Financial aid terms are in alphabetical order. Click on a letter to jump to terms beginning with the letter you select.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Academic Credit -- The unit of measurement an institution gives to a student when he/she fulfills a course or subject requirement(s) by the institution.

Academic Year -- This is a measure of the academic work to be accomplished by the student. The school defines its own academic year, but the federal regulations set minimum standards for the purpose of determining SFA awards. For instance, the academic year at a term school must be at least two semesters, two trimesters, or three quarters and must include at least 30 weeks of instructional time. Unlike the award year, an academic year does not have to begin and end at the same time for all students. As an example, one student might enroll as a full-time student in September and complete one academic year of study in May, while another student might enroll as a half-time student in January and take twice as long to complete an academic year.

Accrual date -- The day interest charges begin to be added to the loan balance.

Accruing interest -- The adding of interest to a loan amount. For some loans, interest charges begin to add up as soon as the loan is made, increasing the total due. (See interest)

Adjusted Gross Income (AGI) -- Taxable income after all allowable deductions are made, such as IRA deductions, moving expenses, self-employment taxes and health insurance, Keogh retirement plans, and alimony paid.

Amortization -- The gradual reduction of a loan debt by periodic installment payments (usually monthly) of principal and interest.

Assets -- Cash on hand in checking, savings, trusts, stocks, bonds, other securities (i.e., real estate, income-producing property, business equipment, and business inventory) is considered in determining expected family contribution (EFC).

Assistantships -- A type of student employment usually referring to teaching or research assistant positions.

Award Letter -- A letter notifying 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. The award letter generally provides students with the opportunity to accept or decline the aid offered.  The Acceptance Form and the Award Letter are often the same document or combined in the same notification.

Award Year -- The award year begins on July 1^st of one year and extends to June 30 of the next year. Funding for the Federal Pell Grant and campus-based programs are provided on the basis of the award year -- thus a student is paid out of funds designated for a particular award year, such as the 1998-99 award year.

Bankruptcy -- A legal way to seek relief from creditors. Bankruptcy must be filed for in court, and has serious long-term financial implications for a person's credit history. In bankruptcy proceedings, student loans less than five years old can be challenged by the lender.

Base Year -- For students and parents, this is the 12-month period ending December 31 preceding the beginning of the student application period.  For example, if you are applying for the 1999-2000 academic year, your base year would be 1998.

Borrower -- The person who assumes legal obligations for the repayment of the loan principal plus interest. In the case of a Federal Perkins or Federal Stafford Loan, the borrower is the student. In the case of a PLUS Loan and many private or supplemental loan programs, the borrower is the parent. In a few private programs, the student and the parent(s) assume the responsibility jointly.

Budget -- The estimated cost of attendance for an institution; usually includes tuition, fees, books, supplies, room board, personal expenses, and transportation. Other expenses may be included depending on circumstances. (see Cost of Attendance).

Bureau of Indian Affairs (BIA) Grants -- A grant program for students who are one-quarter or more Indian Eskimo or Aleut and are enrolled in accredited institutions in pursuit of an undergraduate or graduate degree. Financial need must be demonstrated as determined by the institution the student will attend.

Business Assets -- Property that is used in the operation of a trade or business, including real estate, inventories, buildings, machinery, and other equipment, patents, franchise rights, and copyrights. Considered in determining a family's expected contribution.

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

CAAN -- College Aid Awareness Network, formerly FAAM.

Campus-Based Programs -- The Federal Perkins Loan, the Federal Supplemental Educational Opportunity Grant (FSEOG), and the Federal Work Study Program (FWS). These three programs are called "campus-based" because the funds are administered directly by the school's financial aid office, which awards these funds to students using federal guidelines.

Cancellation of Loan -- The condition that exists when a Federal Perkins Loan or NDSL borrower has fulfilled requirements to permit cancellation or, or "writing off" of, a designated portion of the principal and interest of an existing loan.

Capitalization -- When a lender accrues interest before the borrower goes into repayment, then adds that amount to the principal. Sometimes also called “compounding.” Capitalizing increases the total to be repaid and the size of the minimum monthly payment. Students can avoid capitalizing interest by paying the accrued interest. Lenders may capitalize no more often than quarterly; the more frequently interest is capitalized, the greater it becomes.

