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Speaking the Language: Your Financial Aid Dictionary




Speaking The Language:
Your Financial Aid Dictionary

Every field has its own vocabulary. If you are going to maneuver successfully through the field of financial aid, you’ll need to know the language. Do you know exactly what it takes to be an “independent student?” What defines “financial need?” What’s the difference between FAFSA and PROFILE? We'll help you find out. We've provided here the definitions of these and hundreds of other words, initialisms, abbreviations, and expressions that you are most likely to encounter as you conduct your financial aid search.

If you run across other terms in your search for aid that you don’t recognize and aren’t on this list, let us know. We’ll consider adding them in the future to this list.

If you know the specific word you want to check, use the alphabetical links below to get there. Or, just browse through the list, to learn more about the financial aid process.


A  |  B  |  C  |  D  |  E  |  F  |  G  |  H  |  I - K  |  L
M  |  N  |  O  |  P  |  Q  |  R  |  S  |  T  |  U  |  V  |  W - Z



— A — 

A.A.: Associate of Arts Degree. For more information, see “Associate Degree.”

Academic Year: The school year, which generally lasts about 9 months (at least 30 weeks of instruction)—typically September through May. The academic year is generally divided into semesters (4 to 5 months) or quarters (3 months). Scholarships are usually awarded for 1 academic year.

Accreditation: Approval given to schools that have met certain requirements established by a state, the federal government, or a recognized accrediting agency. Generally, students who attend a nonaccredited school are ineligible for state or federal aid (and, sometimes, private aid as well).

Accrued Interest: This relates to the cost of a loan. The interest rate charged is added up prior to the repayment period or to a payment installment.

Acknowledgement: Students often receive an acknowledgement letter after they have submitted a supplemental aid application. This is also referred to as a “confirmation report.”

ACT: See “American College Testing Program.”

Adjusted Available Income: The amount of family income that remains after deducting local, state, and federal taxes; medical expenses; living allowances; and other factors that are used in the Federal Need Analysis Methodology system of need analysis.

Admissions Officer: These staff members work in the office that recruits potential students, reads applications, and decides which applicants are admitted.

Adult Learner: Students who are older (generally 25 or older), living away from their parents or self supporting, and/or whose primary role is something other than learner (such as parent, spouse, retiree, worker).

Advanced Placement (AP): Credit and/or advance standing awarded to students who have taken college-level courses in high school and passed certain examinations (e.g., those offered by the College Board).

Aid to Dependent Children: This program assists low-income parents with children (between the ages of 18 and 22) who are attending a postsecondary school.

American College Testing Program (ACT): The ACT consists of a series of standardized tests given in the United States and abroad throughout the year. The tests are in English, mathematics, reading, and science reading. The scores (which range from 1 through 36) are considered by colleges and financial aid sponsors in the selection process. The current average composite score is approximately 20.5.

AP: See “Advanced Placement.”

Appeal Procedures: Students may request a college to reevaluate their eligibility or the amount of their award. Some of the reasons a student might wish to appeal: parent lost a job, parent became ill, parent died, need to add information not included in the original application.

Application Essay: This is an important part of college applications and, often, of financial aid applications. The essay can give a more personalized perspective of the applicant, as well as an indication of the applicant’s writing ability.

A.S.: Associate of Science Degree. For more information, see “Associate Degree.”

Assets: Any or all of the following: money in checking, money market, and savings accounts and the value of stocks, bonds, mutual funds, home or business, other real estate, trust funds, etc. Assets are considered in determining Expected Family Contribution (EFC). Generally not considered assets: cars and other personal possessions (like stamp collections and musical instruments).

Associate Degree: Degree earned at some 2-year colleges. Generally, the associate of arts (A.A.) and associate of science (A.S.) degrees are granted after students complete a program of study similar to the first 2 years of a 4-year college or university curriculum. The associate in applied arts (A.A.S.) is generally awarded after the student has completed a 2-year technical or vocational program.

Award Letter: See "Financial Aid Award Letter."


— B — 

B.A.: See “Bachelor’s Degree.”

Baccalaureate Degree: See “Bachelor’s Degree."

Bachelor’s Degree: Degree (B.A., B.S., etc.) awarded for the successful completion of study at a 4-year college or university. Also referred to as a baccalaureate degree.

BEOG: Basic Education Opportunity Grant (now called Pell Grant). For more information, see “Federal Pell Grant.”

BIA: Bureau of Indian Affairs

B.S.: Bachelor of Science degree. For more information, see “Bachelor’s Degree.”


— C —

Campus-Based Financial Aid Programs: These financial aid programs (primarily from the federal government) are administered directly by the postsecondary institution. Schools participating in any of the campus-based program (e.g., Federal Perkins Loans, Federal Supplemental Educational Opportunity Grants, Federal Work-Study) receive a certain amount of funds for each program. Each school sets its own deadline for applying for these funds. When that money is gone, there are no more awards from that program for that year. You’ll probably miss out on aid from the campus-based programs if you don’t apply early. 

