College is EXPENSIVE.

Depending on the school you attend, the total cost of a four-year degree can range from $42,240 (public college) to $150,600 (private college).

As a result, tuition has become a financial burden for all families, especially those who are low-income or middle-class.

So if you’re like most students, odds are you had to turn to the FAFSA for financial aid and may have already received your award letter.

Now what?

Well, if you’re also like most students, then you’re probably having a hard time understanding what your financial aid package means or what obligations or requirements you must satisfy.

This is where we come in!

This article was written to help students like you better understand your financial aid package so you can make well-informed decisions and increase your chances of graduating debt-free! 

Disclaimer: This article is not to serve as financial or legal advice. The information provided is based on my personal experiences and research so you must seek professional help and consider the best course of action for your unique situation.

What types of financial aid are available?

First, let’s talk about what “financial aid” is and what people mean by it.

Simply put, financial aid is any type of “financial” support that “aids” in the payment of costs associated with attending a university or college.

There are 4 types of financial aid: 

1. Grants
2. Loans
3. Scholarships
4. Work-Study

You may be offered one, some, all, or none of them. The point is the type of aid you receive will depend on your unique situation and what you choose to accept at the end.

Financial aid also comes from multiple sources such as the federal government, state, university, and private organizations.

1. Grants

If you’re fortunate enough to receive a grant, you do not have to repay any of it because it’s FREE money (with some exceptions)!

And it is for this exact reason why grants are the most sought-after form of financial aid.

Grants go directly towards your tuition and whatever is left over will be reimbursed into your bank account (or mailed to your listed address).

Keep in mind that grants can be renewed every year – you just need to resubmit your FAFSA. 

There are 4 types of grants:

• Federal Pell Grant
• FSEOG
• Iraq and Afghanistan Service Grant
• TEACH Grant

Federal Pell Grant

The Federal Pell Grant (also known as the Pell Grant) is the most commonly awarded grant and is based on financial need.

This grant is only offered to undergraduate students and is provided for a maximum of 6 years (12 semesters or equivalent) or until you obtain your bachelor’s degree, whichever comes first. 

Eligibility:

• Submit a FAFSA form
• Must be a U.S. citizen or eligible noncitizen
• Must register for the Selective Service
• Pursuing undergraduate study
• You do not already have a bachelor’s or professional degree
• Demonstrate exceptional financial need
• Have a valid SSN
• Have a high school diploma (or equivalent)
• Enrolled in an eligible, nonforeign school
• Not currently incarcerated

The maximum award amount for the 2021-22 academic year was $6,495. 

Although this amount will vary each year, there is still good news. If the trend holds, the cap is expected to increase by about $100-150 every year like it has been for the past 7 years!

Maximum Pell Grant per academic year:

• 2021-22 = $6,495
• 2020-21 = $6,345
• 2019-20 = $6,195
• 2018-19 = $6,095
• 2017-18 = $5,920
• 2016-17 = $5,815
• 2015-16 = $5,775
• 2014-15 = $5,730

Your award amount will depend on your (1) EFC, (2) CoA, (3) enrollment status, and (4) length of study.

This means a student who is attending college full-time and for the entire academic year will receive more funding than a student who goes to college part-time and for less than a year.

The Pell Grant is also awarded once per term and usually in equal amounts. 

It is typically applied to your tuition first and what’s leftover will be deposited into your bank account or mailed to your official residence.

FSEOG

The FSEOG is the shorthand name for the Federal Supplemental Educational Opportunity Grant and is the second line of defense after the Pell Grant.

This is because it is only awarded to undergraduate students with exceptional financial need and when the Pell Grant is not enough to cover the cost of attendance.

Eligibility:

• Submit a FAFSA form
• Be eligible for the Pell Grant
• Demonstrate exceptional financial need
• Enrolled at least part-time

The award amount ranges from $100 to $4,000 for a given academic year and is paid once per term (at least twice a year). 

Like the Pell Grant, it is typically applied to your tuition first and whatever is left over will be deposited into your bank account (or mailed to your residence).

The amount you receive will depend on (1) your financial need, (2) whether you already have other funding, (3) when you submitted your FAFSA, and (4) how much funding your college has left.