Central Processing System (CPS or The Processor) --  The CPS is the Department's processing facility for application data and is currently located in Illinois.  The CPS receives student information from the application processors, calculates the student's official EFC and returns the student's information to the application processor who then mails a Student Aid Report to the student. 

Citizen/Eligible Non-Citizen -- Students must be one of the following to receive federal student aid: U.S. Citizen; U.S. National (includes natives of American Samoa or Swain's Island); U.S. permanent resident who has an I-151, I-551, or I-551C (Alien Registration Receipt Card).

Collection Agency -- A business organization that accepts, from lenders, loan accounts that have become delinquent or are in default, and attempts to collect on those accounts. A fee is charged for the service.

College Board -- A national membership association that supports educational transitions through programs and services in assessment, guidance, admission, placement, financial aid, and educational reform.

College Work-Study Program - See Federal Work-Study.

Commercial Lender -- A commercial bank, savings and loan association, credit union, stock savings bank, trust company, or mutual savings bank.  Commercial lenders provide services offered through the Federal Family Education Loan Programs.

Commuter Student -- A student who is not a resident student; typically "commuter" refers to a student living at home with his or her parents.

Consolidation -- Combining all of your federal student loans under one repayment plan.

Consolidation Loan -- A loan made to a student when an eligible lender pays of his/her existing student loans and creates one new loan. Students can combine certain eligible Federal Student loans into one loan and increase their repayment time frame 10 to 30 years depending on the balance. Student must be out of school.

Consolidation -- Combining two or more loans into one new loan that has a longer repayment term and a single monthly payment that is smaller than the sum of previous monthly payments. By consolidating eligible federal student loans and extending the repayment term (up to 30 years, depending on the total loan amount), repayment can be easier. Note that while this may ease the borrower's cash flow, consolidation can add significantly to the amount of overall interest that is paid over time.

Consumer Price Index (CPI) -- A measure of inflation at the consumer level, updated monthly and annually by the U.S. Department of Labor Bureau of Labor Statistics. The index is determined by comparing the current price of a “market basket” of goods -- including food, shelter, clothing, transportation, and others items -- to the price at which the same goods could have been purchased during a previous month or year.

Co-signer -- A signer other than the borrower who agrees to assume responsibility for repayment in the event that the borrower fails to repay. Guaranty agencies or lenders may require co-signers, but federal regulations do not require them.

Cost of Attendance (Also Known As Cost of Education or Student Budget) --  The student's cost of attendance includes not only tuition and fees, but also living expenses while attending school.  The cost of attendance is determined by the school using guidelines established by federal regulation.  A student's cost of attendance is compared to the expected family contribution to evaluate the student's need for aid.

Credit Bureaus -- Organizations that maintain records on your financial history. There are currently three major credit bureaus: TRW, Inc., Equifax Credit Information Services, and TransUnion.

Debt -- an amount of money owed.

Default -- A borrower's failure to repay according to the terms agreed upon when the promissory note was signed. Default can also occur when a borrower fails to submit requests for deferment or cancellation, and is generally referred to as a “technical default.” When a borrower defaults on a federal student loan, the school, the organization holding the loan, the guaranty agency, and the federal government can all take action to recover the money. A borrower is considered to be “in default” when payments are 180 or more days overdue and no satisfactory arrangements for deferment or forbearance have been made. Assets, including Internal Revenue Service (IRS) refunds may be seized and the borrower's credit record or history is negatively affected. Student loan borrowers cannot get out of default until they pay back their loan in full, sign new loan agreements, or reschedule their debt. They are also ineligible for additional federal student aid, including grants and loans.

Default Rate -- A percentage calculated each year for each post secondary school based on the number of former students who have defaulted on a Federal student loan received while attending that school.

Deferment -- An authorized period of time during which a student loan borrower may postpone making payments on the principal or the principal plus interest. Borrowers must file deferment forms with their lenders and be approved for deferments. Deferments are available if borrowers are: enrolled in school at least half-time, enrolled in a graduate fellowship program or rehabilitation training program, disabled, serving in the military or the Peace Corps, volunteering full-time for a not-for-profit organization, teaching full-time in a teacher-shortage area, unemployed, or experiencing demonstrated economic hardship. The federal government makes interest payments on Subsidized Federal Stafford Loans during deferment periods.

