Financial aid is money, normally in the form of scholarships, grants and loans, that help students pay for college tuition, books and more. For high school students, college freshmen and even parents, terms like FAFSA, EFC, subsidized loans and unsubsidized loans can be confusing. Here are a few key financial aid terms and definitions that will help you understand your financial aid award package.
- FAFSA: The Free Application for Federal Student Aid can be filed the October before you need financial aid. For example, if you are entering college in August of 2022, you can file your FAFSA after October 1, 2021. The deadlines for each state can be found here. To receive the most financial aid, it is recommended that students file their FAFSA on October 1 or soon after.
- EFC: Expected Family Contribution refers to the amount of money that a family is expected to contribute out-of-pocket to a student’s tuition. This amount is based on household income, assets and more.
- Federal Loans: Money that is given by the U.S. Department of Education must be paid back, usually with interest. Direct Subsidized Loans are given based on financial need and do not accrue interest while in school at least half time or during deferment periods of six months. Direct Unsubsidized Loans do accrue interest while the student is in school and during the six month deferral period. Parent PLUS Loans can be taken out only by the biological or adoptive parent of the dependent student with the maximum amount equaling the cost of attendance as determined by the university. Parents taking out the loan cannot have negative credit.