Student
Financial Aid Glossary
Please note that this glossary of terms
may not include all the terms you may come across when
thinking about your student financial aid programs and that
not all the terms will apply to every student or school.
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V
A
ACT
American College Testing
Program
AFDC
Aid to Families with
Dependent Children
AFSA
Association for Federal
Student Assistance
ALAS
Auxiliary Loans to
Assist Students (previous loan type)
AP
Advanced Placement
Academic Year
Refers to
the time frame during which school is in session consisting
of at least 30 weeks of instructions. The school year typically
runs from the beginning of September through the end of May
at most colleges and universities.
Accrued Interest
Accrued interest is interest that accumulates on
the unpaid principal balance of a loan.
Accrual Date
Accrual date is the actual date on which interest charges, on an educational
loan, start to accrue.
Achievement Tests (SAT II)
A collection of tests that measure the student's proficiency and accumulated
knowledge of specific subject areas. Different schools require different achievement
tests as part of their admissions requirements. Since March 1994, these tests
are known as the SAT II tests.
Adjusted, Available Income
Refers to the Federal methodology, the remaining income after the allowances
(taxes and a basic living allowance) have been subtracted.
Admissions
Admissions is the department responsible for providing
information about the school to prospective students, reviewing
applications for acceptance to the university, and determining
a student's eligibility for admission.
Admit-Deny
A practice in which a school will admit marginal students, but not award them
any financial aid.
Advanced Placement Test (AP)
Test used to earn credit for college subjects studied in high school. they
are offered by ETS in the spring. AP tests are scored on a scale from 1 to
5 (5 being the best possible score).
American College Test (ACT)
One of two national standardized college entrance examinations used in the
U.S. The other is the SAT. The ACT is widely used in the West and Midwest.
Most universities require either the ACT or the SAT as part of an application
for admission.
Amortization
The process of gradually paying off a loan over time through scheduled
payments of principal and interest.
Appeal
A formal request to have a financial aid administrator review your aid eligibility
and possibly use professional judgment to adjust the figures. For example,
if you believe the financial information on your financial aid application
does not reflect your family's current ability to pay (because of death of
a parent, unemployment, or other circumstances, you should definitely make
an appeal. The financial aid administrator may require documentation of the
special circumstances or of other information listed on your financial aid
application.
Asset
An item of value, such as a home, business, farm, real estate, stocks, bonds,
mutual funds, cash, certificates of deposit, bank accounts, trust funds and
other property and investments.
Asset Protection Allowance
A portion of your parents' assets that are not included in the calculation
of the parent contribution, as calculated by the Federal Methodology need analysis
formula. The asset protection allowance increases with the parents' age.
Associate Degree
An Associate Degree is the degree granted by two-year colleges.
Award Letter
An award letter is the official
document sent by the Financial Aid Office which lists all
awards - grants, loans, and scholarships - which are offered
to the student for an academic year. It should also list
the terms and conditions required for each program. It
may also list the cost of attendance.
Award Year
Award year refers to the academic year for which financial aid is requested
(or received)
B
B.I.A.
B.I.A. refers to
the Bureau of Indian Affairs
Bachelor's Degree
The undergraduate degree granted by four-year colleges
and universities.
Balloon Payment
A larger than usual payment used to pay off the outstanding balance of a loan
without penalty. Not all loans allow balloon payments. Simple interest loans,
like many educational loans, generally do allow balloon payments.
Bankruptcy
A person is declared bankrupt when
they are found to be legally insolvent and the person’s
property is distributed among his/her creditors or otherwise
administered to satisfy the interests of creditors.
Base Year
Base year refers to the tax year prior to the academic year (award year) for
which financial aid is requested. The base year runs from January 1 of the
junior year in high school through December 31 of the senior year. Financial
information from this year is used to determine eligibility for financial aid.
Borrower
A borrower is the person who takes out the loan.
Bursar
Bursar is the department responsible for the administration
of the student's charges and payments.