Delinquent -- When a borrower is late making a payment (i.e., pays after the due date). Late fees can be charged when borrowers are delinquent. After 180 days of delinquency, a student loan borrower is considered to be “in default.”

Department (ED or DOE) -- Abbreviation for the U.S. Department of Education.

Departmental Scholarship -- An award of gift assistance that is specifically designated for a recipient in a particular academic department or educational program within an institution.

Dependent Student -- A student who must use parental information on the financial aid application based on dependency criteria established by the funding source. A student who does not qualify as an independent student. (See Independent Student)

Dependency Status -- A student's dependency status is determined by guidelines established by the federal government and indicates to what degree the student has access to the parents' financial resources.

To be considered for independent status, a student must be at least 24 years old as of January 1, married, a graduate or professional student, a veteran of the U.S. Armed Forces, an orphan or ward of the court (or was a ward of the court until age 18), or have a legal dependent other than a spouse. All other students are considered dependent. (A parent refusing to provide support is NOT sufficient for a student to be declared independent.)

Dependent -- For an individual to be considered your dependent, they must live with you, and you must provide them with more than half their financial support. Spouses do not count as dependents in the Federal Methodology.

Dependent Student -- A student dependent on his or her parents for financial support.

Direct Loans -- The Federal Direct Loan (FDSL) Program (The formal title is the William D. Ford Federal Direct Student Loan Program.) is a new federal program in which the school becomes the lending agency and manages the funds directly, with the federal government providing the loan funds. The goal is to provide faster turnaround time and less bureaucracy than the "bank loan" program.

The terms of the Direct Loan program are the same as for the Stafford Loan Program.

Not all schools are participating in the Direct Loan program. For more information, call the Direct Loan Servicing Center at 1-800-848-0979.

Direct PLUS (Parent Loan) --   See Federal Direct PLUS Loan.

Direct Subsidized and Direct Unsubsidized Loan Program -- Long-term, low interest loans administered by the Department of Education and educational institutions where the government is the funding source.  Variable interest rates are not to exceed 8.25%.  The Direct Unsubsidized Loan can be used to replace the EFC.

Disbursement -- The process by which financial aid funds are made available to students for use in meeting educational and related living expenses.   Funds may be disbursed directly to the student or applied to the student's account.

Disclosure Statement -- The statement explaining the specific terms and conditions of student loans, such as the interest rate, loan fees charged, gross amount borrowed, and so on.  Disclosure statements be provided with each loan disbursement.

Disclosure Statement -- Lenders are required to provide the borrower with a disclosure statement before issuing a loan. The disclosure statement provides the borrower with information about the actual cost of the loan, including the interest rate, origination, insurance, and loan fees, and any other kinds of finance charges.

Due diligence -- The use of extensive, documented, and persistent procedures for collection of student loans, along with full and timely disclosure to borrowers of their rights and responsibilities.

Earned Income From Work -- Combined income from W2 forms, business income, and farm income.

Earned Income Tax Credit -- The EITC is a special credit for certain persons who work. The credit reduces the amount of tax you owe (if any) and is intended to offset some of the increases in living expenses and social security taxes.

Educational Benefits -- Funds, primarily federal, awarded to certain categories of students (veterans, children of deceased or other deceased wage earners, and students with physical handicaps) to help finance their postsecondary education regardless of their ability to demonstrate need in the traditional sense.

Educational Expenses -- See Cost of Attendance.

Electronic Student Aid Report (ESAR) -- An electronic form of the Student Aid Report.

Eligible Institution -- An institution of higher education, a vocational school, or a postsecondary vocational institution, or a proprietary institution of higher education which is approved for participation in the federal student aid programs by the U.S. Department of Education and/or for New York State programs offered by the New York State Education Department.

Eligible Program -- A program of education or training which complies with the procedures established in regulations governing the Title IV programs. The eligibility of a program determines whether a student in that program can receive federal financial assistance. A course of study leading to a degree or certificate at a school participating in one or more of the student aid programs.