Cancellation (of loan): Some loans have a cancellation provision, which permits part of all or the loan to be forgiven (canceled) if the recipient meets certain conditions (e.g., teaching in a certain geographic area, designated school, or particular subject). These are often called “scholarship/loans,” “forgivable loans,” or “loans-for-service.” Loans may also be canceled because of disability or death.

Central Processing System (CPS): The federal processing system that receives the FAFSA and calculates the Expected Family Contribution (EFC).

Certificate: Awarded in recognition of successful completion of a particular program or course of study (generally in a junior college, vocational school, community college, or continuing educational program).

Citizen/Eligible Noncitizen: To be an eligible citizen or noncitizen for federal financial aid purposes, you must be one of the following: a U.S. citizen, a U.S. national (including natives of American Samoa or Swain’s Island), or a U.S. permanent resident who has an I-151, I-551, or I-551C (Alien Registration Receipt Card). If you don’t fall into one of these categories, you can still qualify, if you have an Arrival-Departure Record (I-94) from the U.S. Immigration and Naturalization Service (INS) showing one of the following designations: refugee, asylum granted, indefinite parole and/or humanitarian parole, Cuban-Haitian entrant with status pending, conditional entrant (valid only if issued before April 1, 1980). Citizens and eligible noncitizens may receive loans from the FFEL and Direct Loan programs at eligible American or participating foreign schools. You are NOT eligible for federal student aid if you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464A) or if you are in the U.S. on an F1 or F2 student visa only, or on a J1 or J2 exchange visa only. Also, persons with G series visas (pertaining to international organizations) are not eligible for federal student aid. Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau are eligible only for Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, and Federal Work-Study.

CLEP: See “College Level Examination Program.”

CM: Congressional Methodology (used in needs analysis).

COA: See “Cost of Attendance.”

COE: Cost of Education (same as Cost of Attendance). For more information, see “Cost of Attendance.”

College Level Examination Program (CLEP): This is a standardized examination program that offers students and adults the opportunity to demonstrate proficiency in a number of subject areas. Some postsecondary institutions offer credit based on a student’s performance on these tests.

College Work-Study Program: See “Federal Work-Study Program.”

Commercial Lender: See “Lender.”

Common Application: An application form that is used by hundreds of independent colleges and universities for admission to their undergraduate program.

Computerized Search Services: See “Scholarship Search Services.”

Conditional Awards: These scholarships, loans, or other awards require additional information or documents (e.g., transcripts, tax statements, verification of enrollment) before the award goes into effect. If the information/documentation is not provided or varies from previously submitted information, the award may be modified or withdrawn.

Congressional Methodology: This is a methodology, developed by Congress, that is used by most colleges and universities to determine what amount a student must contribute to the cost of his or her college education.

Confirmation Report: See “Acknowledgment.”

Consolidated Loan: This occurs when an eligible lender pays off an existing student loan (or loans) and creates one new loan. Borrowers must begin repayment (or have entered a grace period) before the loans can be consolidated. All major federal loans are eligible for consolidation, except for the Federal PLUS Loans made before October 17, 1986. Consolidated loans usually have lower monthly payments, longer repayment periods, and greater interest. Note: consolidation does not increase existing loan limits.

Cooperative Education: When participating in this type of program, which is also called co-op education, college students alternate periods of classroom instruction with periods of related employment. Students are paid for their work at the prevailing wage. It usually takes 5 years (rather than 4) to complete a bachelor’s degree under the cooperative plans, but students graduate with a year of practical work experience in addition to their academic studies. This program is separate from the Federal Work-Study program.

Cosigner: The person who signs your loan contract with you. If you default, the cosigner is legally responsible for the debt.

Cost of Attendance (COA): Sometimes, this is called the Cost of Education. The phrase refers to the total amount it will cost a student to go to school: tuition and fees, on-campus room and board (or a housing and food allowance for off-campus students), and allowances for books, supplies, transportation, child care, costs related to a disability, and miscellaneous expenses. Also included are reasonable costs for eligible study abroad programs. For students attending less than half time, the COA includes only tuition and fees and an allowance for books, supplies, transportation, and dependent care expenses.

Cost of Education: See “Cost of Attendance.”

CPS: See “Central Processing System.”

Custodial Accounts: These are accounts that parents or other family members set up in a child's name, as a way to save for college. Earnings in the account are taxed at the children's marginal tax bracket, rather than at their parent's (or other family member's) level. UGMAs and UTMAs are examples of custodial accounts.

Custodial Parent: This is the parent with whom the dependent student lives. If the student’s parents are separate or divorced, this is the parent whose financial information is used in the need analysis.

CWSP: College Work-Study Program. For more information, see “Federal Work-Study Program.”


