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financial aid

  is a key component in the lives of most College goers, and it can get complicated. That's why we've simplified some of the terms you'll have to understand when you apply for and manage your financial aid.

Some terms every college student and college bound teen should know...

FAFSA (Free Application for Federal Student Aid): This is that pesky form your parents keep nagging you about, and rightfully so. The FAFSA must be filled out if you want to receive financial aid; it can be done online at www.fafsa.ed.gov. Tackle it as soon as possible after January 1st of your senior year and in time to meet with your choice colleges' financial aid deadlines (which usually range from January to May).

Interest: This is the amount charged to the borrower for using the lender's money. When shopping around for a loan, make sure the interest rate is low and easy to maintain. This interest rate will be applied to your monthly payment.

Accrual Date: This is the date those pesky interest charges begin tacking themselves onto your loan balance. Depending on what kind of loan you get, the accrual date could be anytime from the date you took out the loan to months after you have graduated or left school.

Accruing Interest: Unlike regular interest, accruing interest doesn't begin to add up until your accrual date, giving you a bit more time to anticipate your payments. In other words, if your accrual date is six months after you graduate, you will not be charged any interest during the time you are in school, enabling you to get a head start on payments.

Adjusted Aid Award: If you're awarded a scholarship, especially one that is not from your school, the college will evaluate your financial need based on money you are receiving from outside awards. The amount the college offers you after this review process is considered the adjusted aid award.

Adjusted Gross Income: This is found on yours and your parents' tax return and encompasses all taxable income after allowable deductions have been made. Adjusted gross income is one of the main figures that the FAFSA uses to help determine your eligibility for financial aid.

Capitalization: Capitalization increases the amount you need to pay back on your loan. Math majors would explain it this way: Unpaid interest charges are added to the principal balance of your educational loan. Interest is then applied to this additional amount and - boom - you owe more than you thought. To avoid these extra charges, try paying off interest during your time at school.

CSS Profile Form: The CSS profile is an additional form required by some Colleges and Universities in order to consider you for a scholarship. It is presented by the college scholarship Service (CSS), a nonprofit organization.

Default Payment: You're in "default" when you fail to make a timely monthly payment outlined in your promissory note (more on that later). If this occurs, the lender, the state government and/or the federal government can take legal action and can even stop you from receiving other loans in the future. Needless to say, this can ruin your credit score as well.

Expected Family Contribution (EFC): This is the amount of money you and your family are expected to pay toward your college expenses. This figure also determines the amount of aid for which you are eligible. Your EFC is based on family size, the number of family members already in college and your family's taxable and non-taxable income and assets.

Federal Stafford Loan: A borrowing student's best friend, federal Stafford loans are government-issued, low-interest loans that have an interest rate that cannot exceed 8.25 percent. And, you don't have to start making payments until six months after you leave school. They come in two types - subsidized and unsubsidized (keep reading, we'll get to those).

Financial Aid Package: This is that huge packet filled with papers containing lots of numbers and acronyms (all of which you'll understand after reading this!). Really, it's simple: The financial aid package is a breakdown of what it costs to attend the school along with your anticipated financial aid, scholarships and expected family contribution.

Financial Need: Subtract your expected family contribution from the total cost of tuition, and that figure is your financial need.

Gift Aid: Just as its name indicates, gift aid is money that doesn't have to be paid back. Gift aid consists of scholarships and grants received based on academics, sports performance or other achievements or affiliations. Gift aid may affect how much financial aid you receive because it is considered outside scholarship money. (See Adjusted Aid Reward.)

Over-Award: An over-award is when you receive loans and aid that exceeds the total cost of attending college. Federal law prohibits over-awarding from occurring. Sorry, no extra spending Cash for you.

Pell Grant: A Pell grant is a federally-funded grant available to incoming freshmen who demonstrate financial need. It does not have to be paid back and students can apply for it via the FAFSA. The maximum amount of money a student can receive is $4,050 per year.

Principal Balance: This is the amount borrowed before interest is tacked on.

Promissory Note: This is the document you sign when taking out a loan. By signing this, you agree to pay back every last cent you borrowed plus interest.

PLUS Loans (Parent LoaNs for Undergraduate Study): This one is for your parents to worry about. Mom and Dad are the borrowers of this federally-subsidized loan, and can fund your entire college education through this loan minus any other financial aid you have received. So if you're getting a $4,000 scholarship and your tuition is $10,000, your parents can take out a loan for $6,000.

SAR (Student Aid Report): You'll receive this report by mail after you've completed the FAFSA. It's your last chance to give it a once-over to make sure you didn't forget any information and to verify the accuracy of the figures you provided. Be sure to send it right back so as not to delay the process.

Subsidized Loan: This type of loan is strictly need-based. If you are eligible for aid (as determined by the information on your FAFSA and reported on your SAR), you may qualify for a subsidized loan. What makes it so great? The government picks up the interest tab, so interest does not begin accruing until after you have been out of school for six months.

Taxable Income: Taxable income is your total amount of income minus a set of deductions that can include things like cost of living.

Unmet Need: This is exactly what it sounds like: When you still need money to attend school after you've received all of your loans, grants, work-study jobs and scholarships. If this occurs, contact your college's financial aid office right away to explore your options.

Unsubsidized Loan: Any student can take out an unsubsidized loan, but watch out - the interest begins piling on from the date the loan is issued, and continues accumulating until after you graduate. The interest rates for unsubsidized loans are the same as subsidized loans.

Work-Study: Many campuses offer work-study programs to financially needy students. The program provides students with a job on campus for a moderate salary designed to help offset tuition costs. Students usually work no more than 20 hours a week in places such as the library, computer labs or department offices.

Verification: You may have to verify, through additional forms, the accuracy of the information you provided on your financial aid or loan forms. The school or lender may ask you to verify an address, or something that is unclear on your loan application.

CB Survey Says... How financial aid savvy are CB teens? Of the 917 respondents: 68 percent called themselves "average students" in the financial aid classroom. 17 percent admitted they were financial aid "flunk outs."15 percent claimed they were "head of the class" when it comes to understanding the ins and outs of paying for school.

* Full survey results are available at www.myspace.com/cbteen.

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