Know the Lingo
Financial Aid Offer Notification: The document you receive from an institution that explains the financial aid your institution is offering to you. The notification is often sent electronically through your institution’s e-mail. The information includes the types and amounts of financial aid offered, what you are expected to do to receive the offered aid and a deadline for accepting the aid. You may select what aid you want to accept or decline. You are not required to accept all the offered aid. Unless you are planning to attend just one term, this notice will list the financial aid offered for an academic year. If you are planning on attending just one term, notify your financial aid office and they can adjust your aid accordingly.
Direct Costs: Institution costs that are students pay. Direct costs may include:
- Charges for one academic year of tuition and fees.
- Housing – If you are not living on-campus, this includes residence hall charges. If you are living off-campus, your direct costs are an estimate of rent and utilities.
- Food – Includes the cost of a meal plan and/or an estimate of the costs of food prepared at home (only direct if buying a meal plan. Even then, it can be a mix—since food can be bought off-campus to supplement a meal plan).
Indirect Costs: Expenses that you may or may not incur. Indirect costs may include:
- Transportation and parking costs.
- Miscellaneous costs such as personal hygiene, laundry, and reasonable entertainment.
- Other costs specific to certain student circumstances related to attendance, such as dependent care during periods of class attendance or study, expenses related to disabilities, study abroad, educational loan fees, a computer, health insurance and others
- Food – Although many institutions offer meal plans, you can usually choose whether or not to participate and many students buy food outside of meal plans to supplement them.
- Books and supplies – These are indirect costs since you can control how much you pay for books and other supplies. You can rent books, buy them new or used or in some cases, borrow from the library.
Demonstrated Need (sometimes called Need): The difference between your expected family contribution (EFC) from the FAFSA and the total cost of attendance for an institution. It is used in determining eligibility for some federal financial and state aid programs. Aid that requires need is sometimes called need-based aid.
Enrollment Status: A classification based on the number of credit hours you are taking during a term; for example, your enrollment status may be full-time or half-time. Most financial aid and scholarship offers require a student to be enrolled in a minimum number of credits so be sure you know what is required for you to receive each different type of aid.
Entrance Counseling: Explains the obligations you agree to meet as a condition of borrowing a federal loan. In most cases, this is only required to be completed the first time you receive a loan and does not need to be completed each year. It is completed electronically using your FSA ID at Student Aid.Gov. Entrance Counseling is required to be completed by students before they can receive their federal student loan funds.
Expected Family Contribution (EFC): An eligibility index the institution will use to determine how much need-based financial aid you would receive if you were to attend their institution. The EFC is calculated according to a formula specified in law and is based upon the information provided by the student and their family on the Free Application for Federal Student Aid (FAFSA). If you have an unusual financial situation that is not reflected in the FAFSA, you should talk to the Financial Aid Office at the institution you plan to attend.
Financial Aid: Scholarships, grants, loans, and work programs that are provided to you to help pay for educational costs. The funds can come from federal and state governments, institutions and private and social organizations.
Financial Aid Office: An institution office that serves as a resource for students who need help paying for institution costs. Financial aid staff can help you to apply for and receive grants, loans, scholarships and work-study employment. The office may also offer programs to help you establish a budget and manage your money.
Free Application for Federal Student Aid (FAFSA): A free application form you submit to apply for federal financial aid. It is required for all students seeking federal student grants, work-study programs and loans. Many institutions require it as well for institutional scholarships and grants. The FAFSA may also qualify you for state-sponsored financial aid. A new FAFSA must be filed each year you are applying for financial aid. Be sure and use the IRS data retrieval tool when completing the income information as it will prevent you from having to submit additional documents later. File your FAFSA electronically at Student Aid.
FSA ID: A username and password that gives you access to the U.S. Department of Education’s online systems and can serve as your legal signature when completing electronic documents. It is needed to file the FAFSA, complete federal loan entrance counseling, and sign a federal loan master promissory note. You only need to get one FSA ID that can be used for multiple years. If parent information is required on the FAFSA a parent must also get their own FSA ID to sign the FAFSA. It can be obtained at this site.
Independent Student: A student who does not have to include parent information on the FAFSA. To be an independent student, you must meet one of the following:
- Be at least 24 years old
- A graduate/ professional student
- A veteran
- A member of the armed forces
- An orphan
- A ward of the court
- Someone with legal dependents (not a spouse)
- An emancipated minor
- Someone who is or at risk of being homeless.
If you do not meet any of these but have an unusual home situation you should contact the Financial Aid Office at the institution you plan to attend and explain your situation.
Loan Deferment: A temporary postponement of payment on a loan that is allowed while the student is attending an institution and enrolled at least half-time. The federal Direct Subsidized Stafford Loans and the Direct Unsubsidized Stafford Loans allow payments on the loans to be deferred until six months after the student is no longer enrolled at least half-time.
Master Promissory Note (MPN): A legal document that contains the Borrower’s Rights and Responsibilities and Terms and Conditions for repayment. It is required to be completed by the student before they can receive their federal student loan funds. In most cases, this is only required to be completed the first time you receive a federal loan and does not need to be completed each year. It is completed electronically using your FSA ID at this site
Merit-Based Financial Aid: Some types of financial aid is given to students based on their personal achievements, such as scholarships. Most scholarships are considered merit-based financial aid since they are generally offered for success in school, the arts, athletics or another area. These scholarships typically do not require a FAFSA to be filed to qualify.
Need-Based Financial Aid: Financial aid (grants, some scholarships, subsidized loans and work-study opportunities) is given to students who show demonstrated need when filing the FAFSA. Students are required to file a FAFSA to qualify for this type of financial aid.
Priority Date: The date when your application must be received by a certain date to be given the strongest consideration. The application may be for institution admission, student housing or financial aid. Since financial aid is often limited, submitting your application by the priority date is important to be eligible for all types of funds you could be awarded. However, there are still some financial aid funds available after this date.
Satisfactory Academic Progress (SAP): The SAP measures your progress toward your degree so you can continue receiving your scholarships and other financial aid. It is usually measured by grade point average, number of credits successfully completed, and total credits earned. This process may vary across institutions so it is important you know the institution’s requirements.
Student Aid Report (SAR): The report sent to your family after you submit the Free Application for Federal Student Aid (FAFSA) that tells you how you answered each question on the FAFSA and your calculated expected family contribution (EFC). The information is automatically sent to all institutions you listed on the FAFSA. You should review these results and correct any information incorrectly reported on a FAFSA question.
Term: A period of time determined by the institution for a set of classes. For many institutions, a term is also referred to as a semester. There are usually two terms in an academic year, but degree programs of less than two years may have more than two terms in an academic year. Financial aid is usually disbursed to a student by term.
Verification: A federal process to confirm the accuracy of selected data on your Free Application for Federal Student Aid (FAFSA). Many times, students are just selected randomly so you should not feel you are in trouble for what you put on the FAFSA. To complete the process, the Financial Aid Office at your institution will ask you to provide certain documents for review. Once the information is received by the institution, they will compare it to your FAFSA and make any necessary corrections for you.
About 30% of FAFSA filers are selected so if you are selected you are not alone. Do not let this process stop you from receiving financial aid. Just submit the requested information to the Financial Aid Office and they will help you through the process.
Hint: Use the IRS data retrieval tool when completing the FAFSA and it may prevent you from being selected to complete the verification process.