— D —

Default: This occurs when a borrower fails to make a required payment or fails to comply with the other terms spelled out in their loan (or promissory note). Default may also result from failing to submit requests for deferment or cancellation (both terms are defined elsewhere in this list) on time. If you default, your school, the organization that holds your loan, the state, and the federal government can all take action to recover the money you borrowed, including notifying national credit bureaus of your default. This could affect your credit rating for a long time. In addition, the organization holding your loan could ask your employer to deduct payments from your check. If you decide to return to school, you will not be entitled to receive any more student aid. Finally, the Internal Revenue Service may be able to withhold your income tax refund (and apply that amount to the amount you still owe).

Deferment: Some loans allow borrowers to postpone payments that otherwise would be required on a loan. Usually, the repayment period is extended by the length of the deferment period.

Department of Education (ED): This is the unit of federal government that is responsible for providing and administering a number of major federal aid programs, including the Federal Pell Grants, the Federal Supplemental Educational Opportunity Grants, the Federal Perkins Loans, the Federal PLUS loans, the Federal Stafford Loans, the Federal Consolidation Loans, and the Federal Work-Study program.

Dependent Student: Students who have access to parental support are viewed by the federal government as “dependent” students. They do not qualify for “independent” student status. For federal student aid purposes, a dependent student is one who was born within the past 24 years, is not a U.S. armed forces veteran, is not enrolled in a graduate or professional program, is not married, is not an orphan or ward of the court, and has no legal dependents or spouse.

Dislocated Workers: These are persons who have been laid-off or terminated, have been laid-off as a result of permanent closure of a plant or other facility, or were self employed (e.g., farmers) but are now unemployed because of poor economic conditions or natural disasters. Generally, it is the state agencies (rather than the federal government) that have the responsibility for designating dislocated worker status. A number of schools have given tuition breaks to dislocated workers.

DOE: U.S. Department of Energy.

DVA: U.S. Department of Veterans Affairs (formerly the VA: Veterans Administration),


— E —

Early Decision: Also known as early action, early notification, and early evaluation. Some schools offer early decision admission plans, which notify those students who have requested that the college make its admission decision earlier than usual (generally in December of the student’s senior year). Students must apply for these plans by mid-November of their senior year. There are 2 basic types of early decision plans: Students who apply under the First Choice Plan must withdraw their applications from all other colleges as soon as they are notified they are accepted by a first-choice college; students applying under the Single-Choice Plan may apply only to their first-choice college, unless they are rejected by that school.

ED: U.S. Department of Education. For more information, see “Department of Education.”

Education IRAs: These are tax deferred accounts that let parents save up to $2,000 per year per child. Earnings can be withdrawn tax free when they are used for the child's education.

EFC: See “Expected Family Contribution.”

EFN: Exceptional financial need.

Eligibility Criteria: Most financial aid programs have specific conditions that students must meet to be considered for that award. Some programs require financial need; others do not. Other factors commonly considered: academic record, ethnic background, gender, extracurricular activities, professional affiliation, citizenship, age, and career interests.

Eligible program: A course of study that leads to a degree or certificate and meets the U.S. Department of Education’s requirements for an eligible program. To get federal aid, you must be enrolled in an eligible program. There are only 2 exceptions to that rule: 1) if a school has told you that you must take certain courses to qualify for admission into any of its eligible programs, you can get a Direct Loan or an FFEL Program Loan (or your parents can get a PLUS Loan) for up to 12 consecutive months while you are completing the course work—as long as your are enrolled at least half time and meet the usual student aid eligibility requirements; 2) if you are enrolled at least half time in a program to obtain a professional credential or certification required by a state for employment as an elementary or secondary school teacher, you can get a Federal Perkins Loan, Federal Work-Study, or a Direct FFEL Stafford Loan (or your parents can get a PLUS Loan) while you are enrolled in that program.

Emergency Loans: Short-term loans available from colleges or private sources to students who have emergency expenses (e.g., high book costs, expensive equipment requirements, health problems). Many of these loans charge low or no interest.

Enrollment status: A student’s credit hour load at college (e.g., full time, half time, part time).

Entitlement Program: Under this type of program, all students who meet the eligibility requirements receive assistance; there is no further selection process. The federal Pell Grant program is an example of an entitlement program.

ESAR: Electronic Student Aid Report.

ETS: Educational Testing Service.

Exceptional Financial Need: This is a measure used to determine students with the greatest need. The exact definition of what constitutes this need varies by program.

Expected Family Contribution: A formula has been established by Congress to determine how much of your family’s financial resources should be available to help pay for school. This amount is referred to as the Expected Family Contribution (EFC). In determining this amount, such factors as taxable and nontaxable income, assets (e.g., savings and checking accounts), and benefits (e.g., unemployment, Social Security) are considered. The EFC is subtracted from the COA to determine your eligibility for aid from many of the basic federal student aid programs.


— F —

FAF: Financial Aid Form. For more information, see “Financial Aid PROFILE.”

