Pell Grants. FAFSA. EFC,
Subsidized or Unsubsidized Federal Stafford Loans. SAR. College-bound high
school seniors and their parents can often use a crib sheet to help them keep
common student financial aid terms and concepts straight. Here’s a primer on
financial aid lingo that touches the high points.
FAFSA is your gateway to
financial aid.
The financial aid process hinges on
the Free
Application for
Federal Student Aid (FAFSA),
the form required to determine eligibility for all federal financial aid
programs. Many state and institutional student aid programs also rely on FAFSA
data. File your FAFSA online as soon as possible after January 1, 2007 at
www.fafsa.ed.gov,
because most financial aid is awarded on a first-come-first-served basis. When
you file a FAFSA, the federal government issues your
student aid report (SAR),
which details your eligibility for federal financial aid, and your
expected family
contribution or EFC
(how much you and your family
should be able to pay toward college). A FAFSA is required for every year a
student’s in school.
Federal aid comes in many forms.
The most common federal aid
programs are
Stafford Loans and
PLUS Loans
for parents, as well as
Pell Grants, Work-Study,
Perkins Loans.
Stafford Loans
allow eligible
students attending approved
institutions to borrow
guaranteed
(insured) loans at fixed rate. A
subsidized
Stafford Loan is
eligible for interest benefits to be paid by the federal government during
school, grace, and authorized deferment periods, while an unsubsidized
Stafford Loan requires
the student to pay interest during those periods.
Financial aid office terms
Each school that you apply to will
provide a total
cost of attendance (COA)
for one year of study. This figure
usually includes tuition and fees, room and board, books, supplies,
transportation costs, and personal expenses. Your
financial need
is calculated by figuring the
difference between a school's COA and your EFC. Once your financial aid package
has been determined, each school will send you an
award letter,
the official document itemizing all the terms of the aid awarded. If you have
any questions about your aid,
you should contact one of that
school's financial
aid officers, who are
expert in addressing students' concerns about the financial aid process.
The language of lending
Private/alternative loans are funds
that a student or a
sponsor (usually a parent)
borrows from a lending
institution—such as a student loan provider like
Nellie Mae, Massachusetts #1
loan provider— instead
of by the federal government. If you apply for a student loan, your financial
aid officer has to
certify
your application, that is, confirm
for the lender and guarantor that a loan applicant meets enrollment, borrowing
amount, and other eligibility criteria. Once a loan application is certified and
approved, the lender
disburses
funds to the borrower, school, or
escrow agent to pay the tuition. You should realize that unlike
gift aid
(grants or scholarships), all
student loans—including those provided by the federal government--must be
repaid. Check out the complete glossary of financial aid terms at
www.nelliemae.com.
You’ll also find other useful tools to help your family navigate the financial
aid process, including brochures, calculators, and applications for federal and
alternative loans.
