Financial aid can consist of one loan or a combination of loans and grants from the state, the Federal Government or the college. Ultimately, it is the college financial-aid office that decides what a student gets and from where. Here's a list of terms to help you apply for and decipher a financial-aid package.

APPLICATIONS
Free Application for Federal Student Aid (FAFSA): This form is required for all federal financial aid, including work-study and many state aid programs. Go to your college counselor or www.fafsa.ed.gov for a free copy.

College Scholarship Service (CSS) Financial Aid Profile: Required by some colleges for institutional aid. Register with the College Board for an application.

LOANS
Subsidized Stafford Loan: Available to students who demonstrate financial need as determined by a federal formula. The government pays the interest (capped at 8.25%) while a student is in school.

Unsubsidized Stafford Loan: Available to everyone. The student is responsible for all interest (capped at 8.25%), but payment can be deferred until after graduation.

Perkins Loan: A low-interest loan for students with exceptional financial need. The Federal Government pays the interest (5%) while the student is in school, and there are no origination or guarantee fees.

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Parent Loan for Undergraduate Students (PLUS): A federal loan for parents, who can borrow as much as the full cost of their child's education minus financial aid from other sources. The interest rate is capped at 9%.

Consolidation Loan: Allows borrowers to combine multiple education loans into one with one monthly payment to a single lender. Consolidation loans often lower the monthly payments by extending the repayment period, but they increase the interest rate.

Institutional Loan: A loan offered and directed by the individual colleges and universities. Each institution establishes its own eligibility requirements and loan characteristics. Some schools require that the css profile be submitted.

NEED-BASED GRANTS
Pell Grant: Federal money granted to the most financially needy students. This money need not be repaid, and the Department of Education guarantees each participating school enough money to pay the Pell grants of every eligible student.

Federal Supplemental Educational Opportunity Grant (FSEOG): These are like Pell grants and are awarded to students who demonstrate exceptional financial need. There is no guarantee, however, that every eligible student will receive an fseog — priority is given to those who qualify for Pell grants and still have unmet financial need.

State Grants: Many states offer both merit- and need-based grants.

Source: TIME/The Princeton Review's The Best College For You 2001