FAFSA: See “Free Application for Federal Students Aid.”

Family Contribution: The total amount a student and/or family can reasonably be expected to pay for college from their income and assets is referred to as the family contribution. The amount is determined through a needs analysis. Different sponsors use different methodologies. The federal government uses the Federal Need Analysis Methodology and private aid programs generally use the Institutional Methodology (IM).

FAO: Financial aid office or financial aid administrator.

FAT: Financial aid transcript.

FC: See “Family Contribution.”

Federal Direct Loan Program: This is a college-administered program. Students at participating colleges can borrow directly from the federal government, through the subsidized or unsubsidized Federal Stafford Loans and Parent PLUS loans.

Federal Family Education Loan Programs (FFELP): Low-interest federally-supported student loans, including Federal Stafford Loans (subsidized and unsubsidized), Federal Supplemental Loans for Students (SLS), Federal Parent Loans for Students (PLUS), and federal consolidated loans. These loans are made by private lenders and guaranteed by the state designated guaranty agencies on behalf of the federal government.

Federal Methodology: See “Federal Need Analysis Methodology.”

Federal Need Analysis Methodology: This is the standardized method used to determine a student’s and/or a family’s ability to pay for college (EFC). This is also referred to as the Federal Methodology (FM).

Federal Pell Grant: An award to help undergraduates pay for their education after high school. This is the largest need-based student aid program sponsored by the federal government. To apply, use the Free Application for Federal Student Aid (FAFSA).

Federal Perkins Loans: Formerly called the National Direct Student Loan Program (NDSL), this federal program provides low-interest loans to undergraduate and graduate students who can demonstrate exceptional financial need. Colleges administer the program.

Federal PLUS Loans (FPLUS): Under this program, parents of undergraduate students are permitted to borrow up to the full cost of their child’s education (less any other financial aid received). The interest rate charged is variable. Loans are not based on income but on parents’ creditworthiness.

Federal Stafford Loans (FSLS): Formerly known as Guaranteed Student Loans (GSLs), students borrow these funds directly from banks or other lending institutions. There are 2 types of Stafford Loans: subsidized (which are need based) and unsubsidized (which do not require financial need). The federal government pays the interest on subsidized Stafford loans while the students are in college, but students with unsubsidized loans may be asked to pay interest while in school.

Federal Supplemental Educational Opportunity Grant Program (FSEOG): Grants are made to undergraduate students with exceptional financial need—those with the lowest Expected Family Contribution. Priority is given to federal Pell Grant recipients. This is a campus-based program. Funds do not need to be repaid.

Federal Work-Study Program (FWS): This is a form of federal need-based student aid that is open to both undergraduate and graduate students. Participants work at jobs on– or off-campus while attending school. The amount earned cannot exceed the student’s established need. This is a campus-based program.

Fellowships: Financial aid programs for graduate and postgraduate students. No payment is necessary. Although the terms are frequently used interchangeably, “fellowships” are different from “scholarships;" scholarships are intended to support undergraduate study.

FFELP: See “Federal Family Education Loan Programs.”

Financial Aid: A general term that describes any type of assistance that comes from a source other than the student or the student’s family. There are many different types of financial aid, including scholarships for undergraduate study, fellowships for graduate study, loans, work-study programs (sometimes this includes internships), and emergency aid. The funding programs can be sponsored by the federal, state, or local governments, colleges, or private sources (sororities, fraternities, corporations, foundations, organizations, clubs, etc.).

Financial Aid Administrator: The staff member at a postsecondary school who is responsible for preparing, coordinating, and communicating information about financial aid. Also known as a financial aid officer (FAO).

Financial Aid Award: See “Financial Aid Package.”

Financial Aid Award Letter: This notice is sent from a college or other financial aid sponsor. It describes the terms of the financial aid offer (how much aid is being offered and in what form—a non-repayable grant or scholarship, student employment, repayable loan, etc.). Students should respond in writing to all award letters, by accepting, rejecting, or requesting additional information on the financial assistance offered.

Financial Aid Form (FAF): See “Financial Aid PROFILE.”

Financial Aid Package: The total financial aid a student receives, including federal, state, private, and college scholarships, loans, and work-study opportunities. Unsubsidized Stafford loans and PLUS loans are not considered part of the package. According to the federal government, “using available resources to give each student the best possible package of aid is one of the major requirements of a financial aid administrator.”

Financial Aid PROFILE: This needs analysis form (from the College Board) replaces the FAF and is used by some institutions and some states to determine an applicant’s eligibility for institutional or state aid.

Financial Need: The difference between what it costs to attend an institution (COA) and a student’s (and/or a student’s family’s) ability to pay (i.e., the Expected Family Contribution). Often, this is expressed by this formula: COA - EFC = Need. Each family’s financial situation is different. The information you report on your financial aid application is used to calculate your need. The type of needs methodology used can determine the amount of need assessed. Financial need is considered in the selection process of many undergraduate scholarships and most undergraduate loans. Financial need is less of a consideration on the graduate school level.