Eligible Aid Applicant -- An eligible aid applicant is a regular student (as defined below) who meets all of these five criteria:

1. Was enrolled in an academic or training program eligible for the campus-based programs during award year;
2. Met citizenship or residency requirements for the award year;
3. Applied for financial aid by submitting a document that meets these criteria: (a) the document is a part of a formal financial aid process, and (b) the document's purpose is to request funds to pay for the costs of attendance for the award year;
4. Has on file with the institution all information needed to perform a need-based analysis on the information required in Part F of the Higher Education Act of 1965, as amended; and
5. Meets selective service and citizenship requirements.

Employment Allowance -- An allowance to meet expenses related to employment when both parents (or a married independent student and spouse) are employed or when one parent (or independent student) qualifies as a surviving spouse or head of household.  It is used in the need analysis formula to determine the EFC.

Enrolled -- The completion of registration requirements (other than the payment of tuition and fees) at the institution and complete and submit one lesson to be considered enrolled.

Enrollment Status -- At those institutions using semesters, trimesters, quarters, or other academic terms and measuring progress by credit hours, enrollment status equals a student's credit hour workload categorized as either full-time, three-quarter time, or half-time.

Entitlement Program -- Program which is not dependent upon institutional allocations, and which is funded sufficiently to ensure that all eligible applicants will receive awards. As long as the student applicant meets all the eligibility requirements and is enrolled in an eligible programs at an eligible institution, he/she will receive the award for which eligibility ha been established.

Entrance/exit interviews -- Counseling sessions borrowers are required to attend before receiving their first federal loan disbursement and prior to leaving school.

Estimated Financial Assistance (EFA) -- The amount of student financial aid the student can expect from federal, state, school, or other sources, including grants, loans, or need-based work programs. The school uses this estimate when certifying loan applications.

Exceptional Financial Need -- an eligibility criterion in the FSEOG and Federal Perkins Loan Programs. Exceptional financial need for FSEOG is defined in statute as the lowest expected family contribution at an institution.

Expected family contribution (EFC) -- amount that a student and her or his parents can reasonably be expected to contribute toward college costs, computed according to federal guidelines and/or alternate guidelines. EFC is subtracted from total costs of attendance to arrive at an estimate of a student's unmet need. EFC may be divided into “parents' contribution” (PC) and “student's contribution” (SC). (See also Federal Methodology and Institutional Methodology.)

FAFSA (Free Application for Federal Student Aid) -- The official application students must use to apply for federal aid. 

Federal Direct Loan Programs (FDLP) -- The collective name for the Direct Subsidized, Direct Unsubsidizied, and Direct PLUS Loan programs.

Federal Direct Subsidized Loan -- The Federal Direct Subsidized Student Loan is available to students who demonstrate financial need. The amount the student can borrow is based on the number of credit hours the student has earned ($2625 for freshmen, $3500 for sophomores, $5500 for juniors and seniors). The federal government will pay the interest on this loan as long the student is enrolled at least halftime. This loan carries a variable interest rate that caps at 8.25%. Repayment begins 6 months after the student graduates or falls below halftime status. See definition for "subsidized" and "unsubsidized" loans below.

Federal Direct PLUS  Loan -- The Federal Direct Parent Loan for Undergraduate Students (PLUS) is available to parents of dependent students. Parents can borrow up to the Cost of Attendance minus any other aid received. This loan carries a variable interest rate that caps at 9.0%. Repayment begins 60 days after the loan is disbursed to the school, therefore payments must be made while the student is enrolled. A credit check is required before the loan can be approved.

Federal Direct Student Loan Program -- Students apply for federally guaranteed education loans through participating postsecondary institutions. Subsidized and Unsubsidized Stafford Loans and PLUS Loans are included.

Federal Direct Unsubsidized Loan -- The Federal Direct Unsubsidized Student Loan is available to students who did not demonstrate financial need according to the Free Application for Federal Student Aid. The amount the student can borrow is based on the number of credit hours the student has earned ($2625 for freshmen, $3500 for sophomores, $5500 for juniors and seniors). Interest on this loan will accrue while the student is in school. The loan carries a variable interest rate that caps at 8.25%. Repayment begins 6 months after the student graduates or falls below halftime status. See definition for "subsidized" and "unsubsidized" loans below.