This is because the grant is distributed by the college itself; not the federal government. Colleges receive a large sum each year which is then distributed on a first-come, first-serve basis.

Note: Not all colleges receive FSEOG funding so check whether your college qualifies. For simplicity, I will assume your college qualifies for the grant.

Therefore, it is in your benefit to submit your FAFSA early! It is not uncommon for funding to dry up before the college deadline which means you won’t be able to receive this grant.

Unlike the Pell Grant, not all eligible students will get this grant.

Iraq and Afghanistan Service Grant

The Iraq and Afghanistan Service Grant (IASG) is a federal grant offered to students who did not receive the Pell Grant and are children of veterans who died during military service in Iraq or Afghanistan after 9/11.

Eligibility:

• Submit a FAFSA form
• Be eligible for the Pell Grant
• Your parent or guardian was a U.S service member who died in Iraq or Afghanistan after September 11, 2001
• You were under 24 years old or enrolled at least part-time in college when it happened

Although you cannot receive both grants, the maximum award for each is equal to the other so it doesn’t matter which grant you receive because they’re the same.

Note: If you qualify for the Pell Grant, your EFC will be zero and you will receive the maximum amount based on your eligibility. You will not get the service grant in this case.

Note: The service grant is separate from any additional benefits you may receive from the VA for families of veterans killed in military service, such as the GI Bill.

The service grant is distributed at least twice per academic year and leftover funds will be sent to you directly after tuition and fees.

TEACH Grant

This federal grant is formally called the Teacher Education Assistance for College and Higher Education Grant but is commonly referred to by its shorthand name.

Eligibility:

• Submit a FAFSA form
• Satisfy the basic requirements for federal aid
• Enrolled in an eligible program
• Meet the GPA and test requirements
• Complete TEACH Grant counseling
• Sign the service agreement

The TEACH Grant awards up to $4,000 per year to undergraduate, post-baccalaureate, and graduate students pursuing a teaching career in K-12 education.

As part of the service agreement you signed, you are required to teach a high-need subject at a low-income school full-time for four years.

Eligible subjects include:

• Bilingual education
• English as a second language (ESL)
• Foreign language
• Math
• Reading
• Science
• Special education

If you fail to obligate this 4-year teaching commitment, all of the funding you received from this grant will be converted into an unsubsidized loan and you will be required to pay all of it back with interest.

2. Loans

Plain and simple, loans are “borrowed money” that must be repaid with interest.

They can be offered with other forms of financial aid as a supplement or without if no other options are available.

You can take out student loans with the federal government or with financial institutions but we’ll just focus on federal loans because they offer more benefits, have greater flexibility, and are less expensive.

There are four types of federal student loans: 

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans
• Direct Consolidation Loans

If you do decide to take out loans, be sure you understand the terms and conditions because they will be expensive and can take decades to pay off.

According to most estimates, it takes about 20 years to repay student loans (that’s about your age)!

It doesn’t matter which loan you accept because you must complete every general requirement as well as the requirements specific to each loan.

General Requirements:

• Submit a FAFSA form
• Be a U.S. citizen, national, or permanent resident
• Enrolled at least half-time
• Have not defaulted on a prior loan
• Maintain satisfactory progress in your program
• Complete entrance counseling (online course)
• Sign an MPN (terms of agreement)

To satisfy the general requirements, you must complete an online course (entrance counseling) that will teach you everything you need to know about your loan and how to repay it.

You will also be required to sign an MPN, which is a legal document, to acknowledge that you understand the terms of agreement and your obligation to repay your loans.

Keep in mind that you will also be responsible for paying interest and loan fees once you accept your loans. 

In a nutshell, interest is a fee you pay for borrowing the money. 

On the other hand, loan fees are small deductions made to your disbursement (like a tax). This means the amount you actually receive will be smaller than what you asked for. 

Note: Your interest is still based on the loan amount you requested, not the amount you received.

Direct Subsidized Loans

Direct Subsidized Loans are subsidized by the federal government which means you don’t pay interest while (a) in school, (b) within the grace period, or (c) during a deferment period.

