(A bit dull, but important.)

These "financial aid terms" vocab words won't help on the SAT, but they'll help you pay for college.

Campus-Based Financial Aid Programs:

This financial aid term refers to three federal student aid programs that are administered directly by the college financial aid office. These are: the Perkins Loan, the Supplemental Educational Opportunity Grant (SEOG), and the Federal Work-Study Program (FWS).

Commercial Loans:

Also known as private or alternative loans, these are available through several financial services providers. To qualify, you must pass a credit check, and the interest rate will be higher than that of a Direct or FFEL Stafford or Perkins loan. (Definition coming up on this "Financial Aid Terms" page.) For these reasons, it is wise to investigate such low-interest, federally sponsored options before applying for a commercial loan. In addition, beware of scholarship scams that are simply commercial loans in disguise.

Cooperative Programs:

Cooperative education (co-op) integrates classroom study with paid, supervised work experiences. These jobs are part-or-full-time and may lead to academic credit.

Department of Education web site:

For our purposes , a plethora (SAT Word) of information about loans, grants, and f all aspects of financing a college education. Also the government site for K-12 education, with lots of info and links. Visit the U.S. Department of Education here

Direct Loans:

Direct Stafford Loans are low-interest education loans made by the federal government to students and parents. These loans may be either subsidized or unsubsidized and several repayment plans are available.


The Expected Family Contribution (EFC) is the total amount of their collective assets and income that a student and his/her family are expected to contribute towards the cost of college. The federal government determines the amount of the EFC based on the information you supply on the FAFSA and the total cost of attendance for the college of your choice. (The total cost includes tuition, room and board, books, transportation, and other personal expenses.) You will fill out the FAFSA each year and will thus get a unique EFC for each year of college.


One of those must-know financial aid terms. This is the big one, and it strikes fear (unnecessarily) in people's hearts. THE FAFSA: Free Application for Federal Student Aid. Just keep baby-stepping your way through it and you will be fine. They'll contact you if you left something out, or did it wrong. Although it slows down your process, they don't haul you off to jail or any threaten you in any way.

In fact, the pre-FAFSA worksheet, at the website, takes you through the form, step-by-step.
The FAFSA is used to apply for federal student financial aid, including grants, loans, and work-study. In addition, it is used by most states and schools to award non-federal student financial aid. The form is a snapshot of your family's financial situation including income, debt, assets, etc., for both the parents and the student. You will have to fill out the FAFSA every year that you are in college. (www.fafsa.ed.gov) It's a pain, but easier than the CSS Profile!


Federal Family Education Loan (FFEL) Program Stafford Loans are low-interest education loans made by private lenders to students and parents. These loans may be either subsidized or unsubsidized, and there are several repayment plans available.

Financial aid:

The term "financial aid" is used to describe the combination of loans, scholarships, grants, and work-study that will help you pay for college.


Federal Supplemental Educational Opportunity Grants (FSEOG) are government-sponsored, college-administered loans awarded to exceptionally needy students. The federal government determines eligibility for FSEOGs and the program gives priority to students receiving federal Pell Grants. Each school awards FSEOGs from available federal funds. There is no guarantee that each school will have enough funding to award a FSEOG to every eligible student.

Grant Aid:

The most sought after type of financial aid, grant aid, does not have to be paid back. You may receive grant aid on the basis of either need or merit, and it may come from your school or the federal government. Federal grants include the need-based Pell and Federal Supplemental Educational Opportunity (FSEOG) grants.

Merit-based aid:

Each school and/or its alumni associations and wealthy benefactors generally grant merit-based aid, which can take the form of grants, scholarships, or loans on favorable terms. You may qualify for it by meeting a certain academic requirement, such as grade point average, test scores, or career goal. Alternatively, you may qualify through an essay competition or the like. Your financial aid package may include both need- and merit-based aid.

Need-based Aid:

If the Cost of Attendance (COA) for your college exceeds your Expected Family Contribution (EFC), you will be eligible for need-based aid to cover the difference. You may be awarded a financial aid package that consists of a combination of grants, scholarships, loans, and work-study. The total amount of your package will be determined by a combination of demonstrated financial need, federal award maximums, and your school's available funds.

Pell Grants:

Given by the Federal Government, these grants are awarded to those students demonstrating exceptional financial need. Pell grants do not need to be paid back.

Perkins Loans:

Awarded by the student's school, these low-interest loans (5%) are given to students (both undergraduate and graduate) that demonstrate exceptional financial need. Repayment of this loan begins nine months after the student graduates, leave school or drop to less than half-time student status.

Plus Loans (Parent Loans for Undergraduate Students):

This is a federal loan for parents or legal guardians of dependent undergraduate students. This loan allows parents to borrow all or some of the difference between financial aid received and the cost of attending the school, including room, board, and other charges. (For example, if your college costs total $10,000 and you receive $6,000 in financial aid, you could assume a PLUS loan of $4,000.) The PLUS is not based on need, so the FAFSA is not required.

Unlike Stafford loans—in which students themselves assume the loan—PLUS loans allow parents with acceptable credit histories to borrow educational funds on behalf of their children (if their children are enrolled at least half-time). PLUS loans are available both through the U.S. Government and through private lenders, and the eligibility requirements and loan limits are about the same. To be eligible, parents must be U.S, citizens, pass a credit check (although one that is generally much less stringent than required for a home mortgage), and not currently be in default of any of their existing loans. PLUS loan payments are sent directly to your college, and unlike other federal loans, your parents must begin paying both the interest and the principal amount of the loan while you’re still in school.


The CSS/Financial Aid PROFILE is a customized financial aid application form required at certain colleges, which collects additional financial information to determine eligibility for institutional aid.


A type of financial aid that does not require repayment or employment and is usually awarded to students who demonstrate or show potential for achievement–usually academic–at that institution. Learn more about scholarships here

Stafford loans:

These loans, both subsidized (need based) and unsubsidized (non-need based), are guaranteed by the federal government and are available to students to fund education. The subsidized Stafford Loan is need-based, and the interest is paid by the government until the student leaves school. The non-subsidized Stafford Loan is not need-based and can be taken out by almost all students. Students can let the interest on the loan to accumulate until they graduate or leave school.

Federal Stafford Loans are the most common source of education loan funds, and are low-interest loans. They are available to both graduate and undergraduate students In most cases, repayment is not required until the student leaves school or graduates, and there are no interest charges while the student is in school. See also Direct Loans and FFEL

Student Aid Report (SAR):

This is the official notification sent to the student four to six weeks after filing the FAFSA. This report explains your FEC in relation to your school's expected cost of attendance. Students may be required to submit this document to the financial aid office at the college they decide to attend.

Subsidized /Unsubsidized Loans:

Subsidized loans are based upon financial need. With these loans, the interest is paid by the federal government until the repayment period begins and during authorized periods of deferment afterwards. Unsubsidized loans are not need-based; so all students are eligible to receive them. Interest payments begin immediately on unsubsidized loans, although you can waive the payments and the interest will be capitalized. See Stafford Loans.

SEOG (Supplemental Educational Opportunity Grant):

A federally subsidized educational loan program for emancipated undergraduates, and graduate students. The grant is awarded by a colleges financial aid office. See FSEOG.


An institutionally or federally-funded employment program that provides student with part-time jobs–generally 10 to 15 hours per week–for students who are in need of earnings to help meet a part of their educational cost.

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