Federal Family Education Loan Program (FFELP) -- Education loans provided by private lenders and guaranteed by the federal government. Subsidized and Unsubsidized Stafford Loans and PLUS Loans are included. (The now-defunct Supplemental Loans for Students (SLS) Program was also a part of FFELP.)

Federal Methodology (FM) -- The formulas according to which a student's eligibility for Federal Title IV funds is determined. The formulas take into account income, some assets, expenses, family size, and other factors.

Federal Pell Grant Program -- The Federal Pell Grant is available to students who have demonstrated financial need, according to the results of the Free Application for Federal Student Aid. This grant is considered to be “free” money and does not have to be repaid. 

Federal Perkins Loan Program -- The Federal Perkins Loan is available to students who have demonstrated financial need, according to the results of the Free Application for Federal Student Aid. The federal government will pay the interest on this loan as long the student is enrolled at least halftime. The Perkins Loan has a fixed interest rate of 5%. Repayment begins 9 months after the student graduates or falls below halftime status.

Federal PLUS Loans -- Federal loans for parents of undergraduate students, widely available from lenders who participate in FFELP and postsecondary institutions that participate in FDSLP. Parents may borrow up to the total costs of education minus any student aid awarded, per child. Interest rate is variable, based on the 52-week Treasury bill rate plus 3.1 percent, and is capped at 9 percent. Loans are made without regard to financial need but borrowers must demonstrate that they do not have an adverse credit history. Repayment generally begins within 60 days of disbursement, which makes PLUS loans useful in meeting cash-flow problems.

Federal Stafford Loans -- Federal loans for students, both undergraduate and graduate, widely available from lenders who participate in FFELP and postsecondary institutions that participate in FDSLP. Subsidized Federal Stafford Loans are made on the basis of financial need, and the government pays the interest while the student is enrolled. Interest is variable, based on the 91-day Treasury-bill rate plus 3.1 percent, capped at 8.25 percent. Repayment may take up to 10 years, but is deferred until six months after a student graduates, leaves school, or drops below half-time status. Freshmen may borrow up to $2,625; upperclassmen may borrow larger annual amounts to a maximum of $23,000 for dependent undergraduates, $46,000 for independent undergraduates, and $65,500 for graduate students. Borrowers are charged a 3 percent origination fee and a guaranty fee of up to 1 percent, both deducted from the face value of the loan before disbursement. Students who do not qualify for a Subsidized Federal Stafford Loan, or who need additional funds, may borrow from the Unsubsidized Federal Stafford Loan Program. Interest rates and repayment terms are similar to those associated with the Subsidized Federal Stafford Loan Program, with a couple of important differences. For one thing, the government doesn't pay the interest while the student is enrolled; for another, repayment begins almost immediately after disbursement instead of after the student graduates or leaves school. (A student may be able to defer the start of repayment, but interest begins accruing immediately.) An estimated 5 million students participate in the Federal Stafford Loan Program each year.

Federal Supplemental Educational Opportunity Grant (SEOG) Program -- The Federal Supplemental Educational Opportunity Grant (SEOG) is available to undergraduate students who demonstrate exceptional need, according to the results of the Free Application for Federal Student Aid.

Federal Work-Study Program --Federal Work-Study allows a student to earn money by working a part-time job on campus. Students must demonstrate financial need to be considered for this award. Federal Work-Study is not subtracted from a student’s bill. Instead the student is receives a paycheck every two weeks that can be applied to any miscellaneous expenses such as gas, food, clothes, books, supplies, etc. Freshmen students typically work approximately 10 hours per week. 

Fellowship -- A grant or money for postgraduate study which may require teaching for research.

Financial aid -- Assistance provided to students to help them meet both the direct costs of education (e.g., tuition, fees, books) and indirect costs (e.g., room and board, travel expenses). There are four sources of financial aid: the federal government, state governments, private organizations, and postsecondary institutions themselves.

