College Finance Glossary

What it is

The Free Application for Federal Student Aid. A federal form that collects financial information about a student and their family to determine eligibility for federal aid programs, including grants, work-study, and federal student loans. Most colleges also use FAFSA data to award their own institutional aid.

Why it matters

Submitting the FAFSA is typically required to receive any need-based aid, including federal loans. Without it, most colleges will not include grants or subsidized loans in a financial aid offer.

What it is

A number calculated from FAFSA data that colleges use to determine a family's eligibility for need-based aid. A lower SAI generally indicates greater financial need. The SAI replaced the Expected Family Contribution (EFC) in 2024.

Why it matters

The SAI influences how much need-based grant aid a college may offer. It does not represent the amount a family is expected to pay, and different colleges may award very different aid packages to the same family based on the same SAI.

What it is

The total estimated cost of attending a college for one academic year. It includes tuition, fees, room and board, books, supplies, transportation, and personal expenses. COA is published by each college and serves as the starting point for calculating financial aid eligibility.

Why it matters

COA is the number the CollegeClearly calculator uses as its first input. It represents the full price before any aid is applied, and it is the basis for understanding what a family will actually need to cover after grants and scholarships are subtracted.

What it is

The cost of attendance minus grants and scholarships a student receives. Net price is what a family actually needs to cover through a combination of their own funds, work-study earnings, and borrowing.

Why it matters

Net price is often very different from the published cost of attendance. Two schools with similar sticker prices can have very different net prices depending on how generous each school's aid is. Net price is the more meaningful number for comparing what different schools would actually cost a specific family.

What it is

Money awarded to a student that does not need to be repaid. Grants are typically based on financial need and come from the federal government, state governments, or the college itself. The Pell Grant is the most common federal grant for undergraduate students.

Why it matters

Grants directly reduce what a family needs to borrow. Unlike loans, they do not create a repayment obligation. The more grant aid a family receives, the lower the borrowing commitment behind the college decision.

What it is

Money awarded to a student that does not need to be repaid, typically based on merit, achievement, background, or field of study. Scholarships can come from the college itself or from outside organizations.

Why it matters

Scholarships reduce borrowing the same way grants do, but they carry their own considerations: renewal conditions, eligibility requirements, and how outside scholarships interact with institutional aid. Understanding what a scholarship requires to keep is as important as knowing it exists.

What it is

Financial aid awarded based on academic achievement, talent, or other non-need criteria rather than financial need. Merit aid can come in the form of scholarships, grants, or tuition discounts directly from the institution.

Why it matters

Merit aid varies significantly between colleges and is not always automatic. A student who qualifies for substantial merit aid at one school may receive little or none at another. It is worth understanding what criteria each school uses and whether merit aid is renewable each year.

What it is

Financial aid awarded based on a family's demonstrated financial need, as calculated from FAFSA data. Need-based aid can include grants, subsidized loans, and work-study. The amount varies by institution.

Why it matters

Not all colleges meet the same percentage of demonstrated need, and aid packages can vary significantly even among schools with similar costs. Two colleges can have the same net price calculator estimate and offer very different aid packages in practice.

What it is

A federal program that provides part-time employment opportunities for students with financial need. Work-study funds appear in a financial aid offer as an award amount, but the money is earned through work, not paid directly to the student's account.

Why it matters

Work-study awards can make a financial aid package look more generous than it is. Unlike grants, work-study does not automatically reduce tuition costs. The money must be earned and then applied toward expenses. Families comparing aid packages should note whether work-study is included in the total aid figure.

What it is

A federal student loan for undergraduates with demonstrated financial need. The federal government pays the interest on a subsidized loan while the student is enrolled at least half-time, during the grace period after leaving school, and during approved deferment periods.

Why it matters

Because interest does not accrue while the student is in school, subsidized loans are generally the most favorable type of federal loan. When comparing loan packages, the mix of subsidized versus unsubsidized loans affects the total amount owed at repayment.

What it is

A federal student loan available to undergraduates and graduate students regardless of financial need. Interest accrues on an unsubsidized loan from the time it is disbursed, including while the student is in school. Unpaid interest is added to the loan balance.

Why it matters

Because interest begins accruing immediately, the total amount owed at graduation is higher than the amount originally borrowed. A student who borrows $20,000 in unsubsidized loans will owe more than $20,000 by the time repayment begins.

What it is

A federal loan borrowed in the parent's name to help pay for a dependent undergraduate student's education. The parent, not the student, is the legal borrower and is responsible for repayment. Parent PLUS loans carry a fixed interest rate and require a credit check.

Why it matters

Parent PLUS loans do not have the same income-driven repayment options available for student loans. When a family's borrowing extends beyond federal student loan limits, the additional amount often comes through a Parent PLUS loan. Understanding who holds the debt matters when thinking about the long-term commitment behind a college decision.

What it is

A loan from a bank, credit union, or private lender used to cover education costs. Private loans are separate from federal student loans and come with their own terms, interest rates, and repayment conditions set by the lender.

Why it matters

Private loans generally do not offer the same borrower protections as federal loans, including income-driven repayment plans and deferment options. Interest rates are often variable rather than fixed. Families should typically exhaust federal loan options before turning to private loans.