College Financial Aid Terms You Need to Know

Whether you’re in high school beginning to compile your college list or a graduating senior comparing your college offers, it is important to figure out the true cost of college and how to pay for it.

Where to start? Learn the language! Here is a glossary of terms you’ll need to know.


Estimating College Costs


Cost of Attendance (COA)

This is sometimes referred to as the “sticker price” of a college. It refers to the full cost of attending college in a given school for a year. (You may see this as “COA” on your award letter.) Colleges are required to estimate this for you. It includes “direct costs” that colleges charge you like tuition and room and board. Colleges also try to estimate your “indirect costs” – all the costs that you may need to pay to stay in school, including books, transportation, living expenses, and entertainment. Be sure to think about everything you may need to pay for.


Net Price

This is your personalized cost to attend a school after factoring all aid that you are eligible to receive that you do not have to pay back. This includes college grants, state grants, scholarships, other forms of gift aid as well as tuition waivers. Student loans are not factored into the net price, because you have to pay them back.

Learn More: Sticker vs. Net Price: Finding Colleges You Can Afford


Federal Student Aid Estimator

The Federal Student Aid Estimator is the best tool for figuring out how much federal aid (grants and loans) under the new FAFSA. It’s simple and quick to use and it gives you clear information about how much and what types of federal aid you’re likely to receive.

Learn More: How to Estimate Your Financial Aid Package


Net Price Calculator

Every college is required to have a net price calculator on its website. The calculator will ask a few simple questions and offer an estimate of what you will pay after getting federal aid and college grants. There are financial questions similar to those on the FAFSA. Net price calculators may also ask for your grade point average (or GPA) as well as any SAT or ACT scores. If a net price calculator asks you for academic information, the calculation takes into account your eligibility for college merit aid that is awarded based on academic achievements.

Learn More: Five Tips for Using a College Net Price Calculator


Government and College Aid


Federal Student Aid

Federal Student Aid is a government agency run by the U.S. Department of Education. It is in charge of the FAFSA and the federal government’s grant and loan programs. Federal Student Aid provides more than $110 billion dollars of aid annually in the form of grants, work-study, and loans to help pay for college and career schools.


State Aid

Most states, if not all, offer scholarships and grants to help students pay for either pay for college or reduce college debt. The scope, eligibility criteria, and range of opportunities vary by state, so it’s important to know what agency runs your state programs and to reach out to see what help might be available to you. Check out our interactive map to get information about college grants in your state.

Pro Tip: States often offer various financial aid programs for food, healthcare, and other necessities. While applying for educational aid programs, check to see if you meet the requirements for additional aid that can help reduce the cost of your expenses while attending classes.



As readers of this website know, FAFSA stands for Free Application for Federal Student Aid. You must complete this form to be eligible for government grants and loans as well as most other forms of financial aid. The U.S. Department of Education uses the form to calculate how much you can pay for college, which in turn is used to determine how much aid you’re eligible to receive. Colleges use the FAFSA as a starting point to determine how much financial support a student will need to attend.

It’s never too early to learn about the FAFSA. Even if you have completed it in the past for yourself or an older child, you’ll need to re-learn everything because the federal government introduced a new FAFSA that is very different from the former version. Everyone seeking financial aid for the 2024-25 school year and beyond will need to complete the new FAFSA. Download and read our guide to learn all about the new FAFSA.


Student Aid Index

The Student Aid Index, or SAI, is a critical part of the new FAFSA. The SAI is a calculation that determines how much aid a student may be eligible to receive. Everyone who completes the new FAFSA will receive a personalized SAI. On its own, the SAI doesn’t give much guidance on how much federal aid a student may receive. The one thing to know is that the lower the SAI, the more federal aid you are likely to get. The SAI can go as low as -1500.

Learn More: How to Estimate Your Financial Aid Package Today


CSS Profile

The CSS Profile is a supplemental financial aid application that a select group of schools ask applicants to complete. It is administered by the College Board, the same organization that administers the SAT and Advanced Placement exams, and is designed to help colleges and universities get a more detailed understanding of each student’s financial status. Participating schools use the additional information to determine eligibility for grants and scholarships funded from their endowment and other sources.

