part-time employment to help finance the costs of college.
Budget: A financial plan that helps you track your money, make informed spending decisions, and plan for your financial goals.
Interest rate: The percentage at which interest (loan expense charged for the use of borrowed money) is calculated on your loans.
Net price calculator: Estimate of the actual cost that a student and their family need to pay in a given year to cover education expenses for the student to attend college. It is determined by taking cost of attendance and subtracting any grants and scholarships.
Room and board: This is part of your total cost of attendance. It is where you sleep and eat.
Student aid report (SAR): Summary of the information you submitted on your FAFSA®. You receive this report after FAFSA® has been processed. The report contains your EFC, which is the number that is used to determine your eligibility for federal student aid.