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Financial Aid Explained


FAFSA - Free Application for Student Aid

The FAFSA is used to apply for federal financial aid (grants, work-study, and loans). Also, many colleges, universities, and career schools use your FAFSA information to award state and college aid. The process is free. Never pay to apply for federal financial aid.

Create your FSA ID and shorten the time it takes you to complete the online FAFSA in October. You’ll find it at

2018-2019 Guide to Filing the FAFSA

What is a Cal Grant?

Cal Grants are funded by the State of California with a small portion of funding from the Federal Government through the Leveraging Educational Assistance Partnership Program (LEAP).

The awards do not have to be paid back. Electronic GPA verification are used to determine Cal Grant eligiblity after the FAFSA (Free Application For Federal Student Aid) has been submitted. 

In order to be considered for a Cal Grant, California public high schools and charter schools are required to submit a high school Grade Point Average (GPA) to the California Student Aid Commission by October 1 for all graduating seniors, unless the student or parent has opted out. (California Education Code section 69432.9) Students who do not opt out will have their GPA submitted to the Commission to be considered for a Cal Grant award. Students may print an opt out form from the CSAC website. Opt out forms are due to your counselor no later than September 30th of student's senior year.

The California Dream Act

WebGrants for Students (Cal Grant) 

Cal Grant Opt Out Form

Cal Grant Opt Out Form Spanish

Fill out a FAFSA online

Financial Aid Checklist


Assets: Anything that is owned. When determining financial need, assets include: cash, real estate, personal property, investments, savings accounts, etc.

Award Letter (Financial Award Letter): A letter that is sent to the student from the financial aid office outlining the financial aid package offered to the student. The student then needs to sign and return this letter to accept the aid that is offered.

Campus-Based Financial Aid Program: A financial aid program that is sponsored by the federal or state government, but administered locally by the individual schools; typically run by the school’s financial aid office.

Conditional Scholarship: A type of scholarship where specified conditions must be met, and, if they are not, the scholarship is revoked or converted into a loan.

Deferment: A postponement of the payment of the principal and the interest on a loan to a future date. Many of the federal loan programs have some sort of deferment program.

Dependent Student: A classification that says that the student is dependent on his or her parents for financial support.

Disbursement: The paying out of money from a scholarship, grant, or other source.

Dislocated Worker: A state agency must determine that a person has been unemployed for a specific amount of time, notified of termination, or previously self-employed but economic conditions resulted in job loss. If spouses or parents of aid recipients are classified as dislocated workers, the expected amount of family contribution may be less.

Education IRA: An account in which parents can deposit up to $500 a year that is slated specifically for future college expenses.

Eligible Non-Citizen: A government term for people who are not citizens of the United States, but through special circumstances still qualify for federal student assistance programs.

Eligibility: The degree to which a student qualifies for financial aid, usually expressed in a dollar figure; eligibility is based on a number of criteria.

Estimated Family Contribution (EFC): The estimated amount of money a student’s family can contribute to the student’s total cost of college; a standard formula, called the Congressional Methodology, is used to compute the EFC and combines both the parents’ and student’s estimated contributions; the total EFC figure is used in calculating a student’s eligibility for financial aid.

Federal Direct Student Loan (FDSL): A Stafford, PLUS, or consolidated loan that is sponsored by the federal government.

Federal Family Education Loan Program (FFELP): Federally backed program through which private lenders provide PLUS or consolidated loans to students.

Federal Supplemental Education Opportunity Grants (FSEOG): Government grants administered through each school’s financial aid office.

Federal Work-Study: Campus-based program through which students are paid a government-subsidized wage to work; work-study jobs are usually related to the student’s field of study and are typically allocated for students who have demonstrated adequate financial need.

Financial Aid Package: The total aid that is given to the student, including public and private funds. This will include all scholarships, grants, loans, and work/study that are included for the student. The financial aid package is shown in detail in the award letter.

Financial Need: Used to describe a family’s financial situation relative to anticipated college costs; typically, a low-income family will have a high degree of financial need and, therefore, qualify for any number of need-based aid programs.

Free Application For Federal Student Aid (FAFSA): Federal form widely used to apply for federal aid.

Free Money: Financial aid that accrues no interest and does not need to be paid back.

