Financial Aid Basics Flashcards

What is 'work-study' as a form of financial aid?

Answer: A federally funded program that provides part-time jobs for students with financial need to help pay education expenses

Federal Work-Study is a need-based program that funds part-time jobs, often on campus, allowing students to earn money to help cover educational expenses while attending school.

What does 'net price' mean when comparing colleges?

Answer: The estimated actual cost a student will pay after subtracting grants and scholarships from the total cost of attendance

Net price is the estimated cost of attendance minus grant and scholarship aid (gift aid that doesn't need to be repaid), giving a more accurate picture of what a family will actually need to pay or borrow.

What is the Student Aid Index (SAI), which replaced the Expected Family Contribution (EFC) in recent FAFSA updates?

Answer: A number calculated from FAFSA data used to help determine a student's eligibility for need-based financial aid

The Student Aid Index is a number generated from the information provided on the FAFSA that colleges use, along with the cost of attendance, to determine a student's financial need and aid eligibility.

What is a key advantage of grants and scholarships compared to federal loans when funding a college education?

Answer: They do not need to be repaid, reducing the amount of debt a student takes on after graduation

Because grants and scholarships are gift aid, they reduce a student's reliance on borrowed money, meaning less debt to repay with interest after graduation compared to relying on loans.

What generally happens to unsubsidized federal loan interest while a student is still in school?

Answer: Interest begins accruing immediately and the student is responsible for it, even before repayment starts

Unlike subsidized loans, unsubsidized federal loans begin accruing interest from the moment they are disbursed, and the borrower is responsible for that interest whether or not they are currently in school.

Why do financial aid experts recommend comparing college financial aid award letters carefully rather than only looking at the total aid amount?

Answer: Award letters mix grants, scholarships, work-study, and loans, and the proportion of each significantly affects the real cost and future debt

Two award letters with the same total dollar figure can differ enormously in actual value depending on how much comes from grants and scholarships versus loans that must be repaid with interest.