If you are returning to school as an adult, attending college for the first time, or helping your family navigate higher education, financial aid can feel like an entirely different language.

You may hear terms such as:

• FAFSA

• Pell Grant

• Student Aid Index

• Subsidized loan

• Cost of attendance

• Disbursement

• Credit balance

• Financial-aid refund

• Satisfactory Academic Progress

The problem is that many schools explain these terms as though you already understand how the system works.

This beginner-friendly guide will walk you through the basics, help you understand what questions to ask, and show you why the school you choose can affect your tuition, aid package, out-of-pocket costs and possible refund.

Financial aid can help make school possible, but it is important to understand which money is free, which money must be repaid and how much your degree will actually cost.

What Is Financial Aid?

FAFSA stands for the Free Application for Federal Student Aid.

It is the application used to determine whether you may qualify for federal student aid, including:

• Federal grants

• Federal student loans

• Federal work-study

Many states and colleges also use FAFSA information when considering students for their own grants, scholarships and other assistance.

Completing the FAFSA does not automatically mean you will receive a specific amount of money.

The FAFSA is the beginning of the financial-aid process—not the final award.

After your FAFSA is processed, each school you list may use the information to create its own financial-aid offer.

That means two schools can review the same FAFSA and still offer you different amounts.

What Is the Student Aid Index?

The Student Aid Index, often called the SAI, is a number produced from information submitted through the FAFSA.

Schools use the SAI as part of the process for determining your eligibility for need-based financial aid.

The SAI is not:

• The amount your family must pay

• The amount you will receive

• Your tuition bill

• Your expected refund

It is one part of the formula schools use when building your financial-aid package.

Grants

Grants are generally money that does not have to be repaid.

A common example is the federal Pell Grant.

Grants may also come from:

• Your state

• Your school

• Workforce-development programs

• Community organizations

• Special academic or career programs

Some grants have eligibility or enrollment requirements. You may be required to repay part of a grant if you withdraw from school or stop attending before completing the term.

Scholarships

Scholarships are also generally money that does not have to be repaid.

They may be awarded based on:

• Financial need

• Academic achievement

• Career goals

• Community service

• Employer affiliation

• Military service

• Membership in an organization

• Personal background

• Writing an essay

• Attending a specific school

Some scholarships are automatically considered when you apply to a college. Others require a separate application.

Student Loans

Student loans are borrowed money.

You must repay the amount you borrow, usually with interest.

A student-loan refund may feel like extra money when it reaches your bank account, but it is still debt.

Before accepting a loan, ask yourself:

• How much do I actually need?

• What portion will be used for tuition?

• How much could be refunded to me?

• What will my total balance be at graduation?

• What might my monthly payment look like later?

Subsidized and Unsubsidized Loans

Subsidized Loans

Subsidized federal loans are based on financial need.

Under certain conditions, the federal government may pay the interest while you are enrolled at least half time and during certain approved periods.

Unsubsidized Loans

Unsubsidized federal loans are not based entirely on financial need.

Interest generally begins accumulating after the loan is disbursed, including while you are attending school.

You may not be required to make payments immediately, but interest may still be building.

Both subsidized and unsubsidized loans must be repaid.

The Cost of Attendance, often called COA, is the school’s estimate of how much it may cost you to attend for an academic year or another defined enrollment period.

It may include:

• Tuition

• Mandatory fees

• Books

• Supplies

• Equipment

• Housing

• Food

• Transportation

• Personal expenses

• Certain dependent-care costs

• Certain disability-related education expenses

Cost of attendance is not necessarily the amount the school will charge you directly.

It may include two types of expenses:

Direct Cost

Direct costs are charges that usually appear on your student account.

Examples include:

• Tuition

• School fees

• Campus housing

• Meal plans

• Certain course fees

Indirect Cost

Indirect costs are estimated expenses that may not be billed by the school.

Examples include:

• Rent

• Groceries

• Transportation

• Personal expenses

• Off-campus housing

• Childcare

• Internet

• School supplies

A school may include these estimated expenses in its cost-of-attendance budget, but that does not mean the school will give you money equal to the entire budget.

Not necessarily.

A higher cost of attendance may allow the school to consider a larger total financial-aid package, but that does not mean you will automatically receive more grants, more loans or a larger refund.

Your actual aid may still be limited by:

• Federal loan limits

• Pell Grant eligibility

• Enrollment level

• Remaining lifetime eligibility

• Scholarships offered by the school

• State funding

• Previous borrowing

• The school’s own packaging policies

• Your program’s tuition and fees

Think of the cost of attendance as a maximum budget the school may use when evaluating aid—not a guaranteed payment amount.

Why Can Different Schools Offer Different Amounts?

Schools may have different:

• Tuition prices

• Mandatory fees

• Housing estimates

• Transportation estimates

• Program costs

• Scholarships

• Institutional grants

• Academic calendars

• Enrollment definitions

• Aid-disbursement schedules

A lower-cost online school may charge less tuition, leaving more of your existing aid after the bill is paid.

A traditional university may have a higher cost of attendance but also charge significantly more tuition.

A school with a physical campus may estimate higher housing and living expenses, but that does not automatically mean the school will offer you more federal loans.

The most important comparison is not simply:

Which school has the highest cost of attendance?

The better question is:

Which school gives me the strongest combination of affordable tuition, grants, scholarships, transfer credit, reasonable debt and career value?

WGU, Online Universities and Traditional Universities

Students often wonder whether attending a traditional university with a physical campus will result in a larger financial-aid refund than attending a lower-cost online school.

The answer depends on the actual numbers.

A Lower-Cost Competency-Based School

A lower-cost school may:

• Charge tuition by term

• Allow faster course completion

• Accept significant transfer credit

• Use less of your aid for tuition

If your total aid is greater than the school’s charges, you may receive a larger remaining credit balance.

