Now you've got your aid report, but what does it mean? Let's break down some common, and commonly misunderstood, financial aid terms. Visit Part 1 for definitions of financial aid acronyms.
Grant: A grant is money that you receive from the government or from the school that you do not have to pay back. Most often, grant money just appears as a credit on your tuition bill. You will probably not receive a check. (Exceptions to this are programs like the GI Bill, which grant money for off-campus housing and incidentals.)
Pell Grant: The Pell Grant is a federal grant you receive based on your EFC and financial need. For the 2014-2015 school year, the full amount of the Pell Grant is $5,730, although you may be awarded a smaller amount, based on your individual circumstances.
Scholarship: You may receive scholarships from your college or from outside sources. Scholarship money is usually not given as a check to the student but rather sent from the source to the financial aid office and credited against your tuition. Some scholarships do pay the student directly, but most do not. It’s a good idea to write a thank you note to any organization that provides you a scholarship, especially if the scholarship is renewable.
Subsidized loan: A subsidized loan is a loan either given by or underwritten by the federal government. Unlike regular, unsubsidized loans, the government pays the interest that would accrue while the recipient is either in school, in a grace period or in deferment.
Unsubsidized loan: Like a car loan or mortgage, an unsubsidized student loan accrues interest immediately, even though they often don’t require payment to begin immediately.
Work-study: The federal government subsidized the work-study program by giving money to the college to help pay campus employees who are eligible for work-study. Even if you are awarded a certain amount of work-study money in your financial aid package, it is the student’s responsibility to find a work-study-eligible job and get hired. The job is not assigned to you. You will be paid an hourly wage, either weekly or monthly, and be able to use that money for incidental expenses (i.e. cash).
You can find additional information on the types of federal aid available on this video from StudentAid.gov.
Lessa Scherrer is an college admissions consultant who has worked with college-bound students for many years. She is a member of NACAC and WACAC and also teaches ACT Prep, speed-reading, college study skills and college-level writing.
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