Financial Aid Award -- An offer of financial or in-kink 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 award letter -- A notice describing what aid is being awarded and what conditions the recipient must meet or continue to meet to maintain eligibility for the assistance. Award letters from college financial aid offices typically describe how they arrived at the amount and composition of the award package.

Financial aid package -- a combination of aid from several sources and/or of several types. Typically a student receives a package that includes both gift aid and self-help aid, some public and some private.

Financial Aid Transcript (FAT)-- A form used to collect data about any financial aid awards that a student received at previously attended educational institutions.

Financial need -- The difference between what it costs to attend a particular college and the amount that a student and her family can afford to pay towards those expenses. Sometimes also called “demonstrated financial need.” The amount that an applicant can be expected to contribute is measured according to standardized formulas. A student is generally eligible for aid equal to the amount of his or her financial need, although an institution does not always have sufficient funds to meet full need. (See also Estimated family contribution, Federal Methodology, and Institutional Methodology.)

Finance charge -- Another term for interest.

Fixed rate -- An interest rate that remains the same for the term of the loan (e.g., the Federal Perkins Loan Program).

Forbearance -- An authorized period of time during which the lender agrees to temporarily postpone a borrower's total loan repayment obligation. At the borrower's request, an extension of time or smaller monthly payments may be authorized. Forbearance is granted at the lender's discretion when a borrower demonstrates good intentions of repaying but is temporarily unable to do so. A borrower must request forbearance from the lender. Forbearance does not alter the repayment status of the loan and interest continues to accrue.

Foreign Student -- A student belonging to or owing allegiance to another country. Foreign students are not eligible for the basic federal programs, although there are categories of non-U.S. citizens who owe permanent allegiance to the united States and are eligible for student aid.

Free Application for Federal Student Aid (FAFSA) -- A form distributed and processed by the United States Department of Education, used in applying for all Federal Title IV student aid programs, including Pell Grants, Stafford Loans, and the campus-based programs (SEOG, Work-Study, and Perkins Loans). The FAFSA collects the information required to determine need and eligibility according to the Federal Methodology. It is widely available in high schools, postsecondary financial aid offices. You can also obtain one by writing to the Federal Student Aid Information Center, P.O. Box 84, Washington, D.C. 20044.

Full-Time Student -- Generally, one who is taking a minimum of 12 semester or quarter hours per academic term in institutions with standard academic terms or 24 clock hours per week in institutions which measure progress in terms of clock hours.

GED -- General Education Development Certificate -- Or a high school equivalency certification.

GI Bill Benefits -- Special assistance provided by the federal government to eligible veterans for the purpose of financing education or training programs.

Gift aid -- Grants and scholarships that do not have to be repaid (like loans) or earned (like work-study).

Good credit risk -- A borrower with a credit history of making timely payments on his or her loan obligations.

Grace period -- A specified period of time after a student leaves school or drops below half-time status during which he or she is not required to make payments on either principal or interest. The grace period is typically six to nine months, depending on the type of loan. The Federal Subsidized Stafford Loan, for example, has a six-month grace period.

Graduate or Professional Student -- A student enrolled in an academic program of study above the baccalaureate level at an institution of higher education.

Graduated Payments -- A flexible rescheduling of your loan payments that allows you to make payments of different amounts (available through consolidation).

Grants and scholarships, also known as gift aid, do not have to be repaid. Grants are usually awarded on the basis of need alone, while scholarships may have certain requirements that must be met, such as maintaining excellent grade-point averages, participating in certain activities, or completing specific courses.

Although gift aid is the most attractive form of financial aid, it is also the most limited. Don't count on paying for college entirely with grants and scholarships.

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

Guaranteed Student Loan Program (GSL) -- the previous collective name for the Federal Family Education Loan Programs.

Guarantee fee -- A premium deducted from the loan proceeds prior to disbursement and paid to the guarantor. Also known as an “insurance fee.”

Guarantor -- A state, regional, or national organization that acts as an agent for the federal government in the administration and insurance of FFELP loans made by private lenders. Also called “guarantee agency” or “guaranty agency.”

Guaranty Agency -- A state or private nonprofit agency that administers a student loan insurance program, for example, United Student Aid Funds (USAF). There are 41 guaranty agencies for educational loans in the United States. For the name, address, and telephone number of your state's guaranty agency, call the Federal Student Aid Information Center at 1-800-433-3243 (1-800-4-FED-AID).