Grace Period: A period of time after college graduation–typically six to twelve months–in which a student does not have to begin repaying a loan.

Grant: Financial gift that does not need to be paid back; most grant awards are based on the financial need of the student.

Guaranteed Tuition Plan: Guarantees a single, agreed-upon student tuition rate from enrollment to graduation; often used as an incentive for enrollment.

Half-Time: A student must be attending school at least half-time in order to qualify for many types of federal aid. The criteria for half-time varies from college to college. General guidelines are as follows:

  • For schools using semester, trimester, or quarter systems, a minimum of six semester or quarter house per term.
  • For schools not using academic terms to measure progress, at least twelve semester hours or eighteen quarter hours are required.
  • For schools using clock hours to measure progress, a minimum of twelve clock hours per week.

Hope Scholarship: This is not an actual scholarship granted by an organization but rather a tax credit plan that began in 1998 in which parents get a deduction for college expenses they can’t otherwise cover.

Independent Student: A student who is financially independent. In order to be classified as independent, a student must meet certain federal criteria.

Interest: Charge for borrowed money; generally a percentage of the amount borrowed (see Principal).

Lifetime Learning Credit: A tax credit plan in which taxpayers can get a credit of up to $10,000

Loan: Money that is borrowed from the government, a bank, credit union, or other lender that must be paid back; usually accompanied by interest charges.

Parental Contribution: The expected amount contributed by your parents toward your college expenses.

Parental Loans for Undergraduate Students (PLUS): Loans given by the same financial institutions that give Stafford Loans.

Pell Grant: Need-based type of federal financial aid that does not need to be paid back; only available to undergraduate students.

Pell Grant Index (PGI) Number: An index number appearing on your Student Aid Report (SAR) that determines the amount of Pell Grant money to be included in your financial aid package: the number is the result of a series of calculations based on your SAR.

Perkins Loan: A low-interest, need-based loan given by schools; payback begins nine months after a student leaves school.

Principal: In terms of loans, this represents the amount of money borrowed, not including any interest charges.

Promissory Note: A legal note that a student must sign when awarded a loan; stipulates conditions and repayment terms.

Reserve Officer Training Corps (ROTC): A program offered by the Air Force, Army, Marines, and Navy that provides scholarships and on-campus officer training.

Satisfactory Academic Progress: A certain level of academic achievement, usually measured by grade point average, that must be achieved and maintained by the student while earning a degree. The grade point average standard is different for each school, so you must check each school to find their standard for academic progress.

Scholarship: A financial gift that does not need to be paid back; scholarships are awarded based on a variety of criteria, including academic excellence, demonstrated talent, race, religion, group affiliations, state of residence, etc.; scholarships can also be awarded on the basis of need.

Specialized Aid: Aid programs based on a wide range of criteria intended to encourage targeted populations of people to pursue higher education.

Stafford Loan: A loan given by banks, credit unions, loan associations, and schools; also known as the Guaranteed Student Loan, or GSL.

Statement of Education Purpose: This is sent with the Student Aid Report (SAR) and you must sign it to assure the government that the money awarded will go exclusively to education-related expenses. The school you attend or apply to may have a similar report that you must sign.

Student Aid Report (SAR): Report sent to students who have applied for federal financial aid; contains information used by financial aid officers to help them evaluate students eligibility for government aid.

Subsidized Loan: A loan that does not accrue interest until the recipient leaves school.

Supplemental Education Opportunity Grants (SEOG): A campus-based grant program that usually is a supplement to Pell Grants.

Tax Relief Act of 1997: Recent tax law changes benefiting students and their parents who are paying for college.

Total Cost of Attendance: An estimated total of all college costs used in determining a student’s eligibility for financial aid; total costs include such expenses as tuition, books and supplies, housing, meals, personal expenses, transportation/travel, and miscellaneous expenses.

U.S. Armed forces Reserve Officer Training Corps Program (ROTC): Administered by the military’s college-based officer training program; participants can receive full college tuition plus a monthly stipend, typically in return for a time commitment of active and reserve duty in the Armed Forces.

Unsubsidized Loan: A loan that accrues interest while a student is still in school.

Waiver: An arrangement by the school that allows non-residents (out-of-state students and foreign students) to attend that school at the resident tuition rate.