Eligibility:

• Submit a FAFSA form
• Enrolled in an undergraduate program at least half-time
• Demonstrate exceptional financial need
• Your school must be in the Direct Loan Program

This is a huge benefit because it is possible to just repay the principal (amount you actually borrowed) without ever paying interest!

Note: This is assuming you start making repayments during those optional periods.

However, these loans are only available to undergraduate students with exceptional financial need.

The maximum amount you can borrow for a given year is $5,500 and will depend on your (1) grade level, (2) dependency status, and (3) the limit set by your college.

For example, a third-year student can borrow more in loans than a second-year or first-year student ($5,500 vs. $4,500 vs. $3,500).

Your subsidized loan will be applied to your tuition first and what’s leftover will be deposited into your bank account (or mailed to your address).

Currently, the interest rate for the 2021-22 academic year sits at 3.73% while the loan fee is 1.057% of the loan.

Direct Unsubsidized Loans

Direct Unsubsidized Loans are federal student loans that are not subsidized, which means you are solely responsible for paying interest the moment you receive it.

Eligibility:

• Submit a FAFSA form
• Enrolled in a program at least half-time
• Your school must be in the Direct Loan Program

These loans are available to undergraduate and graduate/professional students, and you are not required to demonstrate financial need.

The maximum amount undergraduate students can borrow ranges from $2,000 to $7,000 each year while for graduate and professional students it is up to $20,500.

The amount offered to you will depend on your (1) grade level, (2) dependency status, and (3) the limit set by your college.

Generally speaking, independents and graduate/professional students can borrow more in loans than dependents and undergraduate students, respectively.

The 2021-22 interest rate for undergraduate students is 3.73% while for graduate and professional students it is 5.28 percent. You must also pay a loan fee which is 1.057% of the loan.

Your unsubsidized loan will be applied to your tuition first and whatever is leftover will be deposited directly into your bank account (or mailed to you).

Direct PLUS Loans

Direct PLUS Loans are federal student loans available to graduate/professional students (Grad PLUS Loan) and parents of dependent undergraduate students (Parent PLUS Loan).

Eligibility:

• Submit a FAFSA form
• May need to complete the Direct PLUS Loan application (check with your college)
• Meet general eligibility for federal student aid
• Biological, adoptive, or stepparent of dependent (Parent PLUS Loan only)
• Enrolled in a program at least half-time (Grad PLUS Loan only)
• Your school must be in the Direct Loan Program
• Pass a credit check (or satisfy additional requirements)

These loans are unsubsidized so you are solely responsible for making payments as soon as you receive the full loan amount.

However, if you’re a graduate or professional student, you don’t need to start making loan repayments during the grace period. 

On the other hand, if you’re a parent, you can request a deferment so you don’t have to make payments while your dependent is enrolled at least half-time or during the six-month grace period.

Note: Interest will still accrue on your loan even during times you’re not required to make payments and it can become capitalized.

Your eligibility is not determined by financial need but you must undergo a credit check (if you have bad credit, you must meet additional requirements).

The maximum amount you can receive for either PLUS loan is the total CoA minus any financial aid you or your dependent have received.

When your PLUS loan is disbursed, it will go towards your tuition first and whatever is left over will be sent directly to you.

The 2020-21 interest rate for both loans is 5.30% while the loan fee is 4.228% of the loan.

Note: The current interest rate (2021-22) is not available on the official website but it is projected to be 6.284 percent.

Direct Consolidation Loans

Direct Consolidation Loans are loans that bundle all of your current federal student loans into a single “consolidated” loan.

As a result, you will only need to make one monthly payment, and the interest rate you pay will be the average of the consolidated loans (plus a 0.125% increase).

Eligibility:

• Submit the Direct Consolidation Loan Application
• Consolidated loans must be an eligible federal student loan
• Consolidated loans must be in repayment or the grace period

Keep in mind that you must start making payments after 60 days of receiving the full funds of your consolidated loans.

However, if the loans you consolidated are still in the grace period, you can indicate on your Direct Consolidation Loan application that you want to start payments at the end of that period.

Should I take out loans?

This is a major decision you have to make with your family because loans will follow you for many years after you graduate.