Your state guaranty agency is the best source of information concerning FFELP loans in your state.

Graduated repayment -- An arrangement in which the amount of a borrower's monthly payments increases in a scheduled manner over the term of a loan, permitting smaller monthly payments during the early part of the repayment period.

Half-Time Student -- An enrolled student who is carrying a half-time academic work load as determined by the institution, in general equalizing or exceeding the following minimum requirements: (a) six semester hours or six quarter hours per academic year; (b) 12 clock hours per week for institutions which utilize clock hours to measure progress; or (c) a student enrolled solely in an eligible correspondence school is considered a half-time student if taking a work load of at least 12 hours of preparation per week. A correspondence student is never considered more than half-time.

Hardship -- A period of financial difficulty that may allow you to delay repayment of a loan or to decrease month payments.

Health Education Assistance Loan (HEAL) Program -- A federal loan program, not primarily administered by the institution, although the school may be the lender; designed to assist students in certain health profession programs.

Health Professions Student Loan (HPSL) Program -- A long-term, low interest loan program designed to assist students in specific health profession fields.Holder -- The institution with legal title to a borrower's loan. The holder may be the lender that originally made the loan, a secondary market to which the lender has sold the loan, or -- in the event of a default -- the guaranty agency or the federal government.

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

Independent Student -- For financial aid purposes, an independent student is one who is at least 24 years old as of January 1, is married, has a legal dependent other than a spouse, is a veteran of the U.S. Armed Forces, is a graduate or professional student, or is an orphan or ward of the court (or was a ward of the court until age 18). All other students are considered dependent. Parental refusal to provide support for a child's education is not sufficient for the child to be declared independent.

In-school status -- The period during which student loan borrowers are attending school at least half-time or are in the grace period. The federal government pays the interest on a Subsidized Federal Stafford Loan during this period.

Institution -- A postsecondary educational institution. The terms "school" and "institution" may be used interchangeably to refer to postsecondary educational institutions.

Institutional Methodology (IM) -- Formulas used by many colleges, universities, graduate and professional schools, and private scholarship programs to determine an applicant's need and eligibility for their own private, non-federal student aid funds. While similar in some respects to the Federal Methodology (see above), the Institutional Methodology differs in others. For example, the IM takes home equity into account and includes a minimum expected contribution from the student, but also permits more generous treatment of medical/dental expenses, elementary and secondary school tuition paid, and child support paid.

Interest -- The fee charged to a borrower for the use of someone else's money, computed as a percentage of what is borrowed. The interest rate may remain constant throughout the life of the loan (i.e., fixed) or may change at specified times (i.e., variable). As of October 1, 1993, all Federal Stafford and PLUS loans have variable interest rates.

Internships -- Part-time or full-time opportunities to gain professional work experience while in college.  Some interns are paid; others gain college credits; some offer both.

ISIR -- Institutional Student Information Report -- This is an electronic record sent to the school of choice as a result of completing the Free Application for Student Financial Aid (FAFSA). See SAR for more information.

Legal Dependent (of Applicant) -- A natural 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 person who lives with and receives at least half support from the applicant and will continue to receive that support during the award year. A student who has a legal dependent is considered to be independent. For purposes of determining dependency status, a spouse is not considered a legal dependent.

Legal Guardian -- An individual appointed by the court to be a legal guardian of a person and who is specifically required by the court to use his/her own financial resources to support that person.

Lender -- A financial institution such as a bank, a savings and loan association, a credit union, or a qualified program (e.g., the College Board's CollegeCredit Program) that makes FFELP and/or private loans. Under the FDSLP, some colleges and universities make Federal and PLUS loans to students and parents; others make private loan funds available.

Loan combination -- Combined multiple loans to permit a single monthly payment. In order to combine accounts, the interest rates on the loans must be the same. In loan combination, unlike consolidation, the period of repayment is not extended nor is the size of the monthly payment reduced.

Loans -- Money that must be repaid, with interest. Educational loans are usually subsidized by the state or federal government, or by colleges. Subsidized loans carry lower interest