Mapping Your Financial Journey: Helping Adults Plan for College

Academic Competitiveness Grant: A new federal program that provides up to $750 for the first year of undergraduate study and up to $1,300 for the second year of undergraduate study to full-time students who are eligible for a Pell Grant. Students must have successfully completed a rigorous high school program. It is given in addition to the Pell Grant award.

Auto Pawnbrokers: They collect your vehicle’s title in exchange for a loan. Any missed payment can result in repossession, and the broker can keep any payments made to that point.

Check-Cashing Stores: Stores that charge fees for cashing your checks. Fees range from three to eight percent for every $100. A better option is cashing checks at your bank for free.

Child Care Tax Credit: Most working parents are eligible for a tax credit that repays a portion of child care costs. In general, if your child is 12 or younger and you’re working or looking for work, you will qualify for the tax credit. Contact the IRS at or call 1-800-829-1040.

Cost of Attendance (COA): A list that gives you and many sources of financial aid an idea of what your total college costs will be. They include: tuition, required fees, books and supplies, room and board, personal expenses, transportation and other allowances such as loan fees and dependent care. You can visit to see the Federal Aid's definition of Cost of Attendence.

Credit Report: An account of your credit history that is prepared by a credit bureau. There are three major credit bureaus or credit reporting agencies - Experian, TransUnion and Equifax. You can order one free credit report each year from one of these agencies. Your credit report will influence how easy it will be in the future for you to get loans and other consumer credit, as well as the interest rates you pay. A credit report will contain both: credit history--what you owe to whom and whether you make the payments on time--and personal history--your former addresses, employment record and lawsuits in which you have been involved. It is important to review your credit report and check for errors. An estimated 50 percent of all credit reports contain errors, such as accounts that don't belong to you, an incorrect account status or information reported that is older than seven years.

Debt: An amount owed to a person or organization for funds borrowed. It can be represented by a loan note, bond, mortgage or other form stating repayment terms and, if applicable, interest requirements.

Educational Opportunity Center (EOC): These centers provide counseling and information on college admissions to qualified adults who want to enter or continue a program of postsecondary education. They help you with the financial aid and college application processes. To read more about EOCs, visit

Emergency Fund: Savings that will help you meet unforeseen expenses such as a broken refrigerator, car repair or medical bill. A good rule of thumb is to build up an emergency fund of three to six months of your income.

Employer Educational Benefits: Your employer may offer a set amount of money per year as tuition reimbursement. You sign up for classes and pay for them. At the end of the term, if you’ve maintained a certain GPA, your employer will reimburse you for the cost of tuition.

Expected Family Contribution (EFC): A statement you receive after you submit your Free Application for Federal Student AID (FAFSA). It shows the government’s view of your financial strength and ability to pay for your education. It’s used to determine your eligibility for student aid.

FAFSA--Free Application for Federal Student Aid: Once you’ve made the decision to go to college, this is the first form you should fill out for financial aid. It is a federal application that all colleges may review, but it is only one part of the financial aid process. Every college has its own criteria and deadlines. You can get the form online at or by calling 1-800-433-3243.

Federal Financial Aid: This assistance, from the federal government, includes grants, loans and work-study aid and covers school expenses such as tuition, room and board, books and supplies and transportation. It also can help pay for a computer or dependent care. A student must be a U.S. citizen or an eligible non-citizen. Visit

Federal Supplemental Education Opportunity Grant (FSEOG): A federal grant for undergraduates with exceptional financial needs. Amounts range from $100 to $4,000 per year.

Federal Work-Study: A needs-based program that pays you money for performing a job on or off campus. Pay rate is at least minimum wage.

Financial Aid: Financial assistance that helps you pay for higher education. Sources include federal, state, local, foundation/private and the college you attend. Merit-based aid is awarded for a student’s grades, athletic performance, musical or acting abilities, etc. Need-based aid is determined only by financial need.

Financial Aid Eligibility: Once you have determined your Cost of Attendance (COA) and Expected Family Contribution (EFC), you can determine how much financial aid you need from federal, state or private sources: COA – EFC = Financial Need.

Flexible Spending Account (FSA): Also called a flex plan or reimbursement account, is an employer-sponsored benefit that allows you to pay for eligible medical expenses on a pre-tax basis (there are also similar accounts for dependent and child-care expenses). The contributions you make to a FSA are deducted from your pay BEFORE your Federal, State, or Social Security Taxes are calculated and are never reported to the IRS. The end result is that you decrease your taxable income and increase your spendable income.

Grants: Financial aid for education that does not need to be repaid. They’re usually based on need.

Identity Theft: Someone illegally uses your Social Security number, checking account, credit card numbers or other personal information to steal from you.

Individual Development Accounts (IDAs): The money you save in these accounts is matched by a sponsor. For every dollar you save, the sponsor will usually add at least $1 or more to your IDA savings. When you apply for an IDA, you must state what you intend to do with the savings. The four things you can do are: get education and training; buy a home; start a business, and save for retirement. IDAs are typically managed by community organizations and held at local financial institutions.

Job Scams: Job opportunities that look too good to be true—like part-time jobs with the lure of big money. Often, you must pay a big fee up front.

Lifetime Learning Credit: This tax credit allows you to claim up to 20 percent of your tuition expenses for the first $10,000 (a maximum of $2,000 annually) of the educational expenses you pay.

Living Within Your Means: You can afford to pay for most things you need without borrowing money to pay for them.