D
CAM
Common Account Management
CASHE
College Aid Sources for Higher Education
CBA
Consumer Banking Association
CBHE
Coordinating Board for Higher Education (MO)
CFR
Code of Federal Regulations
CLEP
College-Level Examination Program
COA
Cost of Attendance
CPS
Central Processing System
CSS
College Scholarship Service
CWS
College Work Study
Campus-based Aid
Campus-based Aid refers to financial
aid programs administered by the university. The federal
government provides the university with a fixed annual allocation,
which is awarded by the financial aid administrator to deserving
students. Such programs include the Perkins Loan, Supplemental
Education Opportunity Grant and Federal Work-Study. Note
that there is no guarantee that every eligible student will
receive financial aid through these programs, because the
awards are made from a fixed pool of money. This is a key
difference between campus-based loan programs and the Direct
Loan Program.
Cancellation
Cancellation refers to some loan programs provide
for cancellation of the loan under certain circumstances, such
as death or permanent disability of the borrower. Some of the
federal student loan programs have additional cancellation
provisions.
Capital Gain
An increase in the value of an asset such as stocks, bonds, mutual
funds and real estate between the time the asset was purchased and the time
the asset was sold.
Capitalization
Capitalization is the practice of adding unpaid interest
charges to the principal balance of an educational loan, thereby
increasing the size of the loan. Interest is then charged on
the new balance, including both the unpaid principal and the
accrued interest. Capitalizing the interest increases the monthly
payment and the amount of money you will have to repay. If
you can afford to pay the interest as it accrues, you are better
off not capitalizing.
Collateral
Collateral refers to the p roperty that is used to secure
a loan. If the borrower defaults on the loan, the lender can
seize the collateral. For example, a mortgage is usually secured
by the house purchased with the loan.
Collection Agency
A collection agency is a company hired by the lender or guarantee
agency to recover defaulted loans.
College Board
The college-board is a nonprofit educational association of
colleges, universities, educational systems, and other educational
institutions.
College Work-Study (CWS)
College Work-Study is simply a part-time job. This term is sometimes erroneously
used to refer to the Federal Work-Study Program.
Commuter Student
A commuter student is one who lives at home and commutes
to school every day.
Compounded Interest
Interest that is paid on both the principal balance of the
loan and on any accrued (unpaid) interest. Capitalizing the
interest on an unsubsidized Stafford loan is a form of compounding.
Consolidation
Consolidation is a loan that combines several student loans
into one bigger loan from a single lender. The consolidation
loan is used to pay off the balances on the other loans.
Cooperative Education
A program where the student spends time engaged in employment related to their
major in addition to regular classroom study.
Cosigner
A cosigner on a loan assumes responsibility for the loan if the borrower should
fail to repay it.
Cost of Attendance (COA)
Those costs directly or indirectly associated with
the pursuit of higher education. It may include tuition, fees,
room and board which are billed by the University, but will
also include allowances for books, supplies, personal expenses,
transportation, loan origination fees, computers, dependent
child care costs, etc., which are not billed by the University.
Credit Rating
Your credit rating is an evaluation of the likelihood of
a borrower to default on a loan. Credit bureaus and credit
reporting agencies provide this information to banks and businesses
to help them decide whether to issue a loan or extend credit.
Your credit rating may include your payment history, a list
of current and past credit accounts and their balances, employment
and personal information, and a history of past credit problems.
Defaulting on a loan can hurt your credit rating.
Credits
Credits refer to the unit of measurement of the value
of course work.
College Scholarship Services (CSS) Profile
CSS refers to an Alternative application for financial assistance
used by some schools to determine eligibility for school funds.
May not be used in place of the FAFSA, but may be required
in addition.
Custodial Parent
if a student's parents are divorced or separated, the custodial parent is the
one with whom the student lived the most during the past 12 months. The student's
need analysis is based on financial information supplied by the custodial
parent.
D
DOE
Department of Education
Default
A loan is in default when the borrower fails to pay several regular installments
on time (i.e., payments overdue by 270 days) or otherwise fails to meet the
terms and conditions of the loan. if you default on a loan, the university,
the holder of the loan, the state, and the federal government can take legal
action to recovery the money, including garnishing your wages and withholding
income tax refunds. Defaulting on a government loan will make you ineligible
for future federal financial aid, unless a satisfactory repayment schedule
is arranged, and can affect your credit rating.
