There is so much terminology concerning student financial aid! Here are some examples of the important terminology you will encounter as you navigate funding your education:

Free Application for Federal Student Aid (FAFSA)

The FAFSA is the form that is used to determine eligibility for federal student aid. You must fill out a new FAFSA each academic year that you wish to be considered for federal financial aid.

Student's Eligibility

A student's eligibility is determined by the information contained within the FAFSA and any supporting documentation that may be requested. There are predetermined conditions outlining eligibility guidelines, and the federal government has the final decision concerning student eligibility.

Cost of Attendance (COA)

Your cost of attendance or COA is the total cost associated with attending an institution. Each institution has its own COA, and this figure includes both billable and nonbillable expenses. An example of a billable expense is tuition, and a non-billable expense is books and supplies. It is advisable that you research your institution's COA and know what is included in the calculation. A student may only receive an aid award up to the COA.

Student Aid Report (SAR)

Your Student Aid Report (SAR) is a summary document that you will receive that outlines the answers you gave on the FAFSA and will include an ESTIMATION of expected aid. Your institution will give you your final aid award.

Expected Family Contribution (EFC)

This is a number that is used to determine your eligibility for certain types of aid. It is an indexed number and does not mean you will have to pay that amount of money. The lower your EFC, the more likely you are to receive need-based aid.

Student's Dependency Status

You can either be considered an independent or dependent student. Your aid award may be different based on your dependency status. You can not choose your dependency status. The federal government has a set of conditions that must be met in order for you to be deemed independent.

Loan Servicer

The federal government will fund and issue loans, but they do not take on the responsibility of servicing these loans after they have been disbursed. Your loan servicer will handle all of the loan administration after the fact. You should contact your servicer with any questions you may have regarding your loans or repayment. You should familiarize yourself with your servicer as soon as possible. If you have private loans, the institution that issued the loan is typically your servicer.

Repayment Plan

Once your loans are in repayment status, you will be put on a repayment plan. The federal loan system has multiple repayment plans available to borrowers depending on their current financial situations. Private loan servicers may have limited repayment plan options.

Consolidation

For most students who borrow, they are actually borrowing multiple individual loans each year or semester. Consolidation is the process of turning all of these individual loans into one loan that is easier to manage and administer. Always check with your servicer prior to consolidating in order to make sure that it makes sense for your individual situation.

Defaulting

Defaulting is failure to pay your loan back according to the terms and conditions of the loan agreement. This can have serious financial implications for the borrower and should not be taken lightly.

Loan Forgiveness Program

The federal government and some states have programs that allow some of or all of your outstanding student loan debt to be forgiven. These programs have stringent eligibility requirements and are not available to all borrowers. Private loans are not considered eligible by these programs.

For additional resources on student financial aid, you can either visit your financial aid office on your school's campus or the Federal Student Aid website under the US Department of Education.

Learning Checkpoint:

Optional Activity: If you are borrowing student loans, take a few moments and find out who your loan servicer is. If you are using federal loans, access this information from the Department of Education to find Your Loan Servicer Information.Links to an external site.