Important Financial Aid Terms

Financial aid does not need to be confusing, and it won’t be if you begin by understanding the common financial aid terms below.

To avoid making a mistake when going through the financial aid process, get answers from your school counselor or a college financial aid counselor whenever you have questions.

Academic Scholarships

Financial awards given to students for high academic achievement.

Athletic Scholarships

Scholarships awarded to student-athletes by NCAA Division I and II colleges, NAIA Division I colleges, and some two-year colleges.

Budget Number

The estimated total cost of a year of college at a specific institution, as determined by the chief financial aid officer.

Congressional Methodology

The mathematical formula, determined by Congress, which is used to calculate estimated family contribution (EFC).

Estimated Family Contribution

The amount of money a family can be expected to contribute to a student’s educational expenses, as determined by plugging the information given on the FAFSA into a formula.

FAFSA

The free federal financial aid form that students applying for financial aid are required to complete annually. The FAFSA may be completed online or paper copies may be obtained in virtually all high school guidance offices and college financial aid offices.

Financial Aid Appeal

The process by which a college financial aid office may review a student’s eligibility for financial aid, upon request of the student

Financial Aid Award Letter

A letter sent to students by financial aid offices, listing and describing the funds, if any, for which they qualify.

Financial Need

The difference between the budget number (defined above) and the estimated family contribution (also defined above). In other words, the estimated cost minus the funds the family can afford to provide.

Full Need

Colleges and universities which meet full need provide as much financial aid as a student requires, as determined by the FAFSA and the full cost of attendance.

Gap

Refers to the difference between financial need and financial aid offered.

Gift Aid

Money awarded to students that does not require repayment, primarily grants and scholarships.

Grant

A form of gift aid. A term often used as a synonym for scholarship.

Institutional Financial Aid

Financial aid given to a student by the college or university he/she attends, as opposed to money from external sources.

Merit Scholarships

Scholarships awarded for academic or other achievement.

Need-Based Financial Aid

Funds awarded to students who have demonstrated financial need.

Parent Loan

An unsubsidized student loan which does not require students to demonstrate financial need.

Pell Grant

A need-based federal award offered to students from low income families

Renewable Award

An award which can be renewed during subsequent academic years if stated criteria are met.

Scholarship

A financial award which need not be repaid.

Scholarship Search Websites

Websites at which students may search for online college scholarships for which they may qualify. A list of such sites may be found at https://www.college-scholarships.com/scholarship-information/free-scholarship-searches/.

Self Help Aid

Loans and work study funds.

Stafford Loan

Fixed rate, relatively low interest student loans.

Student Loan

Government or private loans given to students to cover their educational and living expenses.

Subsidized Loans

Student loans with low interest rates as a result of a government subsidy. Subsidized loans require a demonstration of need.

Unmet Need

The amount of established need not covered by a student’s financial aid package.

Unsubsidized Loans

Student loans which are not subsidized by the government.

Work Study

A program which allows students to earn money working on campus or in the local community.