FAFSA and Other Daunting Financial Aid Acronyms
Financial Aid Acronym Overview
While researching financial aid options, you will probably feel overwhelmed by the amount of information that you receive. The good news is that you aren't alone. Students applying for financial aid are often overwhelmed by the terminology associated with it and the heavy use of acronyms within informative literature. Before reading the financial aid information provided in this article, these are some the acronyms you should know:
- FAFSA = Free Application For Student Aid
- FSA = Federal Student Aid
- EFC = Expected Family Contribution
- FPL = Federal Perkins Loan Program
- FSEOG - Federal Supplemental Educational Opportunity Grants
- FWS = Federal Work Study
- PLUS = Parent Loans For Undergraduate Students
- COA = Cost of Attendance
- FFEL = Federal Family Education Loan
- LEAP = Leveraging Educational Assistance Partnership
- SSIG = State Student Incentive Grant
- CPS = Central Processing System
- SAR = Student Aid Report
Where to Begin
Feel as though you've been thrown into a den of ravenous acronyms and aren't sure where to begin applying for financial aid? Begin with FAFSA. To apply for an allotment of financial assistance from the federal government, every student must submit their Free Application for Student Aid. After you submit your FAFSA, it is distributed to the Central Processing System where several federal agencies like the Social Security Administration and the Department of Immigration verify the information submitted. After your information has been evaluated, the government determines your level of need and, subsequently, how much aid you are eligible to receive and where the aid will come from. The most basic formula for determining financial need is the COA minus the EFC. The remaining amount is equal to the funding that the government determines to be in need of. FAFSA gives students and parents access to the FSA funds available. To clarify, FAFSA is not the financial aid itself: FAFSA is the form with which students request financial assistance from the government. Even if you are unsure of what aid you will receive from FAFSA, it is still a good idea to submit your form.
Each year the funds available in the federal assistance programs fluctuate; more often than not, the funds available are lower than the actual need for aid. The fluctuations in funding are caused by changes in our economy and college enrollment rates. The amount that each student is given is influenced by the availability of funds for a given year.
Behind the Scenes
When you submit your FAFSA form, the government decides exactly how much aid you qualify for and then determines where the aid will come from. Typically, the aid is drawn from a combination of assistance programs and expects that either the students or the parents also have the option of taking out a student loan. A typical financial aid package may be comprised of a Pell grant, a state need-based grant, a SEOG, FWS, a direct loan and a Perkins Loan. Students are not obligated to return the money received in the form of grants, however, any funds supplied by the FSL must be repaid.
Federal Student Loan Programs
You can take advantage of FSA programs by receiving assistance from FFEL or a Direct Loan, whichever is designated by the university you attend.
FFEL program relies on a private lender, such as a bank or credit union, to subsidize the loan. A Direct Loan is different: The government is responsible for subsidizing such loans directly. For the students that receive one of these loans, the only notable difference is where the money is returned to.
The best thing about a Pell grant is that it is essentially a gift from the federal government. Any student who has an unmet financial need qualifies to receive assistance from this program. The size of the grant is contingent upon three factors: the cost of attendance, enrollment status, and the EFC. Though a part-time student will receive a lower grant than a student with full-time status, he or she is still eligible for assistance. Typically, Pell grants are only available to undergraduate students that do not already have a degree.
LEAP is vehicle through which your state provides financial assistance for students in need. This program was designed so that the financial contributions made by your state will be matched by the federal government. The primary role of this program is to provide grant money that is accessed through campus-based programs.
Campus-Based Financial Aid Programs
There is a notable difference between federal aid and the assistance provided by the three campus-based programs. If the federal government determines unmet need in a FAFSA applicant, that student gains access to any available aid offered through federal programs. This does not mean, however, that the student will be eligible for any of the federal assistance administered by the college or university through a campus based program. When you submit your FAFSA form, the government does not calculate the equity of your parents homes into the EFC, but universities do. This means that many students who the government deems eligible for financial aid are less likely to receive assistance through a campus-based program. The difference in these calculations is used to separate the needy students from the extremely needy students.
If you are over the age of 24, married, or have children, you are classified as independent. Federal Student Aid was designed to help send dependents without a network of resources to college. If you don’t qualify because of independent status, don't be discouraged as there are other forms of student loans available and scholarships that can be used toward your tuition as well. Additionally, if you carry veteran status or are a ward of the state, you are excluded from the FSA program. Keep in mind that drug abuse can impact your eligibility to receive aid. Any drug related convictions will disqualify you from the program unless you have undergone rehabilitation therapy in a state-approved institution.