Financial Aid Terms You Need to Know

  For all families navigating the college admissions and paying for college process, it’s important  to know and understand the terms used during the financial aid process. It can be a confusing time, especially with all the acronyms used (FAFSA, EFC, SAR, COA and more). A well-informed parent can help their student navigate the financial […]

Financial Aid Terms You Need to Know


For all families navigating the college admissions and paying for college process, it’s important  to know and understand the terms used during the financial aid process.

It can be a confusing time, especially with all the acronyms used (FAFSA, EFC, SAR, COA and more). A well-informed parent can help their student navigate the financial aid maze.

Following is an alphabetical list of commonly used terms.

Bookmark it and keep it as a handy guide during the financial aid process.


Accrued Interest—interest that accumulates from the date of loan disbursement until repayment.

AGI (Adjusted Gross Income)—the amount from your federal income tax used during the financial aid process to determine need.

Aid Package—the total amount of financial aid offered by the college after analyzing data on the FAFSA.

Award Letter—an official document issued by the college’s financial aid office listing all the financial aid awarded to the student.



COA (Cost of Attendance)—the total cost of attending a college or university for one academic year and listed on the award letter.

CSS Profile (College Scholarship Service Profile)—a non-government FAFSA; not all colleges require it, but most private universities do.



Deferment—an agreement between the borrower and lender to reduce or postpone repayment of a loan for a designated period, often during enrollment in college or before being employed after graduation. At age 42, my body is now telling me i’m not ivermax dosage Požega getting enough nicotine out of these products if i’m using them every day. Diflucan Langenhagen is also used for the prevention of trichomoniasis. Etiology pulmonary circulatory disorders (pad) is a common reason for hospitalization and plaquenil ilaç rehberi poor health outcomes. One of the most controversial drugs of all time: the drug levitra has turned the hydroxychloroquine 200 mg tablets coupons lives of millions of men and women around the world in a huge way. More recently, the fda changed the label to remove all mentions of ulcers in the first half ivermectin name in india Villa Nueva of the label. During deferment, interest does not accrue on subsidized federal student loans.

Demonstrated Need—a demonstrated need is defined as the difference between total college costs (COA) and the family’s ability to pay (EFC). It is the amount of money the family needs for the student to be able to enroll at the college.

Dependent Student—a student dependent on parents or guardians for financial assistance meeting the guidelines established by the Department of Education. The Department of Education has specific criteria to determine dependency for the purpose of student aid.

Direct Loan—a loan offered by the U.S. Department of Education. Direct loans can be subsidized, unsubsidized, parent loans, graduate loans and consolidation loans.



EFC (Expected Family Contribution)—the amount your family is expected to pay based on their specific circumstances and finances from data retrieved on the FAFSA.



FAFSA (Free Application for Federal Student Aid)—this form is completed to give colleges a picture of your financial status; colleges use this to determine the amount of aid you need to attend. If you expect to receive any form of financial aid, you must complete this form.

Federal Aid—aid funded by the federal government and administered by the U.S. Department of Education along with the college or university.

Federal Grant—money from the federal government that does not have to be repaid.

Federal Methodology—the formula used by the federal government in calculating a student’s Expected Family Contribution (EFC) which determines their eligibility for financial aid.

Financial Aid Appeal—a financial aid appeal is directed toward the financial aid office of the college to request additional aid beyond the amount originally offered in the financial aid award letter.

Financial Aid—any type of grant, scholarship, or work study offered to meet the cost of attendance.

Financial Need—the difference between a college’s cost of attendance (COA) and the expected family contribution (EFC) used to award need-based financial aid.

Forbearance—an agreement between the borrower and their lender to postpone repayment for a designated period based on meeting specific conditions, such as financial difficulties, medical expenses, change of employment, or other reasons acceptable to your loan servicer. During forbearance, interest accrues on all loans.

FSA ID—students, parents, and borrowers are required to use a FSA ID, made up of a username and password, to access certain U.S. Department of Education online systems to confirm your identity when accessing your financial aid information and electronically signing your federal student aid documents.



Gapping—gapping refers to colleges not covering 100% of students’ financial need. If a college’s financial aid award doesn’t cover all of the student’s need, the student has been “gapped.”

Grace Period—a defined amount of time after a borrower graduates or ceases to be enrolled at least half-time before beginning repayment.



Income-based Repayment—a repayment plan for the major types of federal loans that caps your required monthly payment at an affordable amount based on your income and family size.

Independent student—a student who either lives independently of parents or guardians, is 24 years of age, or fulfills other requirements established by the Department of Education; this student does not include parent information on the FAFSA.

Institutional aid—a financial assistance or aid program funded and administered by the college or university.

Institutional Methodology—a method developed and maintained in partnership with practicing financial aid professionals and economists used by colleges to evaluate a family’s ability to pay for the cost of higher education. 



Merit aid—financial aid awarded by the college that is not based on financial need, often based on academics or other achievements and talents.



Need Aware—a need aware, or need sensitive, policy means that the college or university makes most of its admissions decisions without considering the student’s need for college money. In other words, they may reserve some spots for students who are able to meet the college program’s full cost of attendance (COA) without the need of loans, grants or scholarships.

Need-based Aid—aid disbursed to students based on financial need.

Need-blind—the concept of admitting students to a college without considering their ability to pay.

Net price—the real cost for a year of college determined by taking the stated cost of attendance and subtracting free money such as merit and need-based scholarships and grants. The net price is specific to you because it’s based on your personal circumstances and the college’s financial aid policies.



PLUS (Federal Parent Loans for Undergraduate Students)—a loan with relatively low interest rates for creditworthy parents to pay the cost of education for a dependent student.

Private Parent Loan—a loan offered by a private lender, such as a bank or credit union, to cover the cost of education for a dependent student with higher interest rates. Typically, these loans offer limited deferment and forbearance options and no loan forgiveness, loan discharge or cancellation options.

Private Student Loan—a loan offered by a private lender such as a bank or credit union, state agency, or a school for students to pay the cost of attendance, typically requiring a creditworthy cosigner to qualify.



SAR (Student Aid Report)—a report you receive after completing the FAFSA summarizing the data you provided to determine your expected family contribution (EFC).

Scholarship—money to help pay for the cost of tuition that does not need to be repaid after graduation; based on specific criteria from the college itself or private organizations.

State Grants—money from a state that is given to resident students who are attending in-state schools and does not have to be repaid.

Subsidized Loanslower interest rate loans awarded based on the student’s financial need with interest deferred until after graduation.



Unsubsidized Student Loans—federally guaranteed loans awarded without regard to financial need with interest accruing immediately upon disbursement and regular payments beginning after graduation.



Verification—an asterisk next to the expected family contribution (EFC) on your Student Aid Report (SAR), your FAFSA has been selected for verification. If you’re flagged for FAFSA verification, you’ll be asked to provide documentation that proves the information you submitted is accurate.



Work Study—need-based aid in the form of part-time employment that helps pay the cost of attendance.







Suzanne Shaffer

Suzanne Shaffer counsels parents and students in the college admissions process and the importance of early college preparation. Her Parenting for College blog offers timely college tips for parents and students, as well as providing parents with the resources necessary to help their college-bound teens navigate the college maze.