Terminology
This glossary contains terms used in the field of financial aid. As you
proceed through the process with college financial aid offices, you will need to
understand and use these terms. If you know the term you are looking for, click on
the first letter of the word in this handy index to take you there.
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ALLOCATION
An amount of money allowed by the Department of Education to an institution for the
purpose of funding a campus-based program administered by that institution.
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 which govern the award. It generally provides students with the opportunity to
accept or decline the aid offered.
AWARD YEAR
July 1 of one year through June 30 of the following year.
BASE YEAR
For students and parents, the 12-month period ending December 31 preceding the
beginning of the student application period.
CAMPUS-BASED FINANCIAL AID PROGRAM
Programs administered directly by the college, such as the College Work Study Program
and the Perkins Loan.
COLLEGE BOARD
Testing and information organization consisting of representatives of the college
admissions offices, financial aid officers, and high school guidance personnel.
COLLEGE WORK-STUDY PROGRAM
An award of part-time employment for students who demonstrate financial need. The
maximum amount a student can earn under this program is determined by financial need.
COOPERATIVE EDUCATION (CO-OP) PROGRAM
A program integrating classroom study and work experience and offering credit and
salary.
COST OF EDUCATION
Generally, this includes the college tuition and fees as well as cost of room and
board, books and supplies and transportation expenses.
DEFERMENT OF LOAN
A situation where the repayment of a loan by a borrower is suspended for one or more
reasons.
EMERGENCY LOAN
A short-term loan to cover unexpected expenses.
EXPECTED FAMILY CONTRIBUTION (EFC)
The amount of money that a student and his/her spouse and/or family are expected to pay
toward his/her cost of attendance ("ability to pay"). The EFC amount is computed
from the information you submit on the FAFSA form.
FAMILY FINANCIAL STATEMENT (FFS)
The ACT's form used to collect financial information about the student's family and
compute the family's potential contribution toward college tuition.
FINANCIAL AID FORM (FAF)
Completion of this form distributed by the College Scholarship Service requires
information about your family income, assets, expenses, and liabilities. It is essential
in making application for financial aid distributed by the colleges.
FINANCIAL AID PACKAGE
A financial aid award to a student comprised of a combination of forms for financial
aid (i.e., loans, grants and/or scholarships, employment).
FINANCIAL AID TRANSCRIPT
A form used by post secondary institutions to collect data about a student's prior
attendance at other institutions, financial aid awards that the student received at the
institution providing the transcript, and the status of certain eligibility criteria
involving default and repayments owed. All transfer students applying for aid must have
this form submitted by each prior school that they have attended.
FINANCIAL NEED
The difference between the institution's cost of attendance for a student and the
family's ability to pay (EFC).
FISCAL YEAR
A 12-month period to which certain accounting and appropriation requirements apply; the
federal fiscal year runs from October 1 through September 30 but colleges use July 1 to
June 30.
GIFT AID
Is defined as a form of financial aid which does not require repayment or work to be
performed.
GRACE PERIOD
The period of time that begins when a loan recipient ceases to be at least half time
and ends when the repayment period starts, or in some loan programs, between the time that
a period of deferment ends and loan payments are scheduled to resume. Loan principal need
not be paid and interest does not accrue during this period.
GRADUATE/PROFESSIONAL STUDENT
A student who is enrolled in an academic program of study above the baccalaureate level
at an institution of higher education or is enrolled in a program leading to a first
professional degree; has completed at least three years of full-time study at an
institution of higher education, either prior to entering the program; and is not
receiving Title IV aid as an undergraduate student for the same period of enrollment.
GRANT
Usually a financial award which is not repayable.
GUARANTEE AGENCY
A state agency or private, nonprofit institution or organization which administers a
student loan insurance program.
LOANS
Loans are usually obtained from banks or college sources and must be repaid with
interest. Most often they are paid back after one's education is completed.
MERIT-BASED AID
Financial aid that is awarded to a student based primarily on the student's academic
achievement or on talent. May also be referred to as non need-based aid.
NATIONAL MERIT
SCHOLARSHIP QUALIFYING TEST (NMSQT)
Scores from the PSAT given in October are used to determine if a student qualifies for
a National Merit Scholarship.
NEED ANALYSIS
A system used to estimate a student applicant's need for financial assistance to help
meet his/her educational expenses.
NEED BASED AID
Financial aid which is awarded to a student based solely on the financial condition of
the student and the student's family.
OFF-CAMPUS STUDENT
A student who lives in a house or apartment during the academic year, as opposed to
living with parents or on campus; used as a budget classification.
PARENT'S CONTRIBUTION
That part of the Expected Family Contribution which the parents are expected to provide
according to the needs analysis.
PELL GRANT
The basic federal government aid package, based on need. This is the "base"
funding upon which additional assistance is built.
PERKINS LOAN
Federal Loans awarded by the colleges to students chosen by the colleges themselves.
PLUS LOAN
A loan for parents of dependent undergraduate students.
PSAT
The Preliminary Scholastic Aptitude Test is a preparatory test for the SAT given to
high school juniors.
SATISFACTORY ACADEMIC PROGRESS
The process required of a financial aid recipient in acceptable studies or other
activities to fulfill a specified educational objective.
SCHOLARSHIP
A form of financial assistance which does not require repayment and is usually made to
a student who shows potential for distinction, usually in academic performance.
SELF-HELP AID
Funds provided through the work and effort of the student and the parents. Includes
savings from past and present, earnings, loans, and work study.
STAFFORD LOAN (FORMERLY GSL)
Low-interest educational loans guaranteed by the federal government, but available
directly through banks.
STUDENT AID REPORT (SAR)
The official notification sent to a student of the results of processing the student's
Free Application for Federal Student Aid (FAFSA). The report shows the EFC and Pell Grant
eligibility and must be submitted to the financial aid office at the institution at which
the student enrolls in order for the student to receive payment under the Pell Grant
Program as well as other federal need-based aid.
STUDENT CONTRIBUTION
The amount the student is expected to contribute toward meeting the cost of his/her
education from summer earnings, previous savings, and other resources.
STUDENT FINANCIAL AID
Funds awarded to a student to help meet post secondary educational expenses. These
funds are awarded on the basis of financial need and include scholarships, grants, loans,
and employment.
SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS (SEOG)
A federal government aid program awarded by colleges to students of their choice.
SUPPLEMENTAL LOANS FOR STUDENT (SLS)
A loan for independent undergraduate, graduate, or professional students.
TITLE IV PROGRAMS
Those federal student aid programs reauthorize under Title IV of the Higher Education
Amendments of 1992. They include among others: The Federal Family Education Loan,
including the Federal Stafford Student Loan (subsidized and non-subsidized), Federal
Perkins Student Loan, Federal Parent Loan for Undergraduate Students and Federal
Supplemental Loan for Students. Federal Campus Based Grants include the Federal
Supplemental Education Opportunity Grant and the Federal Pell Grant Program. The Federal
College Work Study Program is included as a self-help program.
UNMET NEED
The difference between the cost of education and the combined total of the
financial aid award made by the college and the expected family contributions.
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