As a parent you thought you were “with it” if you knew texting shorthand, but it seems learning a new language doesn’t end with sending messages to your teen. In fact, if you’re the parent of a high school senior, you’re about to enter the world of financial aid with its own language to learn. There’s FAFSA, EFC, COA, FSA ID, DRT and SAR to get your head spinning.
Here’s a guide to all the important abbreviations you need to know so you won’t feel lost.
What is FAFSA and Who Should Fill it Out?
Understanding the Free Application for Federal Student Aid (FAFSA) can be confusing. It’s a long form, it asks for a lot of information, and it can be hard to understand all the acronyms that are frequently thrown around.
FAFSA is a government form and filling it out is the key to getting federal financial aid like grants, work-study, student loans, parent loans and some college scholarships offered for merit aid. If you have a student entering college or already in college, you’ll need to fill out FAFSA for every year your child will be attending college.
The FASFA is available on October 1st for the academic year of the following fall. That means, for example, that on October 1, 2018, you will gain access to the FAFSA that you need for a student attending college during the 2019-2020 school year.
It’s important to fill FAFSA out as early as possible. Though the last day the FAFSA can be filed is June 30th, you DON’T want to wait that long at all. Colleges and states have different financial aid deadlines, which are much earlier in the year. Schools often hand out aid on a first-come-first-serve basis so It pays – literally! – to be early.
What is the EFC? What Does it Mean?
The EFC is the expected family contribution. The number represents the amount that the student’s family is expected to pay toward their college education.
The EFC is calculated as an outcome of filling out your FAFSA. FAFSA uses the tax and asset information you enter and a formula established by the government to calculate your expected family contribution (EFC).
The Department of Education uses your EFC to determine your student’s eligibility for Pell grants and subsidized loans. Colleges use your EFC in determining how much financial need your family has. In most cases, the EFC is the MINIMUM a family will pay for college.
The difference between a college’s cost of attendance and your family’s EFC is your student’s need.
Sometimes the EFC is 0, but more often it’s a large number that catches the family by surprise. Many families struggle to pay their expected amount. Schools focus on meeting some percentage of a student’s need, not their EFC.
Many families may find themselves needing to get private student loans, such as those offered by College Ave Student Loans, to pay their EFC and unmet need amount.
What Does COA Mean?
The COA is the Cost of Attendance at a school. It includes tuition, fees, on-campus room and board or an off-campus housing allowance, and averages for books, supplies, and transportation.
The COA is compared to your EFC to determine your need at a school. Your student’s need is the amount that the cost of attendance exceeds your EFC.
Schools offer financial aid packages designed to minimize your student’s need, although few schools cover it completely.
A school’s cost of attendance is also a factor in how much you or your student can borrow for college. Parent Plus Loans and private student loans are limited by a school’s cost of attendance. Parents and students cannot borrow funds in excess of a school’s cost of attendance.
What is the FSA ID?
The FSA ID is your Federal Student Aid ID. Both you and your student will have one. Simply put, it’s the username and password that you each use to access federal student aid sites, like Studentloans.gov and FAFSA.gov.
It’s also used to electronically sign financial aid documents. Because it’s used as a signature, a parent and student cannot share the same FSA ID.
The FSA ID is designed to increase security because you no longer enter sensitive information, including your social security number, each time you log in. It’s easy to create one. You can go online at fsaid.ed.gov, enter your personal information, and create a username and password.
Once you do, you’ll need to verify and confirm your email address. If you did not previously have a Federal Student Aid PIN, it will take 1 – 3 days before your account is verified and confirmed. You’ll get an email when the process is complete.
Once you have a FSA ID, it’s vital that both you and your student keep your usernames and passwords as safe as possible. Security is important when you’re talking about something as important as college funding!
If you ever feel that your FSA ID has been compromised, contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243) right away.
What is the IRS DRT?
The IRS Data Retrieval Tool (DRT) allows students and parents who filed a U.S tax return to transfer data directly into the FAFSA from your prior tax returns.
It’s a great tool because it’s easy to use, helps ensure that the FAFSA has accurate financial information, and you don’t need a physical copy of the tax return.
What is a SAR?
The SAR is your Student Aid Report. It’s the report you get after the FAFSA is processed. It’s vital to look the report over and make sure there are no errors in the financial information from the FAFSA that the government used to create the report.
The SAR will have your student’s EFC listed on the right hand corner of page one. If it has an asterisk next to it, your SAR has been flagged for verification. This doesn’t mean anything is wrong, you’ll just have to provide additional documentation. About 30% of SARs are verified.
The SAR will be sent to the schools you listed on the FAFSA, and there will also be a Data Release Number (DRN) listed that you can use if you want your financial information sent to additional schools.
When Will I Hear About My Student’s Financial Aid Offer?
Each school that your student was admitted to and that received your FAFSA will send you a financial aid package. Keep in mind that these offers only cover one school year. Each year a new offer will be put together for your student.
These offers may include federal Stafford student loans (subsidized and/or unsubsidized), work study, and college grants and scholarships.
Even with the money offered – some of which will have to be paid back after graduation – your student may be facing a financial aid gap. Many students focus on attending schools with as small of a gap as possible. Comparing financial aid offers is an important step of choosing a college.
If you’re facing a significant gap, you have two options. One is to take out a private student loan or use savings to pay the difference. The other choice is to do a financial aid appeal. Sometimes, these can help you win more aid.
The FAFSA is Just the Beginning
Paying for college is a long process, and it requires a lot of resources. You want to focus on generous schools that offer a lot of aid for your specific situation. You also want to make sure you choose a good private loan company if you need a private student loan.
Don’t worry, you can do this.
You may come across a variety of important terms throughout the financial aid process. Here are a few of the need-to-know terms if you’re paying for school.Continue Reading