Financial Aid Terminology
Financial Aid comes in various guises, and understanding the terms will help you evaluate the offers you receive.
Cost of Attendance: This is the amount of money required for a year at the given college. It includes tuition, books, room, and board. Some schools add in an amount for personal expenses and travel--some do not. It's important to make sure that you know exactly how it is defined at each college you're considering, so as to make sure you're comparing apples and apples.
EFC: This stands for "Expected Family Contribution," which is the dollar amount that the Federal Government expects the family (student and parents) to pay toward the annual cost of college. They use a complex formula that includes a percentage of parental income and assets and student income (including an expectation that the student will work in the summers and contribute that entire amount each year) and assets.
Need: Everything between the amount of EFC and the cost of attendance is your "need." For example, if the EFC for your family is $10,000, and the cost of attendance at your chosen school is $30,000, you have $20,000 in "need." This need may be met in various ways:
Cost of Attendance: This is the amount of money required for a year at the given college. It includes tuition, books, room, and board. Some schools add in an amount for personal expenses and travel--some do not. It's important to make sure that you know exactly how it is defined at each college you're considering, so as to make sure you're comparing apples and apples.
EFC: This stands for "Expected Family Contribution," which is the dollar amount that the Federal Government expects the family (student and parents) to pay toward the annual cost of college. They use a complex formula that includes a percentage of parental income and assets and student income (including an expectation that the student will work in the summers and contribute that entire amount each year) and assets.
Need: Everything between the amount of EFC and the cost of attendance is your "need." For example, if the EFC for your family is $10,000, and the cost of attendance at your chosen school is $30,000, you have $20,000 in "need." This need may be met in various ways:
- College Grant: A grant is FREE money--it does not have to be paid back. In the case of private colleges and universities, there is quite a bit of discretion when it comes to determining how much of your need to meet with grants vs loans. (Hint: think about applying to the excellent colleges where your qualifications are at the top or slightly above their profile--the more they want you, the more likely they are to offer you grants.)
- Pell Grant: These grants (FREE money) are provided to low income students by the government.
- Federal Stafford Loans: The Federal government offers students low interest college loans. There are two flavors: a SUBSIDIZED loan is one where the government pays the interest while you're in school, while an UNSUBSIDIZED loan is one where the interest accrues while you're in school and is then added to the loan balance.
- Perkins Loans: These are another form of Federal Loan, with a 5% interest rate, that are often offered as part of a loan package for middle income families.
- PLUS Loans: These are parent loans--like the Stafford loans, they are provided by the Federal Government, but to parents rather than to students.
- Need-based Scholarships: Like Grants, scholarships do not have to be paid back. Unlike athletic or academically based scholarships, many colleges offer competitive need based scholarships that can count toward fulfilling need.
- Work Study: This is a Federal Program that is quite popular as a way of helping students help themselves--a small portion (usually $1000-2000/year) of the student's need can be met through part time campus jobs that are partially subsidized by the government, which pays half of the wages. Colleges like work-study because it helps them to offer more jobs to students.
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