529 Plans: This is another type of account (like Education IRAs and Custodial Accounts) in which money invested for educational purposes can be grown tax deferred. The specifics of these plans vary from state to state. For more information, see www.savingforcollege.com

FM: See “Federal Need Analysis Methodology.”

Forbearance: This is an authorized period of time during which the lender agrees to temporarily postpone a borrower’s total loan repayment obligation, to allow an extension of time for making loan payments, or to accept smaller loan payments than were previously scheduled. Forbearance does not alter the repayment status of the student’s loan, and interest continues to accrue.

FPLUS: Federal PLUS Loan.

Free Application for Federal Student Aid (FAFSA): A free need analysis form published by the federal government (also referred to as the federal form). This form must be used to apply for all federal student aid. In many states, it is also sufficient to establish eligibility for state-sponsored aid programs. It is available from the high schools and from colleges that participate in federal student aid programs as well as from the Department of Education: call (800) 4-FEDAID or visit this web site: www.fafsa.ed.gov/

Free Money: A popularly-used term to refer to financial aid (for example, scholarships or grants) that does not need to be repaid.

FSEOG: See “Federal Supplemental Educational Opportunity Grants Program.”

FSLS: See “Federal Stafford Loans.”

Full-Time Student: A student who is registered for 12 semester hours or more.

FWS: See “Federal Work-Study Program.”

FY: Fiscal year.



GAP: See “Unmet Need.”

GED: See “General Education Development.”

General Education Development (GED): The equivalent of a high school degree. The GED is a standardized national examination taken by persons who, for whatever reason, haven’t completed the formal requirements for a high school degree. The test measures educational attainment in 5 areas. Students who pass the examination earn the equivalent of a high school diploma.

Gift Aid: This term is used to refer to funding (e.g., a scholarship) that does not have to be repaid.

G.P.A.: See “Grade Point Average.”

Grace Period: A period of time during which loan repayment is not required. Generally, interest does not accrue during this period either.

Grade Point Average (GPA): A system to evaluate overall academic performance. The numerical equivalent of the grade (e.g., A = 4, B = 3) a student earns in a course is multiplied by the number of units assigned to that course; these grade points are then totaled for all courses taken by the student and divided by the total number of units the student has earned. Grade point average is often requested by financial aid sponsors, as one measure of the applicant’s academic ability.

Graduate Student: A student enrolled in studies above the baccalaureate level at an institution of higher education. This includes advanced professional students as well (e.g., law).

Grant: The federal government and many student aid agencies use this term to refer to financial aid that does not have to be repaid. When the term is used in that way, it functions as a synonym for “scholarship." Sometimes, in the literature, this type of aid is termed “free money.” Another meaning for this term: funds that are provided to support research, creative activities, or other independent projects.

GSL: Guaranteed Student Loan. Now known as the Stafford Loan Program.

Guaranteed Student Loan Program: Former name of the Federal Stafford Loan Program.

Guaranty Agency: The organization that administers the Federal Stafford Loan and Federal PLUS loan programs in your state. The federal government sets loan limits and interest rates, but each state is free to set its own additional limitations, within federal guidelines. 


— H —

HACU: Hispanic Association of Colleges and Universities.

Half-Time Students: There are 3 different ways to measure half-time status: 1) at least 6 semester hours or quarter hours per term, at schools measuring academic progress by credit hours and academic terms (semesters, trimesters, or quarters); 2) at least 12 semester hours or 18 quarter hours per year, at schools measuring progress by credit hours but not using academic terms; or 3) at least 12 hours per week at schools measuring progress by clock hours. Schools may choose to set higher minimums than these. Note: the Federal Stafford Loan requirements are slightly different. You must be enrolled in school at least half time to receive the Federal Stafford Loan, Federal PLUS loan, or Federal Direct Student Loan. Half-time student enrollment is NOT required to receive aid from the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, or Federal Perkins Loan programs.

HBCU: Historically Black Colleges and Universities.

Hope Scholarship Credit: Along with the “Lifetime Learning Credit” (described elsewhere in this list), this is part of the federal tax credit system available to students. Under the Hope Scholarship, you can receive a maximum tax credit of $1,500.


— I, J, K —

IM: See “Institutional Methodology.”

Income: Money received from any or all of the following: salary, dividends, interest, sale or rental of property or services, business or farm profits, certain welfare programs, some subsistence allowances (e.g., child support, Social Security).

Independent Student: You are classified as an “independent” student by the federal government only if you meet 1 of these requirements: You were born more than 24 years ago, you are married, you are a graduate or professional student, you have legal dependents other than a spouse, you are an orphan or ward of the court, or you are a veteran. If you do not meet any of these requirements, you are, by definition, a dependent student.

