Financial Aid Terms Flashcards
Free Application for Federal Student Aid/
FAFSA
The FAFSA is a form used to apply for student financial aid from the federal and state government, as well as most colleges and universities. The government uses the information from your FAFSA to determine your expected family contribution (EFC).
Student Aid Report
SAR
The SAR is the official notification sent to you about a week after filing the FAFSA online. This document includes your Expected Family Contribution (EFC). The SAR also provides information about the colleges you are considering, such as the graduation rates.
Expected Family Contribution
EFC
The EFC is a measure of your family’s financial strength. It is based on the information you submitted on the FAFSA, including income, assets, family size and the number of children in college. Your EFC represents the amount of money the federal government believes your family can contribute toward one academic year of college. It is a harsh assessment of ability to pay, since it does not consider many types of consumer
debt, such as credit card debt, student loan debt and auto loans. The actual amount your family ends up paying could be higher or lower than the EFC figure, depending on the sources of aid available to you.
Federal Methodology (FM) (To determine EFC)
The FM EFC is used for determining eligibility for federal and state aid and financial aid at most colleges.
Institutional Methodology (To determine EFC)
About 250 colleges use the IM EFC for awarding their own financial aid funds.
Financial Aid Package
The financial aid package is a combination of multiple types and sources of financial aid available to you to help pay for college costs. It may include money from the federal government, state government, the college itself and private sources. It can include scholarships, grants, work-study and loans. The financial aid offered by each college may vary. The financial aid packages are typically summarized in financial aid award letters sent to you by your prospective colleges.
Financial Aid Award Letter
The financial aid award letter is the list of all the aid from multiple sources that you are eligible to receive through your prospective college, including terms and conditions. You are not required to accept every
type of aid found in the letter. For example, you could turn down loans. Turning down loans, however, will not increase the amount of grants and/or scholarships you may receive.
Cost of Attendance
COA
The cost of attendance includes the total price of tuition, fees, room, board, textbooks, supplies, transportation and personal expenses for one year of college. This is also known at some colleges as the “Student Budget.” There may be separate student budgets for students who live on campus, off campus or with their parents. Some colleges will adjust the cost of attendance to include the cost of a computer, student health insurance and dependent care.
Grants
Awards typically based on financial need that do not need to be repaid. An example is the Federal Pell Grant. Eligibility often depends on your EFC and/or financial need. For example, the Federal Pell Grant is based on your EFC.
Scholarships
Awards usually based on achievement or talent that also do not need to be paid back. You can search for scholarships for free at www.fastweb.com. Fastweb adds and updates scholarships every single day, and will send
you email notification when there’s a new scholarship that matches your personal background profile. Also, your prospective college(s) may offer scholarships based on academic merit and/or financial need. Call the financial aid office to find out which scholarships are available to you and how you can apply.
Federal Work-Study
FWS
Provides part-time jobs for students with financial need. The jobs are usually available on or near campus. A list of available jobs can be found at the college’s financial aid office or student employment office. Students who don’t qualify for a work-study job may still be able to find student employment to help pay for college bills or
get a little spending money.
Loans
Funds that must be paid back, usually with interest. There are federal student loans, federal parent loans, and private or alternative loans. The good news is that interest rates for education loans are currently at historic lows. However, you must demonstrate financial need for some loans, like the Federal Perkins Loan or the Federal subsidized Stafford Loan. Other loans, such as the Federal unsubsidized Stafford loan and the Federal Parent PLUS loan, do not depend on financial need. Private student loans may depend on your credit history.
Education Tax Benefits
Available to you and your parents when you file your federal income tax returns based on
amounts you paid for college. The most popular education tax benefits are the Hope Scholarship tax credit, Lifetime
Learning tax credit and the student loan interest deduction.
American Opportunity Tax Credit
A temporary enhancement of the Hope Scholarship tax credit. It will expire at the end of 2012 unless extended by Congress. The full $2,500 credit is available to individuals with modified adjusted gross income of $80,000 or less and to married couples filing a joint return with modified AGI of $160,000 or less.
Public Service Loan Forgiveness
PSLF
Students who work full-time in a public service job for 10 years may qualify to have their remaining debt forgiven. Public service loan forgiveness works in conjunction with income-based repayment. Public service jobs include public school teachers, police, fire, EMT, members of the military, public defenders, prosecutors and others who work for the city, state and federal government, as well as people working for 501(c)(3) tax-
exempt charitable organizations. Public service loan forgiveness is available only for federal student loans. Private student loans and Federal Parent PLUS loans are not eligible.
