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

AA: An associate of arts degree. Can be earned at most two-year colleges.

AAS: An associate of applied science degree. Can be earned at some two-year colleges.

ACT: A test published by American College Testing to measure a student's ability in math, verbal comprehension and problem solving. Usually students take this test during their junior or senior year of high school. 

ADC: Aid to Dependent Children

AFDC: Aid to Families with Dependent Children

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 educational program to education program at the same school.

Achievement Tests: Tests required by some colleges to measure student achievement in specific areas of study such as English, Math or Science. 

Accrued Interest: Interest that accumulates on the unpaid principal balance of a loan.  

Adjusted Gross Income (AGI): All taxable income less IRS allowable adjustments to income. This figure is from U.S. IRS tax forms.  

Advanced Placement Test: Test used to earn credit for college subjects studied in high school. They are offered by the Educational Testing Service (ETS) in the spring. AP tests are scored on a scale from 1 to 5 (the best possible score). 

Aid Package: A combination of financial aid (scholarships, grants, loans, and/or work study) determined by the financial aid office of a college or university.  

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.  

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BA or BS: BA stands for bachelor of arts, and BS stands for bachelor of science. Both degrees can be earned at four-year colleges. The type of degree awarded depends on the kinds of courses offered at the particular school. 

BIA: Bureau of Indian Affairs  

Bankruptcy: A person is declared bankrupt, when found to be legally insolvent and the person's property is distributed among creditors or otherwise administered to satisfy the interests of creditors. Generally, Federal student loans cannot be discharged through bankruptcy. 

Base Year: The tax year prior to the academic year (award year) for which financial aid is requested. Financial information from this year is used to determine eligibility for financial aid. 

Borrower: The person who receives the loan. 

Budget: The total cost of attending a postsecondary 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. 

Bursar's Office: The university office that is responsible for the billing and collection of university charges.    

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CASHE: College Aid Sources for Higher Education  

CBT: Computer Based Training  

CPS: Central Processing System  

Campus-based Aid: 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. 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.

Consolidation: Refinancing multiple education loans into one new loan with a new repayment term, monthly payments, and interest rate.

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 (COA): The total cost of attending a post-secondary institution for one academic year. The student's budget usually includes tuition, fees, room, board, supplies, transportation, and personal expenses. 

Credit-ready: A credit-ready borrower is one who has no credit history OR a credit history with no excessive number of delinquencies on consumer loans or revolving charge accounts; no prior education loan defaults; no derogatory credit items such as charge offs, foreclosures, open judgments, bankruptcy, etc. 

Credit-scoring: A method, based on statistical analysis of applicant characteristics, through which lenders determine the applicant's qualification for credit. 

Credit-worthy: An individual with no negative credit history per the criteria established by the lender.  

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DOE: See US Department of Education  

Default: Failure to make scheduled monthly payments according to the agreed-upon terms. Default occurs at 180 days when the delinquency date is prior to 10/7/98, and 270 days when the delinquency date is on or after 10/7/98.  

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.  

Delinquency: Failure to make monthly loan payments when due. Delinquency begins with the first missed payment.  

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. (See also Independent.)  

Direct Repay: Borrowers authorize automatic transfers of funds from checking or savings accounts to cover monthly education loan payments. Participants may receive a 1/4% interest rate reduction on eligible loans. 

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.  

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.  

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ED: See US Department of Education  

ELO: Expanded Lending Option

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 (thus, early decision can be applied to only one school). Unfortunately, this means the student has accepted the offer of admission before they find out about the financial aid package. 

Electronic Funds Transfer (EFT): Any transfer of funds that is initiated through electronic means, such as data transmission by computer rather than a paper based transaction, such as a check.  

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 Federal student aid.  

Endowment: Funds owned by an institution and invested to produce income to support the operation of the institution. Many educational institutions use a portion of their endowment income for financial 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 (and in some cases full-time) to qualify for financial aid. 

Entitlement: Entitlement programs award funds to all qualified applicants. The Pell Grant is an example of such a program. 

Entrance Interview: See Loan Interviews. 

Expected Family Contribution (EFC): Amount a family is expected to contribute to a student's education. EFC is calculated based on family earnings, net assets, savings, size of family and number of students in college.

Exit Interview: See Loan Interviews.  

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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.

FAO: Financial Aid Office  

FDLP: The William D. Ford Federal Direct Loan Program. Stafford and PLUS loans are available directly from the federal 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 federal government.  

Federal Methodology (FM): The need analysis formula mandated by federal law to determine a family's Expected Family Contribution (EFC).

Federal Processor: The organization that processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and uses it to compute eligibility for federal student aid.

