Paying for College
Financial Aid Glossary
-A-
AGI (Adjusted Gross
Income): All taxable income less IRS allowable adjustments to
income. This figure is from U.S. IRS tax forms.
Academic Year: A
period of time schools use to measure a quantity of study. For example,
a school's academic year may consist of a fall and spring semester,
during which a student must complete 24 semester hours. Academic years
vary from school to school, and even from education program to education
program at the same school.
Accrued Interest:
Interest that accumulates on the unpaid principal balance of a
loan.
Amortization: The
process of gradually repaying a loan over an extended period of time
through periodic installments of principal and interest.
Award Letter: An
official document issued by a financial aid office listing all the
financial aid awarded to the student. The award letter will include
information about the cost of attendance and terms and conditions for
the financial aid.
-B-
Borrower: The person
who receives the loan.
Budget: The total
cost of attending a post-secondary institution for one academic year.
The student's budget usually includes tuition, fees, room, board, books,
supplies, travel, and personal expenses. Each institution develops its
own student budget.
-C-
Campus-Based Aid:
Financial aid programs administered by the university. The government
provides the university with a fixed annual allocation, which is awarded
by the financial aid administrator to deserving students. The Perkins
Loan Program, Supplemental Education Opportunity Grant (SEOG), and
Federal Work-Study are examples of campus-based aid.
Capitalization of
Interest: Addition of unpaid interest to the principal balance of a
loan, which increases the total outstanding balance due.
Cooperative Work-Study
Education: A program in which the student alternates between
full-time college study and full-time paid employment related to the
student's area of study. Under this plan, a bachelor's degree often
requires five years to complete.
Cosigner: A person
who signs the promissory note in addition to the borrower and is
responsible for the obligation if the borrower does not pay.
Cost of Attendance:
The total cost of attending a post-secondary institution for one
academic year. The cost of attendance usually includes tuition, fees,
room, board, supplies, transportation, and personal expenses.
Credit-Worthy: An
individual with no negative credit history per the criteria established
by the lender.
-D-
DHHS or HHS (US
Department of Health and Human Services): Government agency that
administers several health education loan programs, including the HEAL,
HPSL, and NSL loan programs.
Deferment: A period
during which a borrower, who meets certain criteria, may suspend loan
payments. For some loans, the federal government pays the interest
during a deferment. On others, the interest accrues and is capitalized,
and the borrower is responsible for paying it.
Dependent Student: An
undergraduate student whose parents provide more than half of their
financial support. A dependent student is not married, is under 24 years
of age, has no legal dependents, is not an orphan or ward of the court,
nor a veteran of the U.S. Armed Forces. Parents of a dependent student
must submit parental information on the FAFSA for their son or daughter
to be considered for financial aid. Parents of dependent students are
eligible for the PLUS Loan program. (See also Independent.)
Disbursement: The
release of loan funds to the school for delivery to the borrower.
Disbursements are usually made in equal multiple installments co-payable
to the borrower and the school.
Disclosure Statement:
Statement of the total cost and amount of a loan, including the interest
rate and any additional finance charges.
-E-
ED, DOE, USED, or DE (US
Department of Education): Government agency that administers several
student financial aid programs, including the Federal Pell Grant, the
Federal Work-Study Program, the Federal Perkins Loan, the FFELP, and the
FDSLP.
EFC (Expected Family
Contribution): The amount a family is expected to contribute to a
student's education. EFC is calculated based on family earnings, net
assets, savings, and size of family and number of family members in
college.
Early Decision: An
admission program with earlier deadlines and earlier notification dates
than the regular admissions process. Students who apply through an early
decision program commit to attending the school if admitted. (Thus, a
student can apply early decision to only one school).
Eligible Non-Citizen:
Someone who is not a US citizen but is nevertheless eligible for Federal
student aid. Eligible non-citizens include US permanent residents who
are holders of valid green cards, US nationals, holders of form I-94 who
have been granted refugee or asylum status, and certain other
non-citizens. Non-citizens who hold student visas or exchange visitor
visas are not eligible for student aid.
Enrollment Status: An
indication of whether you are a full-time or part-time student.
Generally you must be enrolled at least half time in a degree or
certificate program to qualify for financial aid.
Entitlement:
Entitlement programs award funds to all qualified applicants. Federal
student loans are an example of such a program.
-F-
FAA (Financial Aid
Administrator): A college or university employee who is involved in
the administration of financial aid. Some schools call FAAs 'Financial
Aid Advisors' or 'Financial Aid Counselors.'
FAFSA (Free Application
for Federal Student Aid): The form that must be completed by
students and parents applying for Federal Title IV student
aid.
FAT (Financial Aid
Transcript): A record of all financial aid received by students at
each school attended.
FDSLP: The Federal
Direct Student Loan Program. Stafford and PLUS loans are available
directly from the government rather than through commercial lenders.
Selected colleges and universities participate in this
program.
FFELP: The Federal
Family Education Loan Program. Stafford and PLUS loans are financed by
private lenders and guaranteed by the government.
Federal Methodology:
The need analysis formula mandated by law to determine a student's
eligibility for student aid programs.
Federal Processor:
The organization that processes the information submitted on the Free
Application for Federal Student Aid (FAFSA) and submits the results to
students and colleges.
Fellowship: A form of
aid given to graduate students to help support their education. Some
fellowships include tuition grants or payments to universities in lieu
of tuition. Most fellowships include a stipend to cover reasonable
living expenses. Fellowships are a form of gift aid and do not have to
be repaid.