Unlike the FAFSA, the CSS Profile is not free. College Board charges applicants a one-time fee (currently $25) to complete the profile and charges an additional fee (currently $16) for each participating school that you elect to receive the report. Some students may be eligible for a fee waiver.


Types of Financial Aid



A grant is money for college that you do not need to pay back. Grants may be given by the government (federal, state or local), educational institutions, and non-profit organizations. Some grants are for students with financial need. Other grants are awarded based on merit, for instance good grades, sport skills or musical talent. There may be additional criteria for some grants. For instance, state-funded grants often are only for use at in-state schools.



Like a grant, a scholarship is an award of money that you do not need to pay back. These can be used to cover the costs of tuition and school expenses. They may be awarded by a range of institutions – colleges and universities, organizations, corporations, and governments. Typically, scholarships are awarded based on a set of criteria that may take into account finances, but include other eligibility requirements such as good grades, extra-curricular activities, or community service. Some may be limited to students from a certain region or school, or who are a first-generation college attendee.

There are plenty of good scholarship opportunities to be found online – through general searches, on scholarship websites, and even on social media – but you’ll need to be vigilant. It’s important to distinguish between credible financial aid opportunities and the ones that promise you easy money. If it seems too easy or too good to be true, then trust your gut and move on.

Learn More: Where to Start on Big Scholarship Websites

Pro Tip # 1: You may come across “no essay” scholarships when doing your research. These may be advertised as “scholarships,” but they are really contests or sweepstakes that are set up to collect your information to sell to other advertisers and sometimes to lure you into paying for additional services. Do not waste your time. Even if there is some money that will be awarded, the chances are slim that you are going to be chosen among tens of thousands of applicants via a random selection process.

Pro Tip #2: For each college you apply to, check how they factor in scholarships from outside organizations. Many schools will reduce the amount of federal and institutional aid they’ll offer you by the amount of the outside scholarship.


Federal Work-Study

The Federal Work-Study Program funds part-time jobs, both on and off campus, for undergraduate and graduate students with financial need. Work-study is considered a form of financial aid that colleges offer in combination with grants and subsidized loans to meet a student’s financial need. If you see Federal Work-Study listed in your financial aid award letter, you are eligible, but not obligated, to seek out one of these jobs.

Learn More: Q&A What’s Federal Work-Study?



Fellowships are funded opportunities that may last from a few weeks to a few years and are more common at the graduate and postgraduate levels of education. They often focus on professional or academic development and are typically funded by an association, organization, institution, or government that sets the eligibility requirements. Fellowships are designed to support a range of pursuits such as research, training in a specific field, graduate studies, teaching, and sometimes even personal development. Typically, they are considered an honor to receive and are worth applying for when the right opportunity is available.


Student and Parent Loans


Student Loans

Students may borrow money to pay for their education expenses such as tuition, room and board, books and supplies. Loans are not free money. You must pay them back with interest.

The federal government offers two types of student loans: subsidized and unsubsidized loans, which are available to undergraduate and graduate students.

Subsidized loans are given to students who establish financial need based on their responses to the FAFSA. These loans do not accrue interest while a student is enrolled in school at least half-time. Unsubsidized loans are available to all students – regardless of financial need – and begin accruing interest as soon as you get the money. Federal loan dollars are given to the school you attend, which will use them to reduce the cost of your college bill. Federal student loans typically don’t cover the full amount of tuition as the government limits how much a student may borrow per year.

Pro Tip: Students may be tempted to seek out private loans from banks and other lending institutions. Proceed with caution! Private student loans may seem attractive because you may be able to borrow more than a federal loan, but the interest rates may be much higher and payback terms may be less flexible than what is offered to federal student loan borrowers.

Learn More:
Beginner’s Guide: Government-Backed Student Loans

Video: What You Need To Know About Loans


Parent PLUS Loans

Parents may borrow money from the federal government through the Parent PLUS program. Similar to federal student loans, Parent Plus loans are disbursed directly to the school that the student attends, which uses the funds to offset the cost of the outstanding college bill. Read our two-part series on Parent PLUS loans to understand the risks and possible benefits of this option:

For Parents: Plus Loans Are an Option but Proceed With Caution

Parents Plus Loans: Putting Off Payments and More Help


EDITED BY: Laura Zingmond