Costs & Financial Aid Glossary

Academic Competitiveness Grant (ACG): A federal grant awarded to first and second year students who are eligible for a Federal Pell Grant, enrolled at least half time, and who have successfully completed a rigorous secondary school program of study and, for second year students, have earned at least a 3.0 GPA.

Accruing Interest (on a loan): The cost of the loan, represented by the interest,which is added to the loan amount prior to the repayment period or prior to a payment installment.

Adjusted Gross Income (AGI): All taxable income as reported on a U.S. income tax return.

Assets: Cash on hand in checking and savings accounts; trusts, stocks, bonds, other securities; real estate (excluding the home), income-producing property, business equipment, and business inventory. Assets are considered in calculating the Expected Family Contribution (EFC).

Award Letter: A method of notifying successful financial aid applicants of the assistance being offered by the institution. 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 which govern the award. Generally provides students with the opportunity to accept or decline the aid offered. (See Financial Aid Notification)

Budget: See Cost of Attendance.

Byrd Scholarship: A federally sponsored, merit-based scholarship for outstanding high school students.

Campus-based Programs: The term commonly applied to those U.S. Department of Education federal student aid programs administered directly by institutions of postsecondary education. Campus-based programs include: Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Work-Study (FWS).

Capitalization (of interest): The arrangement between borrower and lender whereby interest payments are deferred as they come due and are added to the principal amount of the loan.

Central Processing System (CPS): The computer system to which the students need analysis data is electronically transmitted by the FAFSA processor. The Central Processing System performs database matches, calculates the students official Expected Family contribution (EFC), and generates the Student Aid Report (SAR).

COA: See Cost of Attendance.

Consolidation Loan: A loan made to enable a borrower with different types of loans to obtain a single loan with one interest rate and one repayment schedule. Federal Perkins, Federal Stafford (subsidized and unsubsidized), Direct Subsidized and Direct Unsubsidized, Health Education Assistance Loans (HEAL), Health Professions Student Loans (HPSL), and Loans for Disadvantaged Students may be combined for purposes of consolidation, subject to certain eligibility requirements. A consolidation loan pays off the existing loans; the borrower then repays the consolidated loan.

Cost of Attendance (COA): Generally, this includes the tuition and fees normally assessed a student, together with the institutions estimate of the cost of room and board, transportation and commuting costs, books and supplies, the cost of a computer, and miscellaneous personal expenses. In addition, student loan fees, dependent care, reasonable costs for a study abroad or cooperative education program, and/or costs related to a disability may be included, when appropriate. It is also referred to as cost of education or budget.

CPS: See Central Processing System.

Credit (or Credit Hour): The unit of measurement some institutions give for fulfilling course requirements.

Custodial Parent: The parent with whom a dependent student lives, and whose financial information is used in need analysis when parents are divorced or separated.

Deferment (of loan): A condition during which payments of principal are not required, and, for Federal Perkins and subsidized Federal Stafford and Direct Subsidized Loans, interest does not accrue. The repayment period is extended by the length of the deferment period.

Department of Education, U.S. (ED): The federal government agency that administers assistance to students enrolled in postsecondary educational programs under the following programs: Federal Pell Grant, Academic Competitiveness Grant (ACG), National Science and Mathematics Access to Retain Talent (SMART) Grant, Teacher Education Assistance for College and Higher Education (TEACH) Grants, Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), Federal Family Education Loan (FFEL) Programs, and William D. Ford Federal Direct Loan (Direct Loan) Program.

Dependent Student: A student who does not qualify as an independent student and whose parental income and asset information is used in calculating the Expected Family Contribution (see Independent Student).

Direct PLUS Loan: Long-term loans made available to parents of dependent students. Interest rates are linked to 52-week Treasury bill rates, but may not exceed 9%. May be used to replace EFC; amount borrowed is limited to the cost of attendance minus estimated financial assistance.

Direct Subsidized and Direct Unsubsidized Loans: Long term, low-interest loans administered by the Department of Education and institutions. Loans carry a fixed interest rate of 6.8%. Direct Unsubsidized Loans can be used to replace EFC.

Educational Expenses: See Budget and Cost of Attendance.

EFC: See Expected Family Contribution.

Expected Family Contribution (EFC): The amount a student and his or her family is expected to pay toward the students cost of attendance as calculated by a Congressionally-mandated formula known as Federal Methodology. The EFC is used to determine a students eligibility for the student financial assistance programs.

FAFSA: See Free Application for Federal Student Aid.