Financial Aid:
Financial assistance in the form of scholarships, grants, work-study,
and loans for education.
Financial Aid
Package: A combination of financial aid (scholarships, grants,
loans, and/or work-study) awarded by the financial aid office of a
college or university.
Financial Need: The
difference between the cost of attendance at a college and the Expected
Family Contribution.
Fixed Interest: On a
fixed interest loan, the interest rate remains the same for the life of
the loan.
-G-
Gift Aid: Financial
aid, such as grants and scholarships, which does not need to be
repaid.
Grants: Financial aid
awards that do not have to be repaid. Grants are available through the
government, state agencies and colleges.
-H-
Holder: The
institution that owns a loan.
-I-
Independent Student:
A student who is either married, 24 years of age or older, enrolled in a
graduate or professional education program, has legal dependents other
than a spouse, is an orphan or ward of the court, or a veteran of the
U.S. Armed Forces.
Interest: An amount
calculated as a percent of the principal loan amount, that is charged
for borrowed money.
Internship: A
part-time job during the academic year or the summer months, in which a
student receives supervised practical training in their field of
study.
-L-
Loan: A type of
financial aid that is available to students and their parents. Education
loan programs have varying interest rates and repayment provisions. An
education loan must be repaid.
Loan Interview:
Students with educational loans are required to complete a loan
counseling session before they receive their first loan disbursement and
again before they graduate or otherwise leave school. During these
counseling sessions, called entrance and exit interviews, the FAA
reviews the repayment terms of the loan and the repayment schedule with
the student
-N-
National Service
Trust: President Clinton's national community service program. If
you participate in this program before attending school, the funds may
be used to pay your educational expenses. If you participate after
graduating, the funds may be used to repay your student loans. Eligible
types of community service include education, human services, the
environment, and public safety.
Need: The difference
between the cost of education and the Expected Family Contribution (EFC)
is the student's financial need.
Need Analysis:
Calculation used to determine a student's need for financial assistance
for college expenses. The analysis determines the family's ability to
contribute to costs compared to the student's cost of
attendance.
Need-Based: A means
of determining eligibility for certain types of financial aid using
financial need as the determining factor.
-O-
Origination: The
process whereby the lender, or a servicing agent on behalf of the
lender, handles the initial application processing and disbursement of
loan proceeds.
Origination Fee: Fee,
payable by the borrower and deducted from the principal of a loan prior
to disbursement to the borrower. For federally backed loans, the
origination fee is paid to the government to offset the cost of the
interest subsidy to borrowers. For private loan programs, the
origination fee is generally paid to the originator to cover the cost of
administering and insuring the program.
Overaward: The amount
of financial aid proceeds that, when added to other student financial
assistance, exceeds the borrower's educational need.
-P-
PC (Parent's
Contribution): Amount parents can be expected to contribute each
year to the cost of their student's education as determined by the
Federal Methodology.
PLUS (Parent Loans for
Undergraduate Students): Federally insured loans for parents of
dependent students.
Pell Grant Program:
The largest grant program. Eligibility and award amounts are determined
by the college based on established guidelines.
Perkins Loans:
Federally insured loans funded by the government and awarded by the
school. The loans feature a low interest rate and are repayable over an
extended period.
Post-Secondary: This
term means 'after high school' and refers to all programs for high
school graduates, including programs at two and four-year colleges, and
vocational & technical schools.
Prepaid Tuition Plan:
A college savings plan that is guaranteed to rise in value at the same
rate as college tuition. For example, if a family purchases shares that
are worth half a year's tuition at a state college, they will always be
worth half a year's tuition, even 10 years later when tuition rates will
have doubled.
PROFILE: (CSS/Financial
Aid PROFILETM): A customized financial aid application form required
by certain colleges and scholarship programs, which collects additional
financial information to determine eligibility for institutional
aid.
Promissory Note:
Contract between a borrower and a lender that includes all the terms and
conditions under which the borrower promises to repay the
loan.
-S-
SAR (Student Aid
Report): An output document sent to a student by the application
processor. The SAR contains financial and other information reported by
the student on the FAFSA. The student's Expected Family Contribution
(EFC) is printed on the front of the SAR and is the figure used by
colleges to determine eligibility for aid.
Scholarships: Funds
used to pay for higher education that do not have to be repaid.
Scholarships may be awarded based on any number of criteria, such as
academics, achievements, talents, and affiliations with various groups,
or career aspirations. Scholarships do not have to be repaid.
Self-Help Aid:
Financial aid in the form of loans or student employment.
SEOG: Supplemental
Educational Opportunity Grant Program; grant funds made available
through some schools to a limited number of undergraduate students with
financial need.
Statement of Educational
Purpose: A legal document in which the student agrees to use the
financial aid for educational expenses only.
Subsidized Stafford
Loans: Need-based loans.
-T-
Transcript: A list of
all the courses that a student has taken at a particular high school or
college with the grades that the student earned in each
course.
Tuition: The amount
of money colleges charge for classroom and other instruction, and use of
some facilities such as libraries.
-U-
Unsubsidized Stafford
Loans: Non-need-based loans.
-V-
Variable Interest:
With a variable interest loan, the interest rate changes periodically.
For example, the interest rate might be pegged to the cost of US
Treasury plus additional percentage rate and be updated monthly,
quarterly, semi-annually, or annually.
Verification
Worksheet: A form sent by the college to students who are selected
for verification by the Department of Education's Central Processing
System.
-W-
Work Study: A
program, awarded by the college, through which students work part-time
to help fund their education.
This glossary was produced
by Sallie Mae.
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