Independent Study: A program of study where students work independently (generally under the guidance of a faculty member) rather than attend structured classes.

Ineligible Noncitizens: Some noncitizens are eligible to apply for federal aid. These are defined under the term “Citizen/Eligible Noncitizen.” But, there are noncitizens who are NOT eligible for federal student aid. These include: holders of student visas, exchange visitor visas, or G-series visas, those who have only a Notice of Approval to Apply for Permanent Residence, and those who hold a Form I-688A.

Institutional Methodology (IM): This is used primarily to calculate EFC for private school or privately-sponsored financial aid. For more information, see “Federal Need Analysis Methodology” and “Financial Aid PROFILE.”

Interest Rate: The rate charged a borrower until the loan principal is repaid.

Internships: Short-term (a semester or academic year) work experience programs that usually relate to the student’s major or field of study. The assignment may be on campus or at another location. It may be full or part time. Some internships offer a stipend; others are unpaid (but may provide college credits).


— L —

Legal Dependents: For dependency determination: a child or other person (but not a spouse) who lives with and receives more than half of his or her support from the student. In general: individuals (including spouses) who receive more than half of their support from someone else.

Legal Guardians: Individuals appointed by the court to use their own finances to support a person placed in their charge.

Legal Resident: A person who has met national, state, or local requirements for being declared a resident of that area. Another meaning for the term: an individual who is not an American citizen but who is still eligible for federal student aid.

Lender: A financial institution (bank, credit union, etc.) or other qualified program that makes Federal Family Education and PLUS loans, as well as other private loans, to students and their parents.

Lifetime Learning Credit: Along with the Hope Scholarship Credit, this is 1 of 2 federal tax credit systems available to students. Under the Lifetime Learning Credit, you can receive a maximum tax credit of $1,000 or more.

Loan: Money provided to an individual for a specific amount of time; the recipient must promise to repay the funds. Usually, but not always, interest is charged. This is 1 of the major forms of financial aid available to students. There are many types of loans available, including private loans, federal and state loans, college-based loans, and forgivable loans (also known as scholarship/loans or loans-for-service).


— M —

M.A.: Master’s of Arts. See “Master’s Degree.”

Major: Most colleges require students to specialize (major) in a specific subject or discipline—generally during their junior and senior years.

Master’s Degree: A graduate degree (M.A., M.S., etc.) granted by universities; usually involves taking at least 1 full year of classes beyond a bachelor’s degree plus writing a thesis or taking a comprehensive examination.

MDE Processor: See “Multiple Data Entry Processor.”

Merit-Based Aid: Financial aid is often referred to as either need-based or merit-based. Programs that consider an applicant’s achievements, talents, or other merits, but do not factor in financial need in the selection process, are known as merit-based.

Methodology: There are a number of systems (or methodologies) used to calculate Expected Family Contribution. One of the most important is the Federal Need Analysis Methodology.

Minor: Some colleges require or allow students to develop a secondary area of concentration (minor), in addition to their major. For example, a European history major may have a French minor.

Multiple Data Entry (MDE) Processor: The Department of Education has contracted with a number of organizations to process federal student aid applications (e.g., College Scholarship Service, American College Testing).


— N —

NAFSA: National Association of Student Financial Aid Administrators.

National Direct Student Loan Program: See “Federal Perkins Loan Program.”

NDSL: National Direct Student Loan (formerly the National Defense Student Loan). Now called the Perkins Loan.

Need: See “Financial Need.”

Need Analysis: A system used to calculate Expected Family Contribution. For information on the need analysis system used by the federal government, see “Federal Need Analysis Methodology.”

Need Analysis Form: There are several forms available. For federal and some state aid, the Free Application for Federal Student Aid (FAFSA) is required. The majority of public colleges also use this form. For many private colleges, the Financial Aid PROFILE may be needed. Some states require their residents to use their own form; e.g., Pennsylvania applicants are required to submit the PHEAA Aid Information Request (PAIR), available from the Pennsylvania Higher Education Assistance Agency.

Need-Based Aid: Financial aid awarded on the basis of the applicant’s financial need. Other factors may also be considered.

NMSQT: National Merit Scholarship Qualifying Test. For more information, see “PSAT/NMSQT (Preliminary SAT/National Merit Scholarship Qualifying Test).”

Non-Institutional Costs: College-related costs that are not charged directly by the student’s school (e.g., books, supplies, transportation, off-campus room and board, miscellaneous expenses).

Non-Need Based Aid: Federal aid is often referred to as either need-based or non-need based. No-need programs do not take into consideration an applicant’s level of financial need in the selection process. Other factors, instead, are used (e.g., musical, athletic, or purely academic accomplishments). One popular form of non-need based awards are merit-based programs.

Notification: See “Financial Aid Award Letter.”


— O

Off-Campus: Housing that is either not owned by the school or located on school property.

On-Campus: Housing this is owned by the school or located on school property.