FAFSA on the Web (FOTW): Allows students to compete and file a FAFSA on line at

Federal Family Education Loan (FFEL) Programs: The collective name for the Federal Stafford (subsidized and unsubsidized), Federal PLUS Loan, and Federal Consolidated Loan programs. Funds for these programs are provided by private lenders and the loans are guaranteed by the federal government.

Federal Pell Grant: A federal grant program for needy postsecondary students who have not yet received a baccalaureate or first professional degree; administered by the U.S. Department of Education.

Federal PLUS Loan (PLUS): Long-term loans made available to parents of dependent students. Interest rates may not exceed 9%. PLUS Loans may be used to replace the EFC; annual loan amount limited to the cost of attendance minus estimated financial assistance (EFA).

Federal Stafford Loan (subsidized and unsubsidized): Long term, low interest loans administered by the Department of Education through private guarantee agencies. These loans used to be known as Guaranteed Student Loans (GSLs). Loans have a fixed interest rate of 6.8%. Unsubsidized Federal Stafford Loans may be used to replace the 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 baccalaureate 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 Work-Study Program (FWS): One of the campus-based programs; a part-time employment program which provides jobs for undergraduate and graduate students who are in need of such earnings to meet a portion of their educational expenses.

FFELP: See Federal Family Education Loan Programs.

Financial Aid: General term that describes any source of student assistance outside the student or the students family. Funds awarded to a student to help meet postsecondary educational expenses. These funds are generally awarded on the basis of financial need and include scholarships, grants, loans, and employment.

Financial Aid Award: An offer of financial or in-kind assistance to a student attending a postsecondary 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 Notification: The letter from a postsecondary institution that lets the student know whether or not aid has been awarded. If the student will be receiving assistance, the notification also describes the financial aid package. State agencies and private organizations may send students financial aid notifications separately from the postsecondary institution. Also see Award Letter.

Financial Aid Package: A financial aid award to a student comprised of a combination of forms of financial aid (loans, grants and/or scholarships, and employment).

Financial Need: The difference between the institutions cost of attendance and the familys ability to pay (i.e., Expected Family Contribution). Ability to pay is represented by the expected family contribution for federal need-based aid and for many state and institutional programs.

Financial Need Equation: Cost of attendance minus Expected Family Contribution equals financial need (COA - EFC = Need).

Forbearance: Permits the temporary cessation of repayments of loans, allowing an extension of time for making loan payments, or accepting smaller loan payments than were previously scheduled.

Free Application for Federal Student Aid (FAFSA): The financial aid application completed by the student, and the students parents if applicable, that collects household and financial information. The FAFSA is the foundation document for all federal need analysis computations and database matches performed for a student.

FSEOG: See Federal Supplemental Educational Opportunity Grant.

Grace Period: The period of time that begins when a loan recipient ceases to be enrolled at least half-time and ends when the repayment period starts. Loan principal need not be paid and, generally, interest does not accrue during this period.

Grant: A type of financial aid that does not have to be repaid; usually awarded on the basis of need, possibly combined with some skills or characteristics the student possesses. Also see Gift Aid.

Income: Amount of money received from any or all of the following: wages, interest, dividends, sales or rental of property or services, business or farm profits, certain welfare programs, and subsistence allowances such as taxable and non-taxable Social Security benefits and child support.

Independent Student: A student who:

(a) will be 24 years of age by December 31 of the award year;
(b) is an orphan or a ward of the court;
(c) is an orphan, in foster care, or a ward of the court, at any time when the student was 13 years of age or older;
(d) is an emancipated minor or is in legal guardianship as determined by the court;
(e) is an unaccompanied youth who is homeless or who is at risk of homelessness and is self-supporting, as verified during the school year;
(f) is a veteran;
(g) is serving on active duty in the U.S. Armed Forces for purposes other than training;
(h) is married;
(i) is a graduate or professional student;
(j) has legal dependents other than a spouse;
(k) has dependent children; or
(l) presents documentation of other unusual circumstances demonstrating independence to the financial aid administrator.

Legal Dependent (of Applicant): A biological or adopted child, or a person for whom the applicant has been appointed legal guardian, and for whom the applicant provides more than half support. In addition, a legal dependent is a person who lives with and receives at least half support from the applicant and will continue to receive that support during the award year. For purposes of determining dependency status, a spouse is not considered a legal dependent.

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

Loan Repayment Program: A special program available to qualified students who have attended college on federally-funded student loans and who subsequently enlist in the Army for at least three years in any job specialty.

Master Promissory Note (MPN): A promissory note for the Federal Perkins Loan, FFEL, and Direct Loan programs that allows borrows to apply for multiple loans during a students attendance at a postsecondary institution.

