Financial Aid Glossary

COLLEGE AND FINANCIAL AID GLOSSARY
Familiarize yourself with the college and financial aid terms in this section to better equip yourself for the admissions and financial aid processes. Click here to download a copy.

Academic year
A period of time schools use to measure a quantity of study. An academic year typically consists of two semesters, three quarters, or a defined number of hours of study.

Advanced Placement
A college-equivalent course taken in high school that allows the student, upon passing a test, to earn college credit.

Assets
Items of value such as stocks, bonds, savings and real estate. You are required to report the value of some types of assets when completing the FAFSA.

Associate degree
A degree granted by a college after the satisfactory completion of a two-year, full-time program of study or its part-time equivalent.

Bachelor’s or baccalaureate degree
A degree granted by a college after the satisfactory completion of a four- or five-year, full-time program of study, or its part-time equivalent.

Books/supplies
One of the typical components of Cost of Attendance (COA). Each college includes an average estimated cost you may incur for purchasing textbooks and other academic supplies.

Budget
The total “sticker price” of attending college; also known as Cost of Attendance (COA).

Capitalization
For unsubsidized loans, the amount of interest that accrues while you are in school, a grace period, or in deferment or forbearance that is added to the principal balance of your loan.

Consolidation loan
A loan that combines several student loans into one new loan from a single lender.

Cost of Attendance (COA)
The calculated cost of attending the college, which includes transportation, room and board, tuition and fees, and the estimated cost of books, supplies, and other expenses. COA is used to determine eligibility for financial aid.

CSS/Financial Aid PROFILE®
A form some colleges may require you to complete in addition to the FAFSA to qualify for financial aid.

Default
Occurs when the borrower fails to make scheduled loan payments for a period of 270 days or longer.

Deferment
When the borrower is allowed to postpone repayment of a loan for as long as the borrower meets specific eligibility conditions specified in the law. For subsidized federal loans, interest that accrues during periods of deferment is paid by the federal government.

Dependent student
For federal student aid purposes, any student who is not an independent student is considered to be dependent. See the definition of “independent student” for a list of qualifying conditions.

Early action
A college admissions process that is similar to early decision, but is not a binding commitment to attend the college.

Early decision
Students who apply under early decision commit to enroll at the college if admitted and offered a satisfactory financial aid package. Application deadlines usually are in November or December with a mid- to late-December notification date.

Expected Family Contribution (EFC)
The index used to determine how much a family is expected to contribute toward the Cost of Attendance. Your EFC is calculated based upon the information you provided when filing the FAFSA.

Federal Methodology Need Analysis Formula
A formula used to calculate your family’s expected financial contribution for college. This formula, established by Congress, is used nationwide for all students. The most important factors in the formula are: parent income, assets, and net worth; student income and assets; and family size.

Financial aid package
The total amount of financial aid a student is eligible to receive. It might include grants, work-study, and loan funds from a variety of sources, and is assembled by the college’s financial aid office.

Financial need
The amount by which your family contribution falls short of covering the cost of attendance.

Forbearance
The temporary postponement or reduction of loan payments that is typically granted at the discretion of the lender/servicer. The borrower is responsible for paying all interest that accrues during periods of forbearance.

Free Application for Federal Student Aid (FAFSA)
A free application that must be completed by all students and parents who apply for federal student aid. 

Full-time student
An undergraduate student who is enrolled for at least 12 credit hours per semester or equivalent. For a graduate student, the enrollment requirements can vary among colleges. Does not include audited courses.

Graduate student
A student who is enrolled in a master’s or doctoral program at a college.

Grant
A type of financial aid usually based on financial need, which the student does not have to repay.