Deferment
Occurs when a borrower is allows to postpone repaying the loan. If you have
a subsidized loan, the federal government pays the interest charges during
the deferment period. If you have an unsubsidized loan, you are responsible
for the interest that accrues during the deferment period. You can still postpone
paying the interest charges by capitalizing the interest, which increases the
size of the loan.
Most federal loan programs allow students to defer their loans while they are
in school at least half time. If you don't qualify for a deferment, you may
be able to get what is called forbearance. You cannot get a deferment if your
loan is in default.
Delinquent
Delinquent refers to a borrower that fails to make a payment on time, the borrower
is considered delinquent and late fees may be charged. If the borrower misses
several payments, the loan goes into default.
Dependency Status
Determines to what degree a student has access to a parent's financial resources.
Dependent
For a child or other person to be considered your dependent, they must live
with you and you must provide them with more than half of their support. Spouses
do not count as dependents in the Federal Methodology. You and your spouse
cannot both claim the same child as a dependent.
Direct Loans
The William D. Ford Federal Direct Loan Program (aka the Direct Loan Program)
is a federal program where the school becomes the lending agency and manages
the funds directly, with the federal government providing the loan funds. Not
all schools currently participate in this program. Benefits of the program
include faster turnaround time and less bureaucracy than the old "bank
loan" program. The terms for direct loans are the same as for the Stafford
Loan program.
Disbursement
A disbursement is t he release of loan funds to the school
for delivery to the borrower. The payment will be made co-payable
to the student and the school. Loan funds are first credited
to the student's account for payment of tuition, fees, room
and board, and other school charges. Any excess funds are then
paid to the student in cash or by check. Unless the loan amount
is under $500, the disbursement will be made in at least two
equal installments.
Discharge
To release the borrower from his or her obligation to repay the loan.
Disclosure Statement
A disclosure statement provides the borrower with information about the actual
cost of the loan, including the interest rate, origination, insurance, and
loan fees, and any other kinds of finance charges. Lenders are required to
provide the borrower with a disclosure statement before issuing a loan.
Due Diligence
If a borrower fails to make payments on their loan according to the terms of
the promissory note, the federal government requires the lender, holder,
or servicer of the loan to make frequent attempts to contact the borrower
via telephone and mail to encourage him or her to repay the loan and make
arrangements to resolve the delinquency.
E
ED
U.S. Department of Education
EFC
Expected Family Contribution
EFT
Electronic Funds Transfer
ELO
Expanded Lending Option
ETS
Educational Testing Service
Early Action
A program with earlier deadlines and earlier notification dates than the regular
admissions process. Students who apply to an early action program do not commit
to attending the school if admitted, unlike an early decision program. Ivy
League schools do not allow you to apply to more than one Ivy early action.
Early Admission
A program that allows gifted high school juniors to skip their senior year
and enroll instead in college. The term "Early Admission" is sometimes
used to refer collectively to Early Action and Early Decision programs.
Early Decision
A program with earlier deadlines and earlier notification dates than the regular
admissions process. Students who apply to an early decision program commit
to attending the school if admitted. Unfortunately, this means the student
has accepted the offer of admission before they find out about the financial
aid package. You should only participate in an early decision program if the
school is your first choice and you won't want to consider other schools.
Electronic Data Exchange (EDE)
Program used by participating schools to electronically receive SARs from the
federal processor. At some schools EDE allows students to electronically file
their Free Application to Federal Student Aid (FAFSA).
Enrolment
Enrolment is the process of registering for classes each
semester.
Expected Family Contribution (EFC)
The amount calculated by the federal government
using the Federal Methodology as the minimum amount the student
and/or family is expected to pay toward the cost of education
each year.
Express TAP Application
An application required to determine eligibility for the New York
State Tuition Assistance Program (TAP) grant.
F
FAFSA
Free Application for Federal Student Aid. This is the form
that must be filed annually by all college students seeking
financial assistance. It is used to calculate the EFC (see
above) and determine eligibility for federally based sources
of funding.