Open Admissions: Particularly common on the junior or community college level, this system admits high school graduates and other adults without regard to their academic qualifications (they need only have a high school diploma or its equivalent) 

Out-of-State Student: Students who are not legal residents of a state or local district that is responsible for the supervision of the student’s institution. Generally, the tuition charged out-of-state students is much higher than that charged to legal residents.

Overawards: This occurs when the student’s Expected Family Contribution, the student’s own resources, and the financial aid awarded to the student exceed the student’s cost of attendance. Overawards are not allowed if the student is receiving federal aid.


— P —

PAA: See “Prueba de Aptitude Academica

Package: See “Financial Aid Package.”

Packaging: This refers to the particular combination of scholarships, loans, and work opportunities that is put together for each student.

Parent: The natural mother and/or father, or the adoptive mother and/or father, or any legal guardian.

Parent’s Contribution: The amount parents can reasonably be expected to provide toward the cost of postsecondary education for their child, given their particular combination of assets and liabilities. For more information, see “Expected Family Contribution.”

Part-Time Student: A student who is registered for less than 12 hours of credit per semester.

PLUS: Parent Loans to Undergraduate Students. See “Federal PLUS Loans."

Portability: Financial aid programs are generally either school-based (can be used at only 1 school or a specified group of schools) or portable (can be used at whatever school the student chooses to attend—within limits). Print and Internet resources that focus on “portable” financial aid programs are more useful than those that include school-based programs. Your best source of information on school-based programs is the school itself.

Postsecondary Education: This includes all education occurring after high school, both undergraduate and graduate.

Prepaid Tuition Plan: A college savings plan guaranteed to rise in value at the same rate as college tuition. Several states and institutions offer such programs.

Principal (Loan): The amount of money a student borrows. This does not include interest or any other loan-related charges.

Promissory note: A binding legal document that borrowers sign when they get a student loan. The note lists the conditions under which they are borrowing and the terms under which they agree to pay back the loan. It includes information about interest rates and about deferment and cancellation provisions (if any). Be sure to read and save any promissory note you sign; you will need to refer to it later when you begin to repay the loan.

Prueba de Aptitude Academica (PAA): A Spanish-language college aptitude test (similar to the SAT) developed by the College Board. Many colleges in Puerto Rico use this test.

PSAT/NMSQT (Preliminary SAT/National Merit Scholarship Qualifying Test): Serves as a qualifying test for awards from the National Merit Scholarship Program and some others (including the National Hispanic Scholar Award). The test is administered by high schools nationwide each October. In structure, it is a shortened version of the SAT.


— Q —

Quarter: An academic term, generally 11 weeks in length. While 4 quarters make up the academic year, most students attend only the first 3 quarters.


— R —

Regular Student: A student who is enrolled in an institution to obtain a degree or certificate. Generally, to receive aid from the major federal student aid programs, you will need to be a regular student.

Repayment Schedule: The plan established to repay a loan. It generally spells out the principal and interest due on each installment, the interest rate charged, the frequency of payments, the due date of the first payment, and the total number of installments due.

Residency Requirements: This term can be used in 2 different ways: 1) the minimum time a student must spend in a particular geographic location to be considered a resident, or 2) the minimum time a student must spend taking classes on campus to be eligible for graduation.

Rolling Admissions: Applications for admission that are considered as soon as all the required paperwork has been submitted. These types of program do not have a specific deadline.


— S —

SAR: See “Student Aid Report.”

SAT: See “Scholastic Assessment Test.”

Satisfactory Academic Progress: To be eligible to receive and continue receiving federal student aid, you must be maintaining satisfactory academic progress toward a degree or certificate. You must meet your school’s written standard of satisfactory progress. Check with your school to find out its standard. If you are enrolled in a program that’s longer than 2 years, the following definition of satisfactory progress also applies to you: you must have a “C” average by the end of the your second academic year of study or have an academic standing consistent with your school’s graduation requirements. You must continue to maintain satisfactory academic progress for the rest of your course of study.

Scholarships: This is a type of financial aid for undergraduates that does not have to be paid back. In popular terms, it is also referred to as grants, gift aid, and free money. Although the terms “scholarships” and “fellowships” are frequently used interchangeably, it is proper to think of scholarships as awards for undergraduate students and fellowships as awards for graduate or postgraduate students.

Scholarship/Loans: This is a form of financial aid that has a service and/or cash repayment obligation as a condition for receiving the funds. A student promise to deliver specific services after graduation or repay all funds, plus interest. Also known as forgivable loans and loans-for-service.

Scholarship Search Services: These are businesses that use Internet, computer, or print resources to search for funding for students or others. They charge a fee, which can range from $50 to several hundred dollars.

Scholastic Assessment Test (SAT): Formerly called the Scholastic Aptitude Test. This is a test of verbal and mathematical reasoning that students take during high school. The tests are offered throughout the year at test sites in the United States and abroad. Many colleges and financial aid sponsors require students to take and report their scores on this test.