Fellowship: A form of aid given to graduate students to help support their education. Some fellowships include tuition waivers or payments to universities in lieu of tuition. Most fellowships include a stipend to cover reasonable living expenses (e.g., just above the poverty line). 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: The total amount of financial aid (federal and nonfederal) such as scholarships, grants, loans, and/or work-study for which a student is eligible. 

Financial Aid Transcript (FAT): A record of all federal aid received by students at each school attended. 

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. 

Forbearance: Temporary cessation of regularly scheduled payments or temporarily permitting smaller payments than were originally scheduled.  

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General Education Development Certificate (GED): A certificate students receive in lieu of a diploma if they have passed a specific approved high school equivalency test.

Gift Aid: Financial aid, such as grants and scholarships, which does not need to be repaid. 

Grace Period: Specified period of time between the date a student graduates or drops below half-time status and the date loan repayment begins.  

Grade Point Average (GPA): An average of a student's grades, where the grades have been converted to a 4.0 scale - with 4.0 being an A, 3.0 being a B, and 2.0 being a C.

Graduate Student: A student in a postsecondary institution who is enrolled in a master's or higher level degree program.  

Graduated Repayment: A repayment schedule where the monthly payments are smaller at the start of the repayment period and become larger later on. 

Grants: Financial aid awards that do not have to be repaid. Grants are available through the federal government, state agencies and colleges.  

Great Returns: A program that rewards Stafford borrowers who pay on time with a credit to their account.  

Great Rewards: Enables eligible borrowers who pay on time to receive an interest rate reduction for the remaining term of their loans.  

Gross Income: income before taxes, deductions, and allowances have been subtracted. 

Guarantor or Guarantee Agency: State agency or private non-profit institution that insures student loans for lenders and helps administer the FFELP.  

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Holder: The institution that owns a loan.  

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ISIR: Institutional Student Information Record  

In-School: The period that borrowers are enrolled at least half-time. 

In-School and Grace Interest Subsidy: Interest the federal government pays on certain loans while borrowers are in school, during authorized deferment, or grace periods. 

Income: The amount of money received from employment (salary, wages, tips), profit from financial instruments (interest, dividends, capital gains), or other sources (welfare, disability, child support, Social Security, and pensions). 

Income-Based Repayment: (Income Sensitive/Income Contingent) Repayment schedule where the amount of the monthly payments is based on the income earned by the borrower. 

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.  

Institutional Methodology: When a college or university uses its own formula to determine financial need for allocation of the school's own financial aid funds, the formula is referred to as the Institutional Methodology. 

Insurance Fee: A fee charged by guarantee agencies, which is deducted from loan proceeds and used to insure against defaulted loans.  

Interest: An amount, calculated as a percent of the principal loan amount, that is charged for borrowed money.  

Interest capitalization: See capitalization of interest.  

Interest-Only Payment: A payment that covers only accrued interest owed on a loan and none of the principal balance. Interest-only payments do not prohibit borrowers from making additional or larger payments at any time if the borrower desires.  

Internship: Part-time job during the academic year or the summer months in which a student receives supervised practical training in a their field.  

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Lender: A financial institution, agency or school that provides the money to make a loan to a borrower.  

Loan: A type of financial aid that is available to students and their parents. Student loan programs have varying interest rates and repayment provisions. An education loan must be repaid. 

Loan Interviews: Students with educational loans are required to meet with a financial aid administrator 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.  

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Master Promissory Note: The promissory note a student signs when taking out a Stafford Loan. The Master Promissory Note covers both the Subsidized and Unsubsidized Stafford loans the student may receive for the same enrollment period. If the student is attending a 4-year or graduate school, the Master Promissory Note also covers Subsidized and Unsubsidized Stafford loans the student may receive for future enrollment periods.

Merit-based: A means of determining eligibility for certain types of financial aid using merit, such as a specific accomplishment or talent, as the determining factor, rather than financial need.  

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NMSQT: National Merit Scholastic Qualifying Test  

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 federal 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 -- the gap between the cost of attending the school and the student's resources. 

Need Analysis: Technique 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.  

Net Income: This is income after taxes, deductions, and allowances have been subtracted.   

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Open Admissions: When most or all students that apply to a college are admitted.  

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 federal 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 loan proceeds that, when added to other student financial assistance, exceeds the borrower's educational need.  

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Parent's Contribution (PC): Amount parents can be expected to contribute each year to the cost of their student's education as determined by the Federal Methodology.  

Parent Loans for Undergraduate Students (PLUS): Federally-insured loans for parents of dependent students.  

Pell Grant Program: The largest federal grant program. Eligibility and award amounts are determined by the college based on established federal guidelines.  

Period of Enrollment: The period for which aid is made as determined by the school. A period of enrollment coincides with an academic term such as the academic year, semester, trimester, or quarter, and starts on the day classes begin. 