Federal Work Study (FWS)
Federally funded program administered by the school within federal
guidelines whereby the student seeks employment either in or through the
school and is paid for hours worked.
FERPA
FERPA refers to the Family Education Rights and Privacy Act
(1974 as amended). It concerns the laws which protect a student's
right to privacy in all aspects of their education and govern
the manner in which schools disseminate information to students
and their families.
Financial Aid Office
The department that determines a student's eligibility for financial
aid, creates the financial aid package, and sends out the award letter.
Full-time
Full-time refers to students registered for a minimum of
12 credits per semester (Department of Education definition
which is used to determine eligibility for financial aid).
G
Grace Period
Grace period is the period between separation (graduation
or enrolment for less than 6 credits per semester), and the
commencement of repayment of loan obligations.
Grants
Grants are gift aids offered by schools and other groups.
A grant may be based on need. No repayment is required for
these awards.
Half-time
Registration for 6 to 8 credits per semester 
L
Less than Half-time
Registration for fewer than six credits per semester
M
Merit-based Awards
Financial aid given to students who have outstanding abilities,
talents, and/or achievements is called Merit-based Awards.
Financial situation is not considered.
N
Need
Need is the remainder calculated by taking the 'budget'
and subtracting the ' EFC'
and the 'financial aid' (budget - EFC - financial aid = need).
Need-based Awards
Financial aid awarded to students whose families do not have sufficient
financial resources to pay for college. Academic performance, talent, and
abilities are not considered. These awards may or may not meet all of a student's
needs.
P
Packaging
Packaging is the process whereby a financial aid
officer determines the financial aid awards and amounts for
which the student is eligible each year. The amounts are subject
to change from year to year, and within any given year if factors
affecting eligibility change.
Pell Grant
Pell grant is aFederal based grant with an annual
maximum of $4,050. Eligibility based on the EFC (see above).
Perkins Loan
A Perkins loan is aFederally based loan program
administered by the school within federal guidelines. Annual maximum is $4,000,
with an interest of 5%. Funds are awarded at the discretion of the school
within federal guidelines. Payment of principle and interest begins 9 months
after separation.
R
Registrar
Registrar is the department responsible for the administration
of course registration, room assignments, determining eligibility
for graduation, and the production of transcripts and diplomas.
S
Scholarship
A scholarship is a gift aid offered by schools and other
groups. They are usually based on academic performance, talent,
athletics, school, or community involvement.
Separation
Separation is when the reduction of enrolment to less than
6 credits per semester, leave of absence, graduation, or failure
to register in consecutive terms. This may initiate repayment
of loans.
Student Aid Report (SAR)
Summary of information submitted on the FAFSA which is sent to the
student for his or her review. It should be checked each year for accuracy
and completeness.
Subsidized Stafford Loan
A subsidized Stafford loan is aFederally based
loan program with eligibility determined based on cost of attendance and
need. Maximum eligibility is set by the federal government based on grade
level. Interest rate is variable, set each year on June 1. Interest is paid
by the federal government while the student is in attendance taking at least
6 credits. Repayment begins 6 months after separation.
Supplemental Educational Opportunity Grant (SEOG)
Federally based grant with an annual maximum of $2,000. Eligibility
is tied to the Pell Grant. Funds are awarded at the discretion of the school
within federal guidelines.
T
Three-quarters time
Registration for 9 to 11 credits per semester
Title IV
That part of the Higher Education Act which regulates
the administration of, and refunds for the following sources
of financial aid: Pell Grants, SEOG Grants, Subsidized Stafford
Loans, Unsubsidized Stafford Loans, Perkins Loans, and Federal
Work Study.
U
Unsubsidized Stafford Loan
Unsubsidized Stafford Loan refers to aFederal
based loan program with eligibility NOT tied to need. Maximum
eligibility is set by the federal government based on grade
level. Interest rate is variable, set each year on June 1.
Interest payments are the responsibility of the students as
soon as the funds are disbursed, but may be deferred until
separation. Repayment begins six months after separation.
U
Verification
Verification is the process by which randomly selected
FAFSA records are checked for accuracy by the financial aid
office
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