School Year: See “Academic Year.”

Search Services: See “Scholarship Search Services.”

Selective Service Registration: If you are male, at least 18 years of age, a citizen or eligible noncitizen, and not currently on active duty in the armed services, you must register with the Selective Service in order to receive federal student aid. A statement appears on the Student Aid Report (defined below) that allows you to state either that you have registered with the Selective Service or to explain why you are not required to register. Citizens of the Federated States of Micronesia, the Marshall Islands, and Palau are exempt from registering.

Semester: An academic term, generally 17 or 18 weeks in length. Usually, schools have 2 semesters and 1 or more summer sessions.

SEOG: Supplemental Educational Opportunity Grant. For more information, see “Federal Supplemental Educational Opportunity Grant.”

Service Academies: There are 5 academies administered by the armed services: U.S. Military Academy (West Point), U.S. Air Force Academy; U.S. Naval Academy (Annapolis); U.S. Coast Guard Academy; and U.S. Merchant Marine Academy.

Simplified Needs Test: A way of calculating Expected Family Contribution, when the following situation occurs: parents have an adjusted gross income of less than $50,000 and family members have filed an IRS Form 1040A, 1040TEL, or 1040EZ or are not required to file. Unlike other formulas, this one does not consider assets.

Stafford Loan: See “Federal Stafford Loans.”

Statement of Educational Purpose: Students must sign this document if they are going to receive federal need-based funds. The document states that the student promises to use the money only to pay for educational expenses.

Student Aid Report (SAR): This is the document produced by the U.S. Department of Education that notifies students of the results of the processing of their Free Application for Federal Student Aid (FAFSA). The student’s eligibility for aid is indicated by the EFC, which is printed on the front of the SAR. In addition to the Information Summary that SARs have, some reports will also have an Information Review or Request Form and a Payment Voucher. The SAR must be submitted to the student’s college to certify eligibility for federal student aid.

Student’s Contribution: This is the amount that students are expected to pay towards their college costs. It is based on an analysis of their income, assets, and liabilities. The student’s contribution, along with the parents’ contribution make up the Expected Family Contribution. The EFC is considered when a student’s level of financial need is determined.

Study Abroad: As part of their college education, many students take advantage of study abroad opportunities. Study abroad programs allow students to spend a semester or a year in a foreign country, studying at a university, while receiving credit that will count towards their degree. Generally, students participate in this program during their junior year, but many colleges offer study abroad programs for students at any level.

Subsidized loans: These are federally guaranteed loans that are awarded on the basis of financial need. The federal government pays interest on the loan while the student is in school and for 6 months after graduation.


— T —

Traditional Student: A full-time college or university student who is between the ages of 18 to 25.

Transcript: A list of all classes taken and grades received. Many financial aid sponsors require a copy of an applicant’s official transcript as part of the application process.

Transfer Programs: An organized set of classes offered by community and junior colleges for students who plan to continue their education at a 4-year college or university.

Transfer Students: These are students who have attended 1 college for a period of time (ranging from 1 term to 3 years) who are or will be attending another institution. Some scholarships are set aside specifically for transfer students.

Trimester: An academic term that generally lasts 15 weeks. There are 3 trimesters each year. Most students enroll in only 2 trimesters a year.

Tuition and fee waivers: Many colleges will waive tuition and/or fees for certain categories of students (e.g., senior citizens, children of alumni, veterans, persons with disabilities).


— U —

Upper Division: The last 2 years (junior and senior years) of undergraduate study. There are schools that offer only lower-division classes (e.g., community and junior colleges), both lower-division and upper-division classes (4-year colleges and universities), and only upper-division classes.

Undergraduate Student: A student working on a baccalaureate or first professional degree (e.g., a Bachelor of Architecture).

Unmet Need: The difference between a student’s cost of attendance and the student’s available financial resources (including any financial aid that has already been awarded).

Unsubsidized Loan: Federal loans that are not based on financial need (e.g., Unsubsidized Stafford Loan). Since the loan is not subsidized, students must pay all interest charges that accrue on the loan.


— V —

Variable Interest Rate: As opposed to fixed rates, these rates are adjusted at regular intervals (e.g., monthly, quarterly, or yearly). A number of federal loan programs (e.g., Federal Stafford Loans) carry variable rates that are set annually.

Verification: Confirmation that a school has received a student’s application data.

Verification Form: Sent by a student’s college or servicer; the student needs to complete this form and return it to the school.

— W, X, Y, Z —

 Work-Study: Work-study assignments are awarded as part of a financial aid package and require the recipient to work to receive any money. Unlike cooperative education or internship programs, which are integrated into an academic program, this approach is meant simply as a way for paying for college (see also "Federal Work-Study Program").

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Last updated February 3, 2016. Copyright © 2004-2016

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