Like any type of educational aid programs, the FAFSA or Free Application for Federal Student Aid uses a lot of terms and industry jargon that most students will not be familiar with. This is unfortunate, as misunderstandings of terms can result in delays processing the FAFSA, or mistakes that create inaccurate award determinations. In order to get all of the aid you qualify for and to get it in a timely fashion, it’s important to understand the most common terms encountered on the FAFSA.
Subsidized- Subsidies are amounts paid toward your educational expenses by the government. In the case of the FAFSA, subsidized refers to a type of loan where the federal government pays all interest while the student is still enrolled in classes.
Unsubsidized- the opposite of subsidized, these types of loans feature interest where the government does not contribute to the cost of interest, and therefore the interest is accumulated in the loan from the moment of its dispersal.
EFC- A prominent question on the FAFSA, EFC stands for Expected Family Contribution. This is the amount that the government uses to calculate what aid will be awarded, and is based upon a family’s income and assets. Essentially, the EFC is a general measure of how much a family is expected to contribute to their child’s own education expenses.
Work Study- Federal programs that allow students to work up to a certain award amount in a field similar to their degree path, or one that serves the public interest.
USDE- Acronym for United States Department of Education- the federal agency that oversees all federal educational aid programs.
Financial Need- A term used to describe how much “need” a student has for aid programs. In general, the less money and assets you have, the higher your “need” will be, resulting in more aid being offered.
Grants- Forms of educational funding available via the FAFSA and other sources that do not require repayment of funds awarded.
Scholarships- Academic awards usually reserved for incoming or undergraduate students. Aid is free and does not need to be repaid.
Student Status: This term refers to whether a student is independent, dependent, or independent with dependents. This status will determine what types of aid you may be eligible for.
By having an understanding of what is on the FAFSA before you fill it out, you can save yourself a lot of time and frustration, and ensure that your completed FAFSA is received in time to qualify for as much aid as possible.
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