Financial aid is every college student's best friend. Going through the process is no breeze, though. Students can easily get lost in all the unfamiliar terms and find the process too difficult to go forward with.
While in college and after graduation, you'll realize just how important the financial aid you're eligible for will prove to be extremely helpful after you graduate. When you know how to navigate your way through it, applying for financial aid won't seem so overwhelmingly complicated.
Don't let financial aid confusion deter you from collecting your share. Save yourself the trouble, and more importantly the thousand of dollars in school costs, with this reference guide on some of the most common financial aid terms that students should know.
FAFSA (Free Application for Federal Student Aid):
Filling out a FAFSA is the first step in getting the financial aid process going. The application figures out how much you or your family will be paying along with what financial aid may cover. After completing the form, you'll be able to see how much you'll be able to get from either work-study, loans, or student grants. The form is already free and the results can save you more than you expected.
EFC (Expected Family Contribution):
This term refers to how strong your family's finances are and how much of your college will be paid for by them. This amount is determined by a formula that takes into account taxed and untaxed income, assets, benefits, family size, and the number of members attending college. The results for this calculation is provided when you fill out a FAFSA.
Award letters arrive by mail and tell you how much financial aid you'll be receiving. You can expect these to come in around mid to late April and basically outline your financial aid package. The problem with these letters, however, is that they don't often include ALL the information you need. Some may underestimate the cost of attendance and your package seem more appealing than it really is.
Your financial need is based on your total cost of attendance that isn't covered by your EFC or other forms of contribution such as scholarships or outside grants. You have to be able to demonstrate your financial need in order to be eligible for this type of aid.
Taking out a student loan is one of the most common ways that students get financial aid. Essentially, you borrow money to get you through college while you're enrolled and pay it back after graduation. There are a variety of loan types which FAFSA usually determines the best one for you. Most loans allow you a 6-month grace period after graduation to repay the loan and any interest that may have accrued with it.
Grants are free money. That's right, money that the government, your school, or a private source awards you that you don't have to pay back. Grants too, are calculated in the results when filling out a FAFSA.
Scholarships are kind of the in-between of loans and grants. The money is free, but you have to work for it and it isn't guaranteed. Depending on the certain criteria for the scholarship, you may have to write an essay or participate in a specific project. In general, scholarships are awarded for academic merit which allows all students a chance to earn money without repayment.
The Federal Work Study program makes funds available to students who work part-time. In this case, the school or employer pays up to 50% of your wages while the federal government covers the rest. Students are often employed by the college itself or by another organization.