FAFSA
EducationGlossary term
Definition
The Free Application for Federal Student Aid is a form that students must complete each year to determine their eligibility for federal financial aid, including grants, loans, and work-study programs. The FAFSA collects information about your family's income, assets, and household size to calculate your Expected Family Contribution. Most colleges and states also use the FAFSA to award their own financial aid, making it a critical step in the college funding process.
Related terms
- Expected Family Contribution (EFC)A number calculated from the information you provide on the FAFSA that represents how much your family is expected to contribute toward your education costs for the year. Colleges subtract your EFC from their cost of attendance to determine your financial need and aid package. Since the 2024-2025 FAFSA, the EFC has been replaced by the Student Aid Index (SAI), which works similarly but with updated calculations.
- Pell GrantA federal grant awarded to undergraduate students who demonstrate exceptional financial need, as determined by the FAFSA. Unlike loans, Pell Grants do not need to be repaid, making them one of the most valuable forms of financial aid. The maximum award amount is adjusted annually and for the 2026-2027 academic year is $7,395.
- Federal Student LoanA loan funded by the federal government to help students pay for college or career school, offering fixed interest rates and flexible repayment options that are generally more favorable than private loans. Federal student loans include Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans, each with different eligibility requirements and terms. Borrowers may also qualify for income-driven repayment plans and loan forgiveness programs.
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