Independent student
A student is considered independent for federal student aid if the student meets one of the following criteria:

  • ··Is age 24 or older
  • ··Is working toward a master’s or doctoral degree
  • ··Is married
  • ··Has legal dependents other than a spouse
  • ··Is an orphan or ward of the court or in foster care at any time after age 12
  • ··Is on active duty or is a veteran of the U.S. Armed forces
  • ··Is an emancipated minor or in legal guardianship
  • ··Is an unaccompanied homeless youth
  • ··Is an unaccompanied self-supporting youth at risk of homelessness 

Interest
The periodic fee charged to borrow money. Interest charges are repaid in addition to the principal of the loan.

Loan
A type of financial aid that must be repaid, with interest.

Master Promissory Note (MPN)
To borrow under the federal loan programs, a student or parent must sign this common form. The MPN allows borrowers to receive loans for a single academic year, or for multiple academic years without having to sign a new note.

Merit-based aid
Financial aid awarded on the basis of grades, test scores, athletic ability or other talent regardless of a family’s income or assets.

Need-based aid
Financial aid awarded based on the family’s ability to pay for college. The FAFSA is typically used to determine a family’s eligibility for need-based aid.

Part-time student
An undergraduate student who is enrolled for fewer than 12 credit hours per semester or equivalent. A graduate student who is enrolled for fewer hours than the college’s standard to be considered a full-time student. Does not include audited courses.

Personal expenses
One of the typical components of Cost of Attendance (COA). Each college includes an average estimated cost you may incur for purchasing personal items such as laundry detergent, toothpaste, etc.

PIN (Personal Identification Number)
A four-digit number that is used in combination with a student’s Social Security number, name, and date of birth to identify someone who has the right to access the student’s personal information on Federal Student Aid websites, such as FAFSA on the Web. Parents of dependent students will also electronically sign a FAFSA and need their own PIN.

Principal
The dollar amount borrowed on which interest is calculated.

Priority filing date
The date established by the college by which students are encouraged to submit their FAFSA and have the results forwarded to the college to increase their chances of being awarded certain campus-based financial aid. Financial aid funds are limited for students who fail to meet their college’s priority filing date.

Private grant aid
Non-college grant aid, such as scholarships from community groups and organizations, that does not require repayment. 

Private loans
Education loan programs provided by private lenders to supplement the student and parent education loan programs available from the federal government.

Promissory note
The legal document signed by the borrower prior to receiving a loan. States a promise to repay the loan, and lists the conditions of the loan and terms for repayment. The Master Promissory Note (MPN) is one type of promissory note.

Room/board
One of the typical components of Cost of Attendance (COA). Each college includes the actual cost it charges if you live on campus, or an estimated cost you may incur for living off campus.

Satisfactory Academic Progress (SAP)
The academic standard you must meet in college to continue to receive federal financial aid. Each college establishes its own SAP policy to comply with federal requirements.

State grant aid
State financial aid, such as grants and scholarships, that does not have to be repaid.

Student Aid Report (SAR)
The SAR summarizes the information you included on the Free Application for Federal Student Aid (FAFSA). The SAR provides the Expected Family Contribution (EFC), which is used to determine whether a student is eligible for a Federal Pell Grant and other federal aid.

Title IV school code
The Title IV school code is a six-character college identifier used for federal student aid programs. This code may have a two-digit suffix that identifies a particular division, campus or branch of the college.

Transportation
One of the typical components of Cost of Attendance (COA). Each college includes an average estimated cost you may incur for transportation to and from school. This can vary depending upon whether your permanent residence is in another city/state or if you are a commuting student.

Tuition/fees
One of the typical components of Cost of Attendance (COA). This is the actual cost the college charges students for providing instructional and other services. Tuition may be charged per term, per course or per credit hour.

Undergraduate student
A student who is enrolled in an undergraduate course of study that usually does not exceed four years and that typically leads to a degree or certificate.

Unmet need
The amount of need remaining after Expected Family Contribution (EFC), grant aid, and self-help are subtracted from Cost of Attendance.

Verification
The process colleges use to ensure the accuracy of the information reported on the FAFSA. You may be required to provide the college with a copy of your tax return or other additional documentation.