Financial Aid Glossary

The world of financial aid has a language all its own. Financing your college education can be challenging enough without having to decipher acronyms or trying to figure out exactly what a term means. This glossary should help you as you begin your search for scholarships, grants and other forms of financial aid.

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 full-time undergraduate student must complete 24 semester hours. Academic years can vary from school to school, and even from educational program to educational program at the same school.

Accreditation

The school must have accreditation from an accrediting body recognized by the U.S. Department of Education to be eligible to participate in the administration of federal student aid programs. Accreditation means that the school meets certain minimum academic standards, as defined by the accrediting body.

Acceptance Form

The written acknowledgement by the student of receipt of an award letter. The form usually provides for acceptance or rejection of offered aid.

Award Letter

A means of notifying successful financial aid applicants of the assistance being offered. The award letter usually provides information on the types and amounts of aid offered, as well as specific program information, student responsibilities, and the conditions that govern the award. It generally provides students with the opportunity to accept or decline the aid offered.

Cost of Attendance

Costs associated with attending college. Can include: tuition and fees, room and board, allowances for books, supplies, transportation, personal expenses, child care and costs related to a disability.

Dependent Student

A student who does not qualify as an independent student and whose parental income and asset information is used in calculating Expected Family Contribution.

Expected Family Contribution (EFC)

The amount a student and his/her family are expected to pay toward the cost of attending college. This amount is determined by a formula established by Congress. The formula includes factors such as taxable and non-taxable income, assets, family size, number in college, etc.

Federal Direct Plus (Parent Loan)

Long-term loan made available to parents of dependent students. The federal government provides the loan capital; selected educational institutions serve as the administrators. Interest rates are linked to 52-week Treasury bill rates, but may not exceed nine percent. May be used to replace Expected Family Contribution.

Federal Direct Stafford Loan Program (Subsidized and Unsubsidized)

Long-term, low interest student loan administered by selected educational institutions. The federal government provides the loan capital; the school serves as the administrator. Variable interest rate not to exceed eight and one-quarter percent. Unsubsidized Direct Stafford Loans can be used to replace the EFC.

Federal Pell Grant

A grant program for low-income undergraduate students who have not yet completed a first bachelor’s degree.

Federal Perkins Loan

One of the campus-based programs; a long-term, low interest loan program for both undergraduate and graduate students.

Federal Plus Loan (Parent Loan)

Long-term loan made available to parents of dependent students. Private lending institutions provide the loan capital, and the federal government administers the program. Interest rates are linked to 52-week Treasury bill rates, but may not exceed nine percent. May be used to replace the EFC.

Federal Stafford Loan Program (Subsidized and Unsubsidized)

Long-term, low interest student loan administered by the federal government. Private lending institutions provide the loan capital. Formerly known as Guaranteed Student Loan. Variable interest rate, not to exceed eight and one-quarter percent. Unsubsidized Federal Stafford Loans may be used to replace EFC.

Federal Supplemental Educational Opportunity Grant (FSEOG)

One of the campus-based programs; grants to undergraduate students of exceptional financial need who have not completed their first bachelor’s degree and who are financially in need of this grant to enable them to pursue their education. Priority for FSEOG awards must be given to Federal Pell Grant recipients with the lowest EFCs.

Federal Teacher Education Assistance for College and Higher Education Grant (TEACH)

Grant available to undergraduate, post-baccalaureate or graduate students planning to become elementary or secondary teachers. Requires a teaching service commitment.

Federal Work-study Programs (FWS)

One of the campus-based programs; a part-time employment program that provides jobs for undergraduate and graduate students who are in need of such earnings to meet a portion of their educational expenses. Note: Students not offered FWS may be given the opportunity for on-campus employment through a work program sponsored by the institution.

Financial Aid Award

An offer of financial assistance to a student attending a post-secondary educational institution. This award may be in the form of one or more of the following types of financial aid: repayable loan, a non-repayable grant and/or scholarship, and/or student employment.

Financial Aid Package

The total financial aid award a student receives. The aid may come from federal, state, institutional, or private sources and may include loans, grants, scholarships, and/or employment.

Financial Need

The difference between the institution’s cost of attendance and the EFC.

Free Application for Federal Student Aid (FAFSA)

The form used to apply for federal and state student aid, processed at no cost to the applicant. It is used to determine a student’s eligibility for federal grant, loan, and work-study funds and most other need-based awards. The FAFSA is to be completed by the student and the student’s parents, if applicable, and can be done electronically at www.fafsa.ed.gov. The FAFSA must be filed by March 1.

Full-time Student

Generally, an undergraduate who is taking a minimum of 12 credits per semester or academic term at an institution with standard academic terms.

Institutional Aid

Aid that educational institutions make available from their own funds to their students.

Loan

An advance of funds that is evidenced by a promissory note requiring the recipient to repay the specified amount(s) under prescribed conditions.

Need-based Awards

Awards to students who demonstrate they and their family cannot pay for all of the cost of post-secondary education on their own. Academic merit may or may not be considered.

Nonrenewable Award

An award that is given only once.

PIN (U.S. Department of Education)

A personal identification number that is used each year by students and parents to electronically “sign” the Free Application for Federal Student Aid and access federal aid information. Get your PIN at www.pin.ed.gov.

Renewable Award

An award that can be earned for more than one year providing conditions set by the distributing institution are met by the recipient.

Scholarship

A type of financial assistance that does not require repayment or employment; may be based on merit, need, or merit plus need.

Student Aid Report (SAR)

The report provided to the student after filing the FAFSA. This document summarizes applicant information, the EFC for the student, and other messages related to the student’s application.

Subsidized Loan

A loan on which the government pays the interest until repayment begins. This type of loan may not be used to assist with the Expected Family Contribution and is awarded only to students who demonstrate financial need.

Unmet Need

The difference between a student’s total cost of attendance at a specific institution and the student’s total available resources.

Unsubsidized Loan

A loan on which the student pays the interest beginning at the time of loan disbursement. Arrangements may be made to capitalize the interest. This type of a loan may be used to assist with the Expected Family Contribution. Financial need is not a factor, but the student must complete the FAFSA process.

Verification

The process of confirming information submitted on student aid applications through the comparison of specified documents to the data on the Student Aid Report (SAR) or other applications for student aid. This often requires submission of a copy of federal income tax forms.