FAFSA Terminology: Understanding for Accuracy
If you are planning to go to college, you have probably heard of the FAFSA. Once you start filling out your FAFSA, you may start to feel confused. Don’t worry – this guide breaks down the most common FAFSA terminology so you can feel more confident while applying.
What is FAFSA?
The FAFSA (Free Application for Federal Student Aid) is the form you fill out and submit to find out how much financial aid you may receive for college. Information from the FAFSA is used by schools to help determine eligibility for federal financial aid, and it may also be used when considering some state, institutional, and scholarship programs.
To complete the FAFSA, you will need to create an FSA ID. This is your username and password that acts as an electronic signature. You will use this username and password to log in to StudentAid.gov, access your FAFSA, and submit the form.
Important Numbers to Know
When you fill out the FAFSA, a few keys numbers help decide what aid you qualify for.
- COA (Cost of Attendance): This is the total cost for a student to attend a specific school. It includes expenses such as tuition, fees, books, school supplies, food, and housing.
- AGI (Adjusted Gross Income): This is your family’s income after certain deductions, taken from tax information. This will help calculate your SAI.
- SAI (Student Aid Index): This number helps schools understand your financial need. A lower SAI usually means you may receive more financial aid.
Understanding Your Student Status
Your FAFSA application will also ask about your dependency status. Most high school seniors fall into the Dependent Student category. This means you will need to include your parent or guardian’s financial information on your FAFSA, which can affect your aid eligibility.
Types of Financial Aid
After submitting your FAFSA and applying to colleges, schools will send you an award letter. This letter explains the types of financial aid your school is offering to you.
Some common types of financial aid include:
- Direct Loans: These are federal student loans offered directly by the U.S. Department of Education to eligible students and parents. The loan types include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
- Federal Work-Study: This program provides part-time jobs to students with financial need. Students can gain valuable work experience while earning money to help pay for college, career school, or trade school expenses.
Before receiving any federal loans, you may also need to sign a Master Promissory Note (MPN), which is a legal document that you must sign before you can receive funds from a Direct Loan.
The Bottom Line
Learning key FAFSA terms can make the financial aid process much easier to understand. Taking the time to know what each term means will help you make informed decisions about paying for college and planning your future.
