Focus on Financial Aid: Terminology and Words to Know

Part I. The Application Process

FAFSA. Free Application for Federal Student Aid. A detailed, electronic form that is the first step in applying for federal aid, offered by the U.S. Department of Education. Only one FAFSA needs to be completed each year, even if you are considering several different colleges. You may be able to use the FAFSA to apply for state and college aid as well. Contact your state agency and financial aid administrator to find out whether you can use the FAFSA to apply for state and college aid, and to learn what types of aid may be available to you.

You can complete the FAFSA application online, at www.fafsa.ed.gov. The site will guide you through application process with information on frequently asked questions, what to expect after completing the FAFSA, how to check your status online, and more.

CSS Financial Aid PROFILE. A supplemental need analysis document used by some colleges and private scholarship programs to award their non-federal aid funds. Early in your senior year, participating colleges may ask you to file a PROFILE so that a predetermination can be made of your financial aid eligibility at that school. The PROFILE does not replace the FAFSA--you must still file a FAFSA in order to be considered for federal student aid. You should file a PROFILE only for those colleges and programs that request it. PROFILE registration forms, which are processed by the College Scholarship Service (CSS), are generally available from high schools or colleges. Financial Aid Package-Describes the total amount of aid that a student receives. A package generally consists of several parts: grants/scholarships, loans and jobs. Grants and scholarships are considered "gift aid." Loans and jobs are considered "self help."

Part II. Types of Financial Aid

Grants and Scholarships. Money given to a student that carries no stipulation of repayment is known as a scholarship or a grant. Scholarships and grants can originate from the federal or state government, private sources or the college itself. Grant eligibility tends to be based on need; when need is high, the grant aid tends to be high as well. Scholarship eligibility is often based on financial need, academic achievement, particular talents or skills, or a combination of one or more of these factors. In some cases, the terms "grant" and "scholarship" are used interchangeably.

Loans. Any program described as a loan requires repayment, usually with interest, to the source of the funding. Loans often come from the institution or private lender. Generally, the greater the financial need, the larger the loan. A variety of repayment options are usually available, and sometimes permit payment to be deferred while the borrower is enrolled in school. The time frame for loan repayment can be as little as two to three years, or as long as twenty years. Many banks and lending institutions now make special loan programs available to help parents finance their student's education. These loans are not based on financial need, but can help stretch the family's budget over the years of schooling. Loans may be referred to as "self-help" aid.

Jobs. On- and/or off-campus employment for hourly wages during the academic year. In some cases, the jobs are designed to complement the student's field of study. Jobs may also be called "self-help" aid.