The Basics of Financial Aid

What are all these acronyms? Help!

As if the thought of paying for college weren't already stressful enough, financial aid letters are jam-packed with big numbers and mysterious acronyms. To make it even more confusing, colleges don’t all follow the same format for offer letters. It's stressful! We're here to help break this down for you! 

Understand the terms

You may receive an offer letter and be sticker-shocked. Take a deep breath. Take a walk. And then break each offer down into its pieces. First, know what you are looking at.


    • This is where it all starts. You won't get ANY financial aid offers from schools without completing this. The FAFSA is the free (online) application for federal student aid. It’s used by schools to put together your student aid package. This package can include grants, work-study, subsidized (federal) student loans, and even state and school financial aid. 

    • Really, everyone needs to do the FAFSA, unless you're just going to write a check to pay for school up front and in full. Not too many families can do that. There are lots of great articles online if you still aren't sure about this. 

  • FSA ID

    • Before you complete the FAFSA, you'll need an FSA ID. Students, parents, and borrowers are required to use this FSA ID (a username and password) to access certain Department of Education websites. 
  • Total Cost of Attendance (COA)

    • This is a pretty solid estimate of what you can expect to pay to attend a given school. It includes tuition and fees, room and board, books and supplies, and personal expenses (for one year). This is what you should reasonably expect the total cost to be. 
  • Expected Family Contribution (EFC)

    • This is an index number that colleges use to determine how much financial aid you’re eligible to receive. Your EFC is calculated according to a formula established by law and the information from your FAFSA. 

    • The EFC factors in your family's taxed and untaxed income, assets, and benefits (such as unemployment or Social Security). Your family size and the number of family members who will attend college during the year are also considered. 

    • Note: Your EFC isn't the amount of money your family will have to pay for college and it isn't the amount of federal student aid you'll receive.

  • Student Aid Report (SAR)

    • Your SAR is a document that gives you basic information about your eligibility for federal financial aid. It also gives you a chance to review and correct the information listed on your FAFSA, if you need to. 
    • It’s important to have an accurate SAR since your financial aid awards are based on the information listed on your report. Review it carefully and compare the information listed to a copy of your FAFSA. If you think any of the information on your report is incorrect, correct it by using the Information Review Form on the back of the SAR or by going to the official FAFSA site. 
  • Grants

    • Grants are financial aid that you don't pay back.
    • How do you qualify for grants? Complete the FAFSA!! 
    • Where do they come from? Grants can come from the state and federal governments, or they can come from the school itself. Usually, grants are need-based.
  • Scholarships

    • Scholarships are ALSO financial aid that you don't pay back.
    • Scholarships are often merit-based (based on academic achievement or on some special talent like athletics, music, or activity). Some scholarships are based on a combination of need and merit. It completely depends on the school.
    • How do you qualify? Schools award scholarships based on your application for admission, a scholarship application, and/or your financial need.
    • There are literally millions of scholarships available "out there". Check our scholarship page for information and tips on finding some that work for you!
  • Work-Study

    • The Federal Work-Study Program provides students with part-time jobs to earn money that helps to pay for college. It is a form of financial aid. 
    • Not every college offers work-study. Work-study is offered by colleges that participate in the Federal Work-Study Program. When visiting colleges, ask if the school participates—or check with a school’s financial aid office at any time.  Unlike other financial aid programs, Federal Work-Study gives you an actual job (and a paycheck) where you have to work to earn your money. 
    • Because it is a form of financial aid, it is not offered to all students. Even if it is offered, you can accept or decline this form of aid. 
  • Student Loans

    • Federal student loans, also known as government loans, allow students and parents/guardians to borrow money for college directly from the federal government.

    • There are three types of federal student loans:

      • Direct Subsidized Loans

      • Direct Unsubsidized Loans

      • Direct PLUS Loans

    • These loans are available through the Federal Direct Loan Program. Since federal loans offer different benefits than private student loans, you should always explore them first.

  • Net Cost

    • This is the bottom line. 
    • What is the COA?
    • What free (grant/scholarship) money is being offered?
    • Do we want to accept work study?
    • After all of that....what's left to pay? This is the net cost to your family.
    • But... what if that just looks wrong???
    • Or ...what if your top choice school made you an offer you totally CAN refuse? What can be done? Anything?? Stay tuned for Part 2 - on potential negotiations with a school on that financial aid offer!

If you need help deciphering your aid award letters, call!
We're here to help!