It is considered good practice to rely on grants, scholarships, and work-study before you even think about taking out loans. This way, you increase your odds of graduating debt-free! 

You can also enroll in your university’s monthly payment plan since it is typically much cheaper than taking out a loan and you don’t have to pay your tuition all at once.

Of course, everyone will have a different situation and may need to take out loans. 

If loans are your only option, then you should first consider federal loans over private ones because they generally have lower interest rates, flexible repayment plans, loan forgiveness options, and consumer protection policies.

Also, subsidized loans are usually a better option than unsubsidized loans because the U.S government will cover your interest payments while you’re in school or during the grace period.

Below is the order in which I would accept my financial aid:

Here’s why:

Grants and institutional scholarships are the best types of financial aid because they’re “free money” and you don’t have to do anything extra to get them.

However, grants are slightly better since you usually get more money.

Work-study comes in third because it requires a minimal amount of effort and using it won’t change your financial aid package.

Outside scholarships are another great way to pay for tuition, especially if you don’t qualify for aid through FAFSA, but they require a significant amount of effort and will affect your financial aid package.

Employment is below work-study even though they’re similar because any work that is not work-study will impact your financial aid package.

Lastly, you have different loan options. PLUS loans and private loans are at the bottom because they have higher interest rates and are therefore more expensive.

But between the two, PLUS loans are generally better because you still enjoy some of the benefits of using a federal student loan hence its higher ranking.

Which loans are better?

Subsidized loans are the most popular option because your interest payments are waived while you’re in school and during the six-month grace period. 

Also, they generally have better terms compared to other loans.

However, unsubsidized loans have their own benefits, such as not requiring financial need and allowing students to borrow a higher amount, which can be helpful if you’re a graduate or professional student.

Consolidated loans can also be a good option if you are responsible for making multiple loan payments. Here, they will be rolled into a single monthly payment.

Whatever your choice may be, keep in mind that every student will have a different financial situation that is unique to them so consider the pros and cons before you choose a loan.

And remember to always seek professional help and consult with your family because student loans are going to be one of the most important decisions you will ever make in your life.

3. Scholarships

Scholarships are like grants because they are both “free money” and do not need to be repaid.

But where they differ is that scholarships are based on merit, such as academic achievement or leadership, and generally do not consider financial need.

There is also no cap on how many scholarships you can win so the total amount can exceed the CoA for the academic year.

Scholarship awards may be conditional and can only be used for specific purposes like paying for tuition.

On the other hand, some scholarships are more flexible and can be used to pay for any college-related expense, such as room and board, textbooks, and school supplies.

Related: “25 Strategies I Used to Win Over $55,000 in Scholarships (And So Can You!)”

Related: “19 Red Flags to Look Out for When Applying to Scholarships”

What types of scholarships are there?

Most scholarships are intended for certain applicants and will have restrictive eligibility requirements.

This means you won’t be eligible for every scholarship opportunity, but there will still be many that you can apply for. 

There are ten types of scholarships:

• Academic – meet minimum GPA and/or test score requirements.
• Athletic – demonstrate exceptional athletic ability in respective sport (including esports).
• Community Service – demonstrate how and what you have done to improve your community.
• Creative – submit an art or video submission to demonstrate your artistic ability.
• Demographic – be a member of an underrepresented or marginalized group.
• Hobby/Interest – have a specific interest or hobby that aligns with the scholarship-awarding organization.
• Leadership – articulate the breadth and depth of your leadership experience.
• Need-Based – demonstrate financial need.
• Occupation-Specific – major in a certain program or have a specific career goal.
• Regional – reside in a specific geographical region (e.g., city, state, county, country).

Where can I find scholarships?

Finding scholarships has never been easier because there are so many resources at your fingertips.

Here are the seven resources you can use:

1. Google search
2. Scholarship databases
3. Extracurricular activities
4. School website
5. Financial aid/scholarship office
6. Guidance counselor/academic advisor
7. Departments

The first resource you should use is Google because most, if not all, scholarships are posted there since it is the world’s largest and most used search engine.

For example, the keyword “scholarships” has over a BILLION search results, which comes to show the endless number of scholarship opportunities you can find online.