Loans: Financial aid for education that must be repaid, often with accrued interest.

Long-Term Goal: Something you want to achieve within the next five years—like saving regularly to pay off credit cards.

Medium-Term Goal: Something you hope to achieve within the next year—like obtaining a high GPA so you can quality for additional scholarships.

Money Attitudes: How you deal with money. You might be a:

Saver: You keep any extra money you receive to use for meeting goals or saving for an emergency,

Spender: You rarely are able to save money and don’t know where your money goes.

Planner: You anticipate future expenses and put money away for them.

Worrier: You are anxious that you may need money for the future and have a hard time spending money on things you truly need.

Money Orders: They are sold at numerous places and may be used to pay bills instead of checks from a checking account. While each money order doesn’t cost a lot, they can add up if you purchase several every month. Even a checking account that charges fees will cost less than money orders.

National SMART Grants: These federal grants which stand for, “National Science and Mathematics Access to Retain Talent,” do not need to be repaid. They provide up to $4,000 for each of the third and fourth years of undergraduate study to full-time students who are eligible for a Federal Pell Grant and who are majoring in computer sciences, mathematics, technology or engineering or in a foreign language determined critical to national security.

Needs: The basics of life that you must have to survive like food, housing, clothing. For college, needs include tuition, books and fees.

Payday Loans: A financial “fix” to avoid. These loans are sometimes offered by check-cashing stores. Many states have no laws limiting fees that payday loan stores can charge, so you may end up paying extremely high interest rates and racking up huge debts that will be nearly impossible to pay off.

Paying Yourself First: An important saving technique. Rather than merely saving any money that you have left at the end of the month, you put it away first—before it gets eaten up by other expenses or you’re tempted to spend it. Strive for saving at least 10 percent of your income.

Pawnshops: A financial “fix” to avoid. They loan you money in exchange for items such as jewelry or a stereo. The store must keep your item at least 30 days, during which time you can repay the loan and get it back. Pawnshop loans usually give you less than half of what your item is really worth. You’ll make more money if you sell items through classified ads, bulletin boards or the Internet through eBay or

Pell Grant:  A grant from the federal government that does not need to be repaid. It is mainly for undergraduate students. In 2006-07, the maximum award was $4,050. That amount can change each year. The amount you get will depend on your need and your costs of attending school.

Perkins Loan:  A federal loan that must be repaid plus five percent interest. The maximum loan amount is $4,000 per year for undergraduates and up to $6,000 for certain graduate students.

Rebate: A partial refund following a purchase.

Rent-to-own stores: A financial “fix” to avoid. They offer furniture, appliances and other items for a small weekly rental fee and promise that a portion of each payment will be credited toward purchases of your item. But the final purchase price can be three to 10 times higher than the item would cost new.

Scholarships: Financial assistance for education that does not need to be repaid. They usually are based on merit but also can be based on aid.

Scholarship Scams: Offers of financial assistance for school by sources that are not legitimate. Never give out your personal information to anyone who calls or e-mails you with offers of scholarship money or grants. If it sounds too good to be true, it probably is.

Short-Term Goal: Something you want to achieve within the next three months—like paying for your first semester of college tuition and fees.

SMART Goals: Goals that are Specific, Measurable, Achievable, Relevant and Trackable. To make your goals SMART, you’ll need to determine the following: actions to take; tools, training or expertise needed; total amount of money needed to reach the goal; when you need the money; how much you need to save each month; how much you need to save each week, and where you’ll get the money.

Spending Diary: A small notebook that helps you keeping track of everything you buy for a couple of months. You will write down every purchase you make during the day, no matter how small. It will help you see how much money you have coming in, what you spend it on and where you might be able to cut expenses to save money.

Spending Plan: A tool that helps you keep track of your money and meet your financial goals. The four steps to creating a funding plan are identifying your income, identifying your expenses, comparing the income with the expenses and setting priorities and making changes.

Student Loan Interest Deduction:  If you pay interest on qualified educational loans and meet certain income qualifications, you may be able to deduct up to $2,500 on your tax return.

Subsidized FFEL or Direct Stafford Loan: A federal loan for students attending school at least half time. This loan must be repaid in full plus interest. While you’re in school, interest on the loan is paid by the U.S. Department of Education. The loan is between $2,625 and $6,625 for first-year undergraduate students.

Tax Credits: Several of these can be claimed when you go to college—they reduce the amount of federal income tax you owe.

Tax Deductions: Several of these can be claimed when you go to college—they decrease your federal taxable income.

Tuition and Fees Tax Deduction: You may be able to deduct qualified tuition and related expenses you pay during the year for yourself, your spouse or your dependent, even if you do not itemize deductions on your tax return.

Unsubsidized FFEL or Direct Stafford Loan: A federal loan for students attending school at least half time. You are responsible for interest during the life of the loan. Financial need is not a requirement.

Veteran-Based Assistance: Educational assistance for veterans or their dependents. Visit the U.S. Department of Veterans Affairs at or call 1-888-442-4551.

Wants: Things that are nice to have but aren’t essential like eating out or going to the movies.

Work-study: You receive money in exchange for working at an approved job. Advantages over a regular part-time job include: 1) work-study jobs may be associated with your field of study; 2) your work-study job won’t be subject to as many taxes, 3) work-study jobs are generally scheduled around your class schedule.

We also recommend that you should visit the Federal Financial Aid glossary at

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