Perkins loans: Federally-insured loans funded by the federal government and awarded by the school. The loans feature a low interest rate and are repayable over an extended period.  

Postsecondary: 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. 

Prepayment: Paying off all or part of a loan before it is due. 

Principal Balance: Amount borrowed, which may increase as a result of interest capitalization, and the amount on which interest is calculated. 

Private Loans: Private loans provide supplemental funding when other financial aid does not cover costs. These loans (not sponsored by government agencies) are offered by banks or other financial institutions and schools to parents and students.  

PROFILE: (CSS/Financial Aid Profile) A customized financial aid application form required at certain colleges, 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.  

Proprietary School: Postsecondary schools that are private and are legally permitted to make a profit. Most proprietary schools offer technical and vocational courses. 

PSAT/NMSQT: The Preliminary Scholastic Assessment Test/National Merit Scholastic Qualifying Test, which helps prepare students for the SAT and is part of the qualifying criteria for the National Merit Scholarship Program. A student usually takes this test as a high school sophomore or early in the junior year.  

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RA: Research Assistantship  

Renewal Application: A FAFSA application that is used for subsequent-year applications after the initial FAFSA has been filed.  

Repayment: The time during which a borrower actively pays back an education loan.  

Reserve Officers Training Corps (ROTC): Programs that combine military education with baccalaureate degree study, often with financial support and required commitment to future service in the Armed Services. Scholarship recipients participate in summer training while in college and meet a service commitment after college.    

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SASE: Self-Addressed Stamped Envelope  

SAT I: The Scholastic Assessment Test, which is used to measure a student's ability in math, verbal comprehension and problem solving. SATs are administered during the junior and senior years in high school.  

SAT II Subject Test: Offered in many areas of study including English, mathematics, many sciences, history, and foreign languages. Some colleges require students to take one or more SAT II tests when they apply for admission. 

SLMA: Student Loan Marketing Association, a Sallie Mae company  

SSIG: State Student Incentive Grant, see LEAP.  

SSN: Social Security Number  

Satisfactory Academic Progress: An eligibility requirement to receive federal student aid. Satisfactory progress standards are established by each school. 

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, hobbies, talents, affiliations with various groups, or career aspirations. They usually do not provide funds for living expenses.  

Secondary Market: Institutions, like Sallie Mae, that buy student loans from the institutions that originate or own them.  

Selective Service: Registration for the military draft. Male students who are U.S. citizens, have reached the age of 18, and were born after December 31, 1959, must be registered with the Selective Service to be eligible for federal financial aid. 

Self-Help Aid: Financial aid in the form of loans or student employment. 

SEOG: Supplemental Educational Opportunity Grant Program; federal grant funds made available through some schools to a limited number of undergraduate students with financial need.  

Serialization: Combining several loans into one account so that the borrower only pays one monthly bill. Original loan terms do not change with serialization.  

Servicer: Organization that administers and collects loan payments. May be either the loan holder or an agent acting on behalf of the holder.  

SMART LOAN Account: Sallie Mae's loan consolidation plan that allows borrowers to reduce their initial monthly payments by as much as 40%.  

Stafford loans: Loans, both subsidized (need based) and unsubsidized (non-need based), guaranteed by the federal government and available to students to fund education.  

Statement of Educational Purpose: A legal document in which the student agrees to use the financial aid for educational expenses only. 

Student Aid Report (SAR): A federal 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 eligibility for aid is indicated by the Expected Family Contribution (EFC), which is printed on the front of the SAR.  

Subsidized Stafford loans: Need based loans.

Supplemental Loan for Students: Federal loans for financially independent students. This program was eliminated in 1994 with the creation of the Unsubsidized Stafford Loan program.  

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TA: Teaching Assistantship  

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. Transcripts are usually required for college applications.  

Tuition: The amount of money colleges charge for classroom and other instruction, and use of some facilities such as libraries.   

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Undergraduate Student: A degree-seeking student at a college or university who has not earned a first bachelor's degree.  

Unsubsidized Stafford loans: Non-need based loans.  

US Department of Education (ED, DOE, USED, DE): Government agency that administers several federal student financial aid programs, including the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loan, the FFELP, and the FDSLP.  

US Department of Health and Human Services (DHHS, HHS): Government agency that administers several federal health education loan programs, including the HEAL, HPSL, and NSL loan programs.  

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VA: Veteran's Administration  

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 Bills (e.g., T-Bill rate plus 3.1%) 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.  

Veteran: For Federal financial aid purposes, such as determining dependency status, a veteran is a former member of the US Armed Forces who served on active duty and was discharged other than dishonorably.   

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Work Study: A program, awarded by the college, through which students work part-time to help fund their education.    

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