By the same token, you want to be systematic in your search and filter out scholarships you are not eligible for to save time.

Your second resource is scholarship databases which are useful because thousands of scholarships are added regularly and can be filtered by keywords and phrases.

Here are my favorite scholarship databases:

• BigFuture
• Bold.org
• Chegg
• Fastweb
• Peterson’s
• Scholarships.com

Some databases require registering for an account to provide personalized scholarships, but you can avoid this by clicking on the scholarship directory at the bottom of each website.

Your extracurricular activities are another resource you can take advantage of in your search for scholarships and include the following:

• Community-based organizations
• Internships
• Professional organizations
• Religious organizations
• Student organizations
• Workplace

Lastly, your institution is also a great resource because it likely has a scholarship master list on file, which you can request through your guidance counselor, the scholarship office, or the school website.

If you’re a college student, you can also drop by the department of your major to inquire about department-wide scholarships. 

How do I apply for scholarships?

Many scholarships, especially institutional ones, will require you to submit the FAFSA to determine your eligibility and financial need.

Other common requirements include submitting essays, transcripts, letters of recommendation, test scores, a resume, and an application.

Of course, these are the most common requirements so some scholarships may require additional items while others may require less.

When should I apply for scholarships?

Many students apply for scholarships by junior/senior year of high school while they prepare for college applications but you can start as early as freshman year.

And although scholarships are offered year-round, there are optimal times when you should apply.

Any time during the academic year is ideal, but the fall is the most optimal period because it maximizes the number of scholarships you can apply for in a given year.

Note: Some experts recommend submitting scholarship applications by October 15th.

Additionally, since most scholarship programs receive their funding during the fall, scholarships are awarded on a first-come, first-serve basis.

This means funding will likely be depleted by the end of the academic year so it is in your best interest to apply as early as possible, preferably in the fall or spring.

Related: Join our Facebook group to access scholarship content, resources, and updates.

How will scholarships affect my financial aid?

When you win an outside scholarship, you are obligated to report it to your school so they can readjust your financial aid package.

In most cases, this means reducing your financial aid by the scholarship amount so your net gain becomes zero.

This practice is called scholarship displacement and occurs because colleges are barred by law from over-awarding students otherwise they may lose their federal funding!

However, scholarship displacement isn’t entirely evil and could actually be beneficial to you. 

For example, many colleges will reduce your loans and work-study before ever touching your grants and scholarships so you could essentially graduate debt-free!

There are three ways your institution can deal with outside scholarships:

1. Reduce all forms of financial aid equally.
2. Reduce grants and institutional scholarships first.
3. Reduce loans and work-study first.

Every school is different so reach out to your institution and inquire about its policy on scholarship displacement – or how it deals with external scholarships. 

Should I even apply for scholarships?

It depends.

There is no one-size-fits-all answer because it really depends on your situation, what your goals are, and what skillsets you have.

Here’s a good rule of thumb:

1. If you come from a low-income family, then focus on need-based aid (grants).
2. If you qualify for need-based aid but your financial aid package includes loans, then you may consider merit-based aid (scholarships).
3. If you have a strong academic background and don’t qualify for need-based aid, then focus on merit-based aid (scholarships).

To summarize, you should not apply for scholarships if your financial aid package already covers your entire CoA without loans. 

However, you should consider applying for scholarships if you are offered loans or you don’t qualify for financial aid through the FAFSA.

If you received a financial aid package, make sure you read your school’s policy on scholarship displacement before you apply for scholarships because it could make the difference between saving or losing money.

For example, if your school reduces loans and work-study first, then it would be a good idea to apply for scholarships until you replace them.

This way, your financial aid will consist of only “free money” so it is possible for you to graduate debt-free!

On the other hand, if your school reduces grants and institutional scholarships first or equally, then you should consider full-ride scholarships to avoid taking out loans (or don’t apply at all).

Is it possible to minimize scholarship displacement?

Yes, there are some strategies you can use to protect your grants and institutional scholarships from being reduced in the event you do win an outside scholarship.

First, reach out to the financial aid office to see what your options are and determine a course of action that minimizes the impact of scholarship displacement.