A Public University with Online Programs

A public university may:

• Charge by credit hour

• Have separate in-state and out-of-state tuition rates

• Offer institutional or state grants

• Use a traditional semester calendar

• Have a higher published cost of attendance

However, higher tuition can consume more of your aid.

A Traditional Campus Based University

A traditional university may include larger estimates for housing, food and transportation.

But those estimates do not guarantee additional free money.

The university may also have:

• Higher tuition

• Housing charges

• Campus fees

• Meal-plan expenses

• More program-related fees

A larger financial-aid offer can still leave you with a higher bill or more debt.

A financial-aid refund may occur when the aid credited to your student account is greater than the amount the school charges you.

A basic example:

• Grants and accepted loans: $12,000

• Tuition and school charges: $8,000

• Remaining credit balance: $4,000

The school may release the remaining credit balance to you after your aid is disbursed and your account is reviewed.

The refund may be sent by:

• Direct deposit

• Check

• A school-selected refund service

Refund timing varies by school.

Some schools do not release refunds until after:

• Classes begin

• Attendance is confirmed

• Enrollment is verified

• Loan requirements are completed

• Aid is officially disbursed

• The school’s refund processing date

A Refund Is Not Always Free Money

Your refund may include:

• Grant money

• Scholarship money

• Loan money

• A combination of different aid sources

If the refund includes student loans, you must repay that portion later.

A $5,000 refund created from loans may help with rent, childcare, transportation or supplies, but it also increases your total student-loan balance.

Before spending a refund, determine exactly where it came from.

Ask:

• How much came from grants?

• How much came from scholarships?

• How much came from subsidized loans?

• How much came from unsubsidized loans?

• How much will I owe after graduation?

How to Estimate a Possible Refund

Use this basic formula:

Total accepted aid − direct school charges = estimated credit balance

Your accepted aid may include:

• Grants

• Scholarships

• Federal loans

• State aid

• Institutional aid

• Employer funds already sent to the school

Your school charges may include:

• Tuition

• Fees

• Housing

• Meal plan

• Books charged through the school

• Technology fees

• Prior balances

• Other approved charges

Example

School A

• Total aid: $18,000

• Tuition and direct charges: $9,500

• Possible remaining credit: $8,500

School B

• Total aid: $20,000

• Tuition and direct charges: $16,500

• Possible remaining credit: $3,500

School B offered more aid, but School A may leave the student with a larger remaining balance because the school charges less.

This is why you should compare the full financial picture.

What Can Change Your Refund?

Your refund may change if you:

• Drop a course

• Withdraw from school

• Attend less than full time

• Do not begin attendance

• Fail to complete required documents

• Receive a new scholarship

• Have previous aid adjusted

• Reach a federal loan limit

• Reach a Pell Grant lifetime limit

• Change programs

• Change your start date

• Have a prior-school balance

• Change housing status

• Receive employer reimbursement

Never build your entire monthly budget around an estimated refund until the school confirms the amount and disbursement date.

What Is Financial-Aid Verification?

Verification is a review process used to confirm information connected to your FAFSA.

A school may request documents such as:

• Tax information

• Income documentation

• Household information

• Identity documentation

• Statements explaining unusual circumstances

• Verification worksheets

Being selected for verification does not automatically mean you did anything wrong.

However, your aid may be delayed until the requested documents are reviewed.

Respond quickly and submit complete information.

What Is Satisfactory Academic Progress?

Satisfactory Academic Progress, or SAP, is the academic standard students must meet to remain eligible for financial aid.

SAP usually considers:

• Your grade-point average

• The percentage of attempted credits you complete

• Whether you are finishing your program within the maximum allowed timeframe

Financial aid may be affected if you:

• Fail multiple classes

• Withdraw frequently

• Stop participating

• Repeat too many courses

• Take too long to finish your program

Some schools allow students to file a SAP appeal when serious circumstances affected their progress.

Withdrawing after receiving financial aid can create serious financial consequences.

The school may be required to calculate how much federal aid you earned based on how long you attended.

Unearned aid may have to be returned.

This can leave you with:

• A balance owed to the school

• Reduced future aid

• A registration hold

• A transcript hold where legally permitted

• A SAP problem

• Loan debt for a term you did not complete

Before withdrawing, speak with:

• Financial aid

• Academic advising

• Student accounts

• Your instructor or mentor

• Any employer tuition-assistance office

Ask for the estimated financial impact in writing.

Financial-aid administrators may sometimes review special or unusual financial circumstances.

Examples may include:

• Job loss

• Significant income reduction

• High medical expenses

• Divorce or separation

• Death of a household contributor

• Unusual childcare costs

• A change in housing circumstances

The school may request documentation.

Approval is not guaranteed, and every school has its own process.

Ask whether the school offers:

• A special-circumstance review

• An income-adjustment appeal

• A cost-of-attendance adjustment

• A dependency-status review

Before enrolling, ask:

• What grants am I eligible for?

• What scholarships does this school offer?

• Which parts of my offer must be repaid?

• What are my annual and lifetime loan limits?

• What is my estimated tuition and fee total?

• What is my expected out-of-pocket balance?

• What is my estimated refund?

• When will aid disburse?

• When are refunds released?

• What enrollment level is required?

• What happens if I drop a class?

• What happens if I withdraw?

• How does this school calculate cost of attendance for online students?

• Are housing and food included in the online-student budget?

• Can I request a cost-of-attendance adjustment?

• What are the SAP requirements?

• Are books, technology or certification exams included?

• Does the program qualify for my employer’s tuition benefit?

• Can I reduce or return part of a loan later?
  
  

Save the name of the representative, the date and any written confirmation you receive.