Defining Financial Aid Terms
By now you’ve received financial aid awards from the schools that have offered you admission. But interpreting those awards might seems a bit like reading a foreign language. Here are six common terms that you will see on a financial aid award.
Cost of Attendance – The Cost of Attendance is more than just tuition, it is an estimate of the total expense for one year of attendance. It should include – 1) Tuition & Fees; 2) Room & Board; 3) Books & Supplies; 4) Personal Expenses, 5) Transportation (getting to and from the campus). If the financial aid award does not include these items, search the website for the information or call the college.
Expected Family Contribution (EFC) – The amount your family is expected to pay toward college (your EFC) is calculated by the FAFSA (Free Application for Student Aid). You can find your EFC on the confirmation page you received when you submitted your FAFSA form. This number should be listed on all your awards. If it’s not there, ask the college why.
Cost of Attendance – Expected Family Contribution = Need
Student Financial Need – Use the financial aid equation above to determine your “financial need” for each school. Then check the college’s award letter. If the school’s total financial aid award is less than your financial need, you have a “financial aid gap.” You must pay this gap (in addition to paying your EFC amount) with other sources of funding not provided by the school. Scholarships from community groups or other sources, personal savings, or private loans are examples of how students pay their EFC plus any financial gap.
Grants and Scholarships – Grants and scholarships are awards that do not need to be repaid. Are these grants or scholarships renewable (will you received them for just freshman year or every year)? What are the eligibility requirements that you must meet to receive the scholarship for additional years (a minimum GPA, a certain number of course credits, etc.)?
Loans – Has the college included student or parent loans in your award? This money must be repaid by you or your parents. An offer of $20,000 parent loan alone is not a good offer.
Work-study – A work-study award is potential income that you may earn by working part-time in a work-study position. Most work-study jobs are on-campus which can make them convenient, but a work-study award does not guarantee you a work-study job. You must apply for work-study positions like any other part-time job. And just like other part-time jobs, you will receive a paycheck for your work-study earnings. It is not automatically applied toward your cost of attendance. Contact the university financial aid office to learn about the availability and application process for work-study positions.
Are you being offered a mix of grants, scholarships, loans and work-study? The more money you don’t have to pay back, or earn by working, (ideally – more scholarships and grants, less loans and work-study) the better.
GuidedPath Edge Guru