COLLEGE FINANCIAL AID TERMINOLOGY

College Planning:  Commonly Used Financial Aid Terminology

  • ALTERNATIVE LOAN - Also known as private loans, alternative loans are provided by non-government lenders (typically banks, credit unions, and lending companies).  These loans often require a cosigner and frequently have variable interest rates.  The lenders set the terms of these loans which can include immediate repayment or interest accrual.
  • COST OF ATTENDANCE - The total estimated annual cost to attend college. Each college publishes their official cost of attendance each year which typically includes tuition, fees, room and board, books and supplies, transportation, and an allocation for personal expenses.
  • CSS PROFILE - A financial aid form utilized by approximately 300 selective private colleges to award the college's own institutional financial aid. https://profileonline.collegeboard.com/prf/index.jsp
  • EFC (EXPECTED FAMILY CONTRIBUTION) - This is the minimum amount a family will likely be expected to contribute toward the student's cost of college each year.  The federal EFC, for example, is determined using a formula called the Federal Methodology which assesses parent and student income and assets.  The family's EFC will be the same at each college as the federal formula does not vary college by college.
  • FAFSA - Free Application for Federal Student Aid form which current and prospective college students complete each year in order to become eligible to receive federal student aid.  http:/www.fafsa.ed.gov/
  • FEDERAL METHODOLOGY - The mathematical formula used by the federal government to assess parent and student income and assets in order to determine a student's eligibility for federal aid each year. http://www.ifap.ed.gov.efcfromulaguide/attachments/101310EFCFormulaGuide1112.pdf
  • FINANCIAL AID - A general term used to describe any funds provided to the student by the college, the government, or another party such as a scholarship donor.  Financial aid can come in the form of free money (scholarships and grants) as well as "self-help" (loans and work-study programs).  Financial aid can be need-based or merit-based.
  • INSTITUTIONAL METHODOLOGY - The formula used by colleges which require CSS Profile to assess parent and student income and assets for the purpose of determining institutional aid eligibility.  This formula is not published and may vary college by college.
  • MERIT AID - Financial aid which is not based on family finances.  Merit aid may be based on factors such as academics, talent, ethnicity, geographic location, major, etc.
  • NEED - A student's need is determined by subtracting the EFC from the cost of attendance.  COA-EFC=Need.  NOTE:  Most colleges do not meet all of a family's demonstrated need.  Any unmet need will be added to the family's EFC to determine the family's total out-of-pocket cost.
  • NEED-BASED AID - Financial aid which is contingent on family finances (typically parent and student income and assets).
  • PERKINS LOAN - A fixed-interest government loan typically reserved for students who demonstrate the most financial need. Interest does not accrue on the loan.  Repayment begins 9 months after graduation, leaving school, or dropping below half-time enrollment.  http://studentaid.ed.gov/PORTALSWebApp/students/english/campusaid.jsp#03
  • PLUS LOAN - A fixed-interest government loan where the parent is the borrower. In order to be offered a PLUS loan the family must complete the FAFSA each year.  Parents can borrow up to the full cost of attendance minus and other aid received by the student.  Repayment begins after the 2nd (Spring) disbursement.  http://studentaid.ed.gov/PORTALSWebApp/students/english/parentloans.jsp 
  • RESOURCE - A resource is any form of third-party funds which the college counts as a dollar-for-dollar reduction in need-based financial aid award.  Examples include third-party scholarships or tuition gifts from grandparents paid directly to the college.
  • STAFFORD LOAN - A fixed-interest government loan where the student is the borrower.  In order to be offered a Stafford loan the family must complete the FAFSA form each year.  There are two versions of the Stafford loan.  Subsidized Stafford loans are the need-based version where the interest is paid by the government while the student is in college.  Conversely, the interest on the Unsubsidized Stafford loans accrues while the student is in college.  Repayment for Stafford loans begins 6 months after graduation, leaving school, or dropping below half-time enrollment.  http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp