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When you’re new to the financial aid process, some terms may sound like a different language. Here we define a list of terms to help you through this process. The terms listed below are pretty universal amongst colleges in the USA, but there may be terms specific to each college. Don’t be afraid to ask your admissions counselor or financial aid counselor to explain certain terms to you!

Cost of Attendance (COA)

COA is more than just your tuition. It includes the cost of tuition, room and board, books, laptop, transportation, and other personal costs. 

CSS Profile

Some schools require a CSS (College Scholarship Service) Profile for scholarship consideration. Check your schools of interest to see if they require a CSS Profile from you. 

Entrance Loan Counseling (ELC)

ELC is mandatory when you take out student loans and PLUS loans. This online training module reviews the terms of the loan, origination fees, interest rates, repayment options, and so on. 

Expected Family Contribution (EFC)

The EFC is the total out-of-pocket amount that your family can contribute towards your college expenses. This amount considers factors such as your family size, the number of family members already enrolled in college (if any), and taxable and non-taxable family income or assets. The EFC uses the information you include on your FAFSA.

Free Application for Federal Student Aid (FAFSA)

Each year in college you will fill out the FAFSA for need-based aid. You will also need fill out the FAFSA if you wish to take out federal student loans to fund your education. The FAFSA typically opens October 1st for the following school year. If you’re unmarried and under the age of 24, be sure to have your and your parents’ tax info from two years ago. More about the FAFSA here.


Your FSA ID is the username and password that will grant access to certain Department of Education websites. It will also help verify your identity and serve as your digital signature for your FAFSA. If you are a dependent student, your parent or guardian will need to create an FSA ID as well.

Gift Aid

AKA free money that you don’t need to pay back. Gift aid takes the form of grants and scholarships. In an ideal world, you would want all your financial aid to be Gift Aid.

Master Promissory Note (MPN)

This is essentially your loan contract that states that you agree to pay back all of the money you have borrowed, including interest.


The world of financial aid defines “need” as the difference between the Cost of Attendance and the amount your family can afford based on your FAFSA application. 


Need-blind schools do not consider an applicant’s financial need or status when making admissions decisions. In other words, these schools would never deny someone because of their inability to pay full tuition. Fortunately, many schools define themselves as need-blind. 


Need aware is the opposite of need-blind. Colleges that are need-aware will take students’ ability to pay tuition into consideration when they are making admissions decisions.

Origination Fee

An origination fee is a fee paid to the bank to compensate them for the cost of administering a loan. The fees are usually 3% of the amount disbursed. A part of this money goes to the federal government to offset administrative costs.

Pell Grants

Pell Grants are federally funded, need-based grants for students who submit their FAFSA application. You do not need to pay back Pell Grants. 

Parent Loans for Undergraduate Study (PLUS Loans)

Parents can apply for a PLUS loan up to the Cost of Attendance minus any other aid. To qualify for this loan, parents must have a positive credit history. PLUS loans begin accruing interest and require repayment as soon as they disburse.

Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness is a program that helps forgive your direct federal student loan debt. The way this happens: after 120 payments under a qualifying repayment plan and working for a qualifying governmental agency or non-profit organization.


Renewable Scholarship

You can receive a renewable scholarship for more than one aid year. Renewable scholarships typically require a recipient to maintain certain academic standards. Some might require students to reapply every year.

Satisfactory Academic Progress (SAP)

In order to continue to receive aid, you must meet certain benchmarks such as credit completion, a certain GPA, and so on. Make sure you are aware of all of the specific requirements for your aid.

Student Aid Report (SAR)

You’ll receive this report via email after submitting the FAFSA. The SAR is your opportunity to review all of the information you have submitted and make sure it is accurate.

Subsidized Loans

Subsidized loans DO NOT accrue interest while you are still enrolled in college. Repayment begins 6 months after either graduation or dropping below half-time status.

Unsubsidized Loans

Unsubsidized student loans from the government begin accruing interest immediately upon disbursement. Repayment will begin 6 months after graduation or after dropping below half-time status. If you have the ability, consider making interest-only payments while you are in school so that interest won’t capitalize. 


If you’re selected for FAFSA verification, don’t panic. Some applications are chosen at random, and others are chosen because of mismatched information that needs further explanation. If you’re chosen for verification, each college will contact you with next steps. For more information, check out our tips.


A work-study provides the opportunity to earn money by applying for on-campus jobs.Many financial aid packages offer a work-study as a way to offset a portion of your Cost of Attendance. As you would with any other role, you will have to apply for these jobs. To give you a sense of the commitment, your work study shouldn’t require more than 20 hours/week. 

We hope that familiarizing with financial aid vocabulary will ease any anxieties you may feel about the process. Good luck!