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Financial Aid Vocabulary:

These are general explanations intended to help you understand financial aid terms. As with any legal document, make sure to read your papers carefully. If you need help, call your college financial aid office, or call us at the office (406) 496-4690.

Expected Financial Contribution (EFC): What you and your family are expected to contribute for the cost of your college education, based off the information you put into the FAFSA.

Grants: Free money! Usually based on financial need or G.P.A., you automatically apply for grants when you fill out the FAFSA.

Scholarships: Free money! The money comes from different organizations (government, schools, private foundations/organizations, individuals), and each application process is different.

Interest: The percentage at which the bank charges you for borrowing money. The higher the percentage, the more money you will have to pay back.

Loans: Money you borrow that you MUST pay back. There are several different types of loans:

Public/Federal Loans: Money you borrow from the government.

There are two different types of federal loans:                                      

Subsidized Loans: The government will pay the interest while you are enrolled in college, so if you borrow $3000 at the beginning of your freshman year, you will still owe $3000 in your senior year of school (assuming you never left school).

Unsubsidized Loans: The government will NOT pay the interest while you are enrolled in college, so if you borrow $3000 at the beginning of your freshman year, assuming the interest rate was 8.5% (the maximum interest possible) and you made no payments for the four years you were in school, you would owe $4,159 the end of your senior year.

Private Loans: Money you borrow from a private institution, such as a bank or credit union. The interest rates are generally higher than federal loans, and private loans also charge interest while you are attending school.

Work study: Money to work at school. Work Study is a financial aid program that allows an undergraduate or graduate student to work on campus or with approved off-campus employers to earn money to pay for college expenses.