Applying for financial aid can be a pretty complicated process, especially the first time around. You’ll run into a lot of phrases you’ve never heard before, and there are enough different types of scholarships, grants, and loans that it can be hard to figure out which options are best for you. To help you out, we’ve prepared this guide to some commonly used financial aid terminology.
Part 1: General Terms
Part 2: Grants
Part 3: Scholarships
Part 4: Loans
Part 5: Other Student Aid
Accredited: An accredited post-secondary school has been reviewed by one of a number of agencies and has been determined to provide a quality education. The U.S. Department of Education recognizes several accrediting agencies, and schools not accredited by one of these agencies cannot offer federal financial aid.
Adult Learner: At the Maine Community Foundation, a student needs to meet at least one of the following criteria to be considered an adult learner:
- be over the age of 25
- have delayed enrollment in college after high school for more than one year and for reasons other than a planned gap year (such as AmeriCorps, etc.)
- attend college part time, work full time (35 hours per week or more) while being enrolled
- have dependents other than a spouse
- be financially independent from parents
- have not received a standard high school diploma (completed with a GED/HiSET or certificate of completion).
Award Letter: A letter from a school listing what type and amount of financial aid you are being offered. Information about grants, loans, scholarships, and work-study awards, as well as school costs and how much your family is expected to pay, are typically included in the award letter.
Cost of Attendance: A school’s estimate of how much it will cost to attend for one academic year. Cost of Attendance typically includes tuition, room and board, books and supplies, personal costs, and transportation.
Dependent Student: If you are supported at least 50 percent by your parent(s), you are considered a dependent student. If you are a dependent student, your parents’ income and assets will be included as resources in financial aid calculations.
Expected Family Contribution (EFC): The EFC is the amount of money you and your family can contribute to pay for your education. It is determined by analysis of the FAFSA and/or an institutional financial aid application.
FAFSA (Free Application for Federal Student Aid): This form must be filled out if you wish to apply for financial aid from the U.S. federal government, including both federal loans and grants. All colleges require this form. You can get a copy of the FAFSA from your guidance office and mail it, or fill it out online. A step-by-step guide on how to fill out the FAFSA is available here.
Financial Aid Package: The combination of grants, loans, and work-study that a college offers you to help pay for college costs.
Financial Need (sometimes called Demonstrated Need): The difference between the Cost of Attendance and the Expected Family Contribution (EFC).
Free Money or Gift Aid: Student financial assistance that does not need to be repaid. Grants, scholarships, work-study, and assistantships are forms of gift aid.
Graduate School: A program that offers advanced degrees for students who have already earned a bachelor’s degree. Graduate degrees include the master’s degree and the doctoral degree.
Independent Student: If you are least 24 years old; married; a graduate or professional student; have a legal dependent who is not a spouse; are an Armed Forces veteran; or you are orphan or ward of the court, you qualify as an independent student. Note that you only need to meet one of these criteria to be considered independent. Financial aid calculations for independent students do not include parents’ income or assets.
Post-Secondary School: A college, university, or technical/trade school.
Professional School: A graduate program that results in a specialized professional degree. Medical school, law school, and veterinary school are types of professional schools.
Satisfactory Academic Progress: Your school will require you to maintain reasonable grades and attend a specific number of classes to continue receiving financial aid. Each school determines what constitutes satisfactory academic progress, and some scholarships may have different requirements than the school does. Be sure you know what kind of grades you need to get and how many classes you need to take to keep your aid. Some of our scholarships require a higher GPA than your school might; note this when submitting your application.
Student Aid Report (SAR): A document that summarizes the financial information you provided on your FAFSA and lists your Expected Family Contribution (EFC). Many Maine Community Foundation scholarship applications require you to submit a copy of your Student Aid Report. See a copy of a Student Aid Report here.
Institutional Grant: A need-based grant given by a college.
Pell Grant: A need-based grant given to undergraduate students by the federal government.
Supplemental Educational Opportunity Grant (SEOG): A need-based grant given to students who have already qualified for a Pell Grant. SEOGs are not available at all schools.
Merit-based Scholarship: A scholarship that is awarded based on a student’s academic performance, special talent, leadership potential, or other criteria defined by the awarding institution.
Need-based Scholarship: A scholarship that is awarded based on a student’s and/or family’s financial situation.
Parent PLUS Loan: A federal loan program available to parents of dependent undergraduate students. The amount that can be borrowed is limited to the difference between the Cost of Attendance and other financial aid that has been awarded.
Perkins Loan: As of September 2017, no Perkins Loans will be offered to new or returning college students. Students currently receiving Perkins Loans or those who are awarded new Perkins Loans for 2015-2016 will be unable to renew them for the 2016-2017 academic year. Check with your college financial aid advisor for your status.
Private Loan: A loan obtained through a commercial lender such as a bank. Private loans are not subsidized by the government, and the government does not define the terms of the loan. These tend to charge higher interest rates than loans backed by the government.
Student PLUS Loan: A federal loan program for graduate and professional students. The amount that can be borrowed is limited to the difference between the Cost of Attendance and other financial aid that has been awarded.
Subsidized Stafford Loan: A low-interest loan for college education that is subsidized by the federal government and does not start charging interest until after the student graduates. Eligibility for subsidized Stafford Loans is determined by financial need.
Unsubsidized Stafford Loan: A low-interest loan for college education. Unlike subsidized Stafford Loans, the unsubsidized loan is not need-based. Although loan payments are not required until after the student graduates or leaves school, interest charges will accrue (accumulate to be paid at a later date) while the student attends school.
For more information about student loans, visit the Finance Authority of Maine (FAME) website.
Other Student Aid
Research Assistantship: A financial aid program that allows a graduate student to work as a professor’s research assistant in return for a full or partial tuition waiver and, sometimes, a living expense stipend. Research assistantship awards are typically merit-based.
Teaching Assistantship: A financial aid program for graduate students that allows them to work as a teaching assistant in return for a full or partial tuition waiver and, sometimes, a living expense stipend. Teaching assistantship awards are typically merit-based.
Work-Study: A program subsidized by the federal government that helps pay college students to work on campus. Work-study awards are need-based and are offered to low-income students as part of a financial aid package. They are paid directly to the student in the form of a paycheck; they are not applied to the student's tuition balance.