Merit-based Aid: Student assistance awarded because of a students achievement or talent in a particular area, such as academics, athletics, music, etc.

Need: See Financial Need.

Need-based Aid: Student assistance awarded because a students financial circumstances would not permit him or her to afford the cost of a postsecondary education.

Non Need-based Aid: Aid based on criteria other than need, such as academic, musical, or athletic ability. Also, refers to federal student aid programs where the expected family contribution (EFC) is not part of the need equation.

Packaging: The process of combining various types of student aid (grants, loans, scholarships, and employment) to attempt to meet full amount of students need.

Parent Contribution: A quantitative estimate of the parents ability to contribute to postsecondary educational expenses.

PLUS: See Federal PLUS Loan.

Principal (of a loan): The amount of money borrowed through a loan; does not include interest or other charges, unless they are capitalized.

Professional Judgment (PJ): The financial aid administrators discretion, based on the special circumstances of the student, to change the data elements used in determining eligibility for federal student aid or adjust a students costs, for example.

Promissory Note: The legal document which binds a borrower to the repayment obligations and other terms and conditions which govern a loan program.

Repayment Schedule: A plan that is provided to the borrower at the time he or she ceases at least half-time enrollment. The plan sets forth the principal and interest due on each installment and the number of payments required to paying the loan in full. Additionally, it includes the interest rate, the due date of the first payment, and the frequency of payments.

SAR: See Student Aid Report.

SAR Acknowledgment: A non-correctable one-page Student Aid Report. Students who file a FAFSA on the Web (FOTW) and do not provide an email address or who make corrections on line to applicant information receive this acknowledgment.

Scholarship: A form of financial assistance that does not require repayment or employment and is usually made to students who demonstrate or show potential for distinction, usually in academic performance.

Student Aid Report (SAR): The official notification sent to a student as a result of the Central Processing System (CPS) receiving an applicant record (FAFSA) for a student. The SAR summarizes applicant information, provides the Expected Family Contribution (EFC) for a student, and displays other special messages related to the students application. In some instances the SAR may need to be submitted to the financial aid office at the school the student plans to attend, but only if the school requests it.

Student Contribution: A quantitative estimate of the students ability to contribute to postsecondary expenses for a given year.

Taxable Income: Income earned from wages, salaries, and tips, as well as interest income, dividend income, business or farm profits, and rental or property income.

Title IV Programs: Those federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended. Includes: the Federal Pell Grant, Academic Competitiveness Grant (ACG), National Science and Mathematics Access to Retain Talent (SMART) Grant, Teacher Education Assistance for College and Higher Education (TEACH) Grants, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, Federal Perkins Loan, Federal Stafford Loan, Federal PLUS Loan, Direct Loan, Direct PLUS Loan, and SSIG.

Unmet Need: The difference between a students total cost attendance at a specific institution and the students total available resources.

Untaxed Income: All income received that is not reported to the Internal Revenue Service (IRS) or is reported but excluded from taxation. Such income would include but not be limited to any untaxed portion of Social Security benefits, Earned Income Credit, welfare payments, untaxed capital gains, interest on tax-free bonds, dividend exclusion, and military and other subsistence and living allowances.

Veterans Educational Benefits: Assistance programs for eligible veterans and/or their dependents for education or training.

Vocational Rehabilitation: Programs administered by state departments of vocational rehabilitation services to assist individuals who have a physical or mental disability which is a substantial handicap to employment.

William D. Ford Federal Direct Loan (Direct Loan) Program: The collective name for the Direct Subsidized, Direct Unsubsidized, Direct PLUS Loan, and Direct Consolidation Loan Programs. Loan funds for these programs are provided by the federal government to students and parents through postsecondary institutions that participate in the program. With the exception of certain repayment options, the terms and conditions of loans made under the Direct Loan Program are identical to those made under the FFEL program.

Abbreviations Commonly Used in Financial Aid Administration

ACG: Academic Competitiveness Grant
ACT: American College Testing Program
AGI: Adjusted Gross Income
BA: Bachelors Degree
COA: Cost of Attendance
CPS: Central Processing System
ED: Education Department, U.S.
EFC: Expected Family Contribution (also FC, Family Contribution)
FAFSA: Free Application for Federal Student Aid
FFELP: Federal Family Education Loan Program
FOTW: FAFSA on the Web
FSEOG: Federal Supplemental Educational Opportunity Grant
FWS: Federal Work Study
GPA: Grade Point Average
IRS: Internal Revenue Service
SAR: Student Aid Report

Source: National Association of Student Financial Aid Administrators (NASFAA)