When it comes to financial aid terminology, financial aid administrators are familiar with all the acronyms and abbreviations, but students and families find financial aid lingo difficult to navigate. To minimize the confusion, institutions should be mindful to include definitions or instructions when developing materials and language, especially financial aid award letters.
According to a study conducted by Zachery Taylor and Ibrahim Bicak at the University of Texas at Austin, adult learners found many of the terms below unfamiliar when reviewing financial aid documents from schools. Taylor and Bicak concluded that “institutions of higher education and those responsible for providing financial wellness programming should collaborate and review their institutional, state, and federal financial aid application materials.”
- FAFSA – While we might think everyone is familiar with the FAFSA and why it is important to complete it, this is not always true. Taylor and Bicek noted that institutions “should not take federal student aid knowledge for granted, as many prospective [students] in this study’s sample reported being unfamiliar with seemingly common student financial aid concepts such as the FAFSA.” Explaining that this form is required for federal and state aid could help students understand how important it is to complete this form.
- FSA ID – It is just as important that students understand what an FSA ID is and how to create it. Without the FSA ID, students and families cannot complete the FAFSA. However, many students and families are unfamiliar with this term or the requirement until they begin their FAFSA, adding frustration to the process.
- MPN – While it is important for students and families to know what this stands for, Master Promissory Note, it is equally important to explain how and why they need to complete this step. Including clear instructions can assist families in completing this form in a timely manner.
- Grants – Most schools include “grants” in their “Scholarships and Grants” section, but many students do not know the difference is between the two terms. “Grants” refers to gift aid – funds that are awarded to a student that do not need to be repaid – that is typically based on financial need.
- IRS DRT – The IRS Data Retrieval Tool is a tool that can assist families in completing the FAFSA accurately and quickly. Providing benefits to using this tool could encourage families to use it, if available, and make the process simpler.
- CSS Profile – For institutions that require the CSS Profile, it is important to share with students what this form is, how to complete it accurately, and what funds are available based on the results. The Collegeboard offers information that can assist institutions in explaining the CSS Profile, like this Collegeboard webpage which explains how to get started on the application.
It’s not just adult learners that are confused by terms in financial aid communication – traditional students and families also have trouble understanding financial aid lingo. In a different study led by the National Association for Financial Aid Administrators (NASFAA), students shared their opinions of federal financial aid documents, including unfamiliar terms that led to confusion around financial aid funding.
- Financial Aid Package – The question “what is considered financial aid?” was raised by participants throughout the NASFAA study. Majority of students and parents only consider “free” money to be financial aid, so it is important to effectively convey information about what is included in financial aid packages and what this term means to the institution.
- Subsidized and Unsubsidized Loans – Many students do not understand the difference between these two loans. Simply explaining the difference between the loans can help families determine how they proceed. In some cases, families do not even know these are loans – which need to be repaid – when reviewing financial aid awards. In a study done in 2018, researchers found that there were 136 different names used to describe the federal unsubsidized loan among the 455 financial aid letters they reviewed, some didn’t have the word “loan” in the description at all. Clearly articulating the type of fund is important to assist students in developing their financial plan.
- PLUS Loans – Federal loan funds available to the parents of dependent undergraduate students up to the cost of attendance. Whether institutions include this as a part of the financial aid award or as an outside resource, it is important to clarify that this fund is available to parents and needs to be repaid.
- Federal Work Study or Student Employment – The NASFAA study showed that many students did not know what work study is, how it is different than any other on-campus job, and whether the paycheck is provided directly to the institution or to the individual student.
Unfortunately, we cannot simply remove all financial aid terminology. However, we can review marketing pieces and websites to explain important terms and remove unnecessary jargon whenever possible, building a more confident student population.
Sources:
Findings from NASFAA’s Research on the College Financing Plan
Study: Many Adult Learners Struggle With Financial Aid Applications Due to Jargon
Glossary of Terms for Financial Aid Offers
NerdWallet: Accepted! How to Decipher Your College Aid