When applying for financial aid, you may hear some terms that you’re unfamiliar with. Here are some common terms and their definitions that will hopefully help you throughout the process.
Award Amount - Amount of aid a school expects to pay a student based on the student’s current grant and loan eligibility, enrollment, Expected Family Contribution (EFC), and the school's cost of attendance.
Award Letter - An offer from a college or career school that states the type and amount of financial aid the school is willing to provide if you accept admission and register to take classes at that school.
Cost of Attendance (COA) - The total amount it will cost you to go to school—usually stated as a yearly figure. COA includes tuition and fees; room and board (or a housing and food allowance); and allowances for books, supplies, transportation, loan fees, and dependent care. It also includes miscellaneous and personal expenses, including an allowance for the rental or purchase of a personal computer; costs related to a disability; and reasonable costs for eligible study-abroad programs.
Dependent Student - Undergraduate students who are under age 24 as of December 31 of the award year are considered to be dependent for federal student aid purposes unless they are married, have dependents other than a spouse, are an orphan, are a veteran or active duty member of the US Armed Forces or satisfy other very limited criteria. If you’re a dependent student, you will report your and your parents’ information.
Expected Family Contribution (EFC) - This is the number that’s used to determine your eligibility for federal student financial aid. This number results from the financial information you provide in your FAFSA form, the application for federal student aid. Your EFC is reported to you on your Student Aid Report (SAR).
FAFSA Form - The free application for federal student aid which can be found at fafsa.gov.
Federal Student Aid - Part of the U.S. Department of Education and is the largest provider of student financial aid in the nation. The office of Federal Student Aid provides grants, loans, and work-study funds for college or career school.
Financial Aid Package - The total amount of financial aid (federal and nonfederal) a student is offered by a college or career school. The school's financial aid staff combines various forms of aid into a “package” to help meet a student’s education costs.
FSA ID - Username and password that you will need if you plan to sign your FAFSA form electronically. Your FSA ID also can be used to sign loan contracts and to access certain information online.
Grant - Financial aid, often based on financial need, that does not need to be repaid (unless, for example, you withdraw from school and owe a refund).
Independent Student - An independent student is one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents other than a spouse, an emancipated minor or someone who is homeless or at risk of becoming homeless. If you’re an independent student, you will report your own information (and, if you’re married, your spouse’s).
IRS Data Retrieval Tool (IRS DRT) - The IRS DRT provides tax data that automatically fills in information for part of the FAFSA form, as well as for the income-driven repayment plan application for federal student loan borrowers. You can still manually enter your tax return information, but the IRS DRT is the fastest, most accurate way to input your tax return information into the FAFSA form.
Loan - Borrowed money that will need to be paid back. There are several types of loans you can receive, some that are Federal and some that are not. Federal loans are made by the U.S. Department of Education and are available by filling out the FAFSA. Private/Nonfederal loans can be made by a lender such as a bank, credit union, state agency, or school.
Merit-Based Aid - Based on a student's skill or ability. Example: A merit-based scholarship might be awarded based on a student's high grades.
Need-Based Aid - Based on a student's financial need. Example: A need-based grant might be awarded based on a student's low income.
Net Price - An estimate of the actual cost that a student and their family needs to pay in a given year to cover education expenses for the student to attend a particular school. Net price is determined by taking the institution's cost of attendance and subtracting any grants and scholarships for which the student may be eligible.
Satisfactory Academic Progress - A school’s standards for satisfactory academic progress toward a degree or certificate offered by that institution. Check with your school to find out its standards.
Scholarship - Money awarded to students based on academic or other achievements to help pay for education expenses. Scholarships generally do not have to be repaid.
Student Aid Report (SAR) - This is the number that’s used to determine your eligibility for federal student financial aid. This number results from the financial information you provide in your FAFSA form, the application for federal student aid. Your EFC is reported to you on your Student Aid Report (SAR).
Verification - The process your school uses to confirm that the data reported on your FAFSA form is accurate. Your school has the authority to contact you for documentation that supports income and other information that you reported.
Work-Study - A federal student aid program that provides part-time employment while you are enrolled in school to help pay your education expenses.