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Jul 02 2016
by Caitlin Pope

8 Definitions You Need To Understand Your Financial Aid

By Caitlin Pope - Jul 02 2016
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Congratulations college kids (and aspiring college kids): you knocked down 12 years of having to ask your teacher if you can go to the bathroom only to get ready to buckle down for your college future.

The first thing that pops into everyone’s mind when college comes up is Ramen Noodles. Second is money or lack thereof.

So here are all the definitions you need to understand how to get money for school and what this money actually means.

1. Financial Aid 

Any grant or scholarship, loan or paid employment offered to help a student meet his/her college expenses.

2. FAFSA

FAFSA stands for Free Application For Federal Student Aid. You will not be granted a cent of financial aid without filling out this application.

3. Award Letter

A document that outlines the amount of financial aid granted to you.

4. Gift Aid

Scholarships* and grants: this is FREE money. These scholarships may come from the Alumni Network at the school or the school itself. Grants can come from your state (if the college/university you are attending is an in-state school).

5. Loans

Loans can help you have enough money for college. You should never take out more loans than you need. For all 4-5 years of your undergrad, you don’t want to exceed the healthy amount of $25,000 (TOTAL) in loans. When viewing your award letter you will see:

6. EFC

EFC stands for Estimated Family Contribution. Just like the name it is the estimated amount of money your family can contribute annually; you estimate this number while completing your FAFSA.

6. Room and Board 

This is your estimated cost for your housing and meal plan.

7. Tuition 

This is where most of your money is going. This is the price for college itself. Specifically your classes. This number is based on how much each undergraduate unit costs and the max/min units you must take in order to stay as a student.

8. Direct vs. Indirect Cost 

This is not labeled on your award letter, but this is a must know. That total amount of money that you “owe” to the school is not due immediately weeks before classes start. Direct cost is what you directly pay to the school. This includes tuition, fees & room and board. Indirect cost is flexible costs. This includes books and supplies, transportation & personal expenses.

Now, if you still can’t afford the amount of money that is left, after you accept your aid, you can write a formal appeal letter to your college. Check with your college to find out the formal process.

*Your gift aid usually does not include any scholarships that you earn from outside scholarships but you will have to tell your school about any winnings in some cases.

Lead Image Credit: NikolayF via pixabay.com


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Caitlin Pope - Rochester Institute of Technology

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