Second, ask your scholarship provider if they could disburse your award into multiple payments over four years, which will minimize reductions to your financial aid.

For example, if you’re awarded $50,000 in financial aid and you won a $40,000 scholarship, break it up over four years. This way, you will only incur a $10,000 reduction each year instead of $40,000 at once thereby spreading the risk.

You can also ask your scholarship provider to defer award payments to a later year or until you graduate. In the latter case, you can keep 100% of your financial aid and outside scholarships.

4. Work-Study

This program is part of the Federal Work-Study Program and offers part-time employment to undergraduate, graduate, and professional students with financial need.

Eligibility:

• Submit a FAFSA form before the priority deadline
• Demonstrate exceptional financial need
• Enrolled at least part-time
• Maintain satisfactory progress in your program
• College must participate in the Federal Work-Study Program

The work-study amount you are awarded will depend on (1) when you apply, (2) your level of financial need, (3) funding at your school, and (4) other financial aid you received.

It is also awarded on a first-come, first-serve basis so you have to submit your FAFSA before the priority deadline to qualify!

A major benefit of the work-study program is that these positions must consider your class schedule when determining your work schedule. 

It is also common for students working on-campus to be able to study and do homework while working.

Lastly, you can add this work experience to your resume (bonus if it’s related to your major or career goal).

Will I be given a job?

No, a job will not be assigned to you. 

Your award letter only indicates the maximum amount you can earn through the work-study program but you must first secure an eligible job to receive that money.

Most schools will have a job portal just for work-study positions so check there or ask the financial aid office for assistance.

You will have the option to work on-campus or off-campus, which differs in the type of work and responsibilities.

Specifically, on-campus jobs tend to focus on research and administrative work while off-campus jobs focus on community service.

It is a good idea to use this opportunity to gain work experience that is related to your major or career goal.

Keep in mind that available jobs become scarce as the semester progresses so if you apply too late or don’t find a job in time, your work-study amount will be wasted.

How much will I get paid?

Your pay will vary depending on your (1) job, (2) experience, (3) location, and (4) grade level, but the rate will at least be at the federal minimum wage ($7.25 per hour).

As a third-year college student, I worked as a research assistant and made $15 an hour (10 hours per week) in California.

The average amount students earned from work-study was $1,847 in 2020. Keep in mind that you can only work as much as your award amount (converted into hours). 

For example, if you are awarded $1,500 for work-study and found a position that pays $10 per hour then you can only work a total of 150 hours.

If you’re an undergraduate student, you will be paid per hour but you will also have the option to be paid a salary if you’re a graduate student.

In terms of payment, you will be paid at least once per month (I was paid every two weeks) by check, direct deposit, or as credit to your student account.

Glossary

• Award Letter – referred to as your “financial aid package” and is the financial aid offer made to you by your college (combination of federal, state, and institutional aid).
• Capitalized Interest – process of adding your interest to your principal due to a missed payment, which will increase your future monthly payments.
• CoA – stands for cost of attendance and refers to the “total cost” of attending college for a single academic year (e.g., tuition, fees, room and board, textbooks).
• Deferment – temporary suspension of student loan repayments for a fixed period of time (interest may or may not accrue during this time).
• Dependent (tax) – defined as any unmarried person under the age of 24 that receives more than half of his or her support from an independent.
• Direct Consolidation Loan – refers to a type of federal student loan that allows borrowers to combine eligible student loans into a single payment plan.
• Direct Subsidized Loan – also referred to as the “Stafford Loan” and is a subsidized federal student loan that is available only to undergraduate students with financial need.
• Direct Unsubsidized Loan – also referred to as the “Stafford Loan” and is an unsubsidized federal student loan that is available to undergraduate and graduate students (financial need not required).
• EFC – stands for expected family contribution and is an estimate of how much you and your family are “expected” to cover your CoA out-of-pocket.
• Entrance Counseling – refers to the online course you must complete in order to borrow student loans from the federal government.
• FAFSA – stands for the Free Application for Federal Student Aid and refers to the online application you must submit to be considered for federal, state, and institutional aid.
• Federal Financial Aid – refers to federal grants, loans, and work-study; there are no federal scholarships offered through FAFSA.
• Federal Pell Grant – federal grant offered to low-income students to cover the costs of attending an undergraduate program.
• Federal Student Loans – student loans offered by the federal government, which generally have lower interest rates and flexible repayment options compared to private loans.
• Financial aid – umbrella term used to refer to any form of federal, state, institutional, or outside financial assistance (e.g., grants, loans, scholarships, work-study).
• Financial aid package – refers to the financial aid offered to you by your school and can include any type or combination of aid.
• FSEOG – stands for the Federal Supplemental Education Opportunity Grant and is a federal grant awarded to low-income students with unmet financial need not covered by the Pell Grant.
• GPA – stands for grade point average and reflects a student’s overall academic performance on a 4-point scale (can also be on a 5-point scale).
• Grace Period – refers to the six months after graduating, dropping out, or falling below half-time; you do not need to make loan repayments during this time.
• Grad PLUS Loan – type of PLUS loan that is offered to graduate and professional students.
• Grants – broad term used to refer to any form of financial aid that does not need to be repaid (with some exceptions) and is typically awarded based on financial need.
• Independent (tax) – defined as any person who is at least 24 years old, married/separated, financially supporting a dependent, homeless, an emancipated minor, a service member/veteran, or a graduate student.
• Interest (loans) – fee you pay on top of your loan; it can be calculated by taking the interest rate and multiplying it by the amount you borrowed.
• Iraq and Afghanistan Service Grant – offered to students who are children of fallen service members in Iraq or Afghanistan and did not receive the Pell Grant.
• Loan Fee – refers to the tax-like fee that is deducted from your disbursement so the amount you receive will be slightly less than what you asked for.
• Loans – borrowed money that needs to be repaid with interest and within a fixed period of time.
• Merit-Based Scholarships – type of scholarships that are awarded based on academic achievement, leadership, community service, or some other criteria.
• MPN – stands for the master promissory note and refers to the terms of agreement you must sign in order to take out student loans with the federal government.
• Need-Based Aid – refers to federal grants and institutional scholarships that are awarded based on financial need.
• Need-Based Scholarships – type of scholarships that are awarded based on financial need.
• Outside Scholarships – refer to scholarships that are awarded by organizations “outside” of your college or the federal government, such as corporations and associations.
• Over-award – occurs when your financial aid amount exceeds the CoA, which is usually due to the addition of outside scholarships.
• Parent PLUS Loan – type of PLUS loan that is offered to parents of undergraduate students. 
• Principal (loans) – original amount you borrowed from a lender (e.g., federal government, banks, credit unions).
• Priority Deadline – refers to the early deadline students must submit their FAFSA by to be considered for certain types of financial aid, such as work-study.
• Private (Student) Loans – loans offered by banks, credit unions, and other financial institutions usually at a relatively high interest rate.
• Private Organizations – one of the two sources of “outside scholarships” and refers to corporations, businesses, foundations, etc.
• Public Organizations – one of the two sources of “outside scholarships” and refers to government agencies whose scholarship programs are not affiliated with the FAFSA.
• Scholarship Displacement – refers to the act of removing previously offered financial aid to offset the amount of outside scholarships, which will result in a zero net gain. 
• Scholarships – monetary gifts that do not need to be repaid and are awarded based on merit or financial need.
• Selective Service – all men in the United States between the ages of 18-25 years old must register into this database and is a requirement for federal student aid.
• SSN – refers to your social security number and is one of the required documents you need to submit your FAFSA.
• Stafford Loans – refer to the Direct Subsidized Loan and Direct Unsubsidized Loan.
• Subsidized Loans – type of loan that needs to be repaid with interest unless you’re enrolled in school or during the grace period.
• TEACH Grant – stands for the Teacher Education Assistance for College and Higher Education Grant and is intended for students pursuing a teaching career in a high-need field and a low-income area.
• Unsubsidized Loans – type of loan that needs to be repaid with interest.
• Work-Study – federal work program available to undergraduate and graduate students with financial need, and is paid an hourly rate equal to or higher than the federal minimum wage.