College Financial Aid Glossary
To get the most out of the available financial aid programs you must understand the terminology. Here is a list of the most common term students are likely to come across.
529 Plan: A state sponsored savings plan that offers tax incentives for money used for educational costs.
Award letter: An official notice of financial aid a student is being offered from a particular institution.
Coverall Education Savings Account (ESA): A college savings plan sponsored by the federal government. Depending on income, up to $2000 may be contributed annually.
Dependent Student: A student who depends on his/her parents for support. An important consideration in determining aid eligibility.
Expected Family Contribution (EFC): The amount a family can afford to contribute to educational costs. This will impact the level of federal (and other) assistance a student qualifies for.
FAFSA: Free Application for Federal Student Aid. This must be submitted to qualify for federal programs. Many college and private funding sources will require this as well. It can be submitted through the mail or online.
FSEOG: Federal Supplemental Educational Opportunity Grant Program-a federal loan program for undergraduates with extraordinary financial needs.
HOPE Education Tax Credit: A federal income tax credit for educational expenses that have been paid for by the student (or parents). Applicable during the first two years of college. The amount of the credit depends on income.
Independent Student: A student not dependent on parents for support. This is an important factor in determining financial aid eligibility.
Lifetime Learning Credit: A federal income tax credit for educational expenses that have been paid for by the student (or parents). The amount of the credit depends on income. Unlike the Hope Credit, it is not limited to the first two years of college.
Need Analysis: The process by which the amount you can reasonably afford to contribute to educational costs is determined.
Parents Contribution: The amount of money parents are expected to contribute toward a student's educational expenses. This factors into the amount of aid you may receive.
Pell Grant: A federal grant program for undergraduates. It is based on need.
Perkins Loan: A low-interest student loan, funded by the federal government, but administered by colleges. Students can wait until after they graduate to begin repayment.
Plus Loan: A federal loan program for parents of undergraduate students.
Stafford loan: A federal loan program that allows students to borrow money for educational costs from many different banks.
Tuition Waiver: A benefit offered by some colleges for certain groups of students. Tuition and fees may be totally or partially waived if you qualify. For example, some schools waive tuition for the children of faculty and staff members
Work Study: A program in which the student works in exchange for part of his financial aid package. The type of work may be related to the student's major or career goals.