Key Financial Terms Every Student Should Know

Financial literacy is an important skill for all students to cultivate before they graduate.
Transitioning out of high school or college is a major life change and it can oftentimes feel
overwhelming. To help you prepare, we’ve put together a list of key financial terms every
student should understand before they enter or leave school.

Student Aid Terms

Financial Aid: Financial aid is the money you can receive from the government, your school,
or other organizations to help you pay for college. This can include grants, scholarships, workstudy, and student loans.

Grants: Grants are a form of financial aid that does not have to be repaid. Grants are typically
based on financial need or academic performance.

Scholarships: Scholarships are a form of financial aid that does not have to be repaid.
Scholarships are typically based on academic performance and/or other criteria, such as
extracurricular activities.

Work-Study: Work-study is a form of financial aid that requires you to work in order to receive
payment. Work-study is typically awarded to students who demonstrate financial need.

Student Loans: Student loans are a form of financial aid that must be repaid, usually with
interest. Student loans are typically based on financial need.

Credit Terms

Credit Score: A credit score is a number that reflects your creditworthiness. It is based on
information in your credit report, such as payment history, amount of debt, and number of
accounts.

Credit Report: A credit report is a record of your credit history that is used to calculate your
credit score. It includes information about your credit accounts and payment history.

Interest Rate: An interest rate is the amount of money charged by a lender for the use of their
money. Interest rates are typically based on your credit score and other factors.

Credit Card: A credit card is a type of loan that allows you to borrow money from a lender.
Credit cards typically have a high interest rate and an annual fee.

Tax Terms

Tax Deduction: A tax deduction is an amount of money that can be subtracted from your
taxable income. Tax deductions can include charitable donations, mortgage interest, and
medical expenses.

Tax Credit: A tax credit is an amount of money that can be subtracted from your tax bill. Tax
credits can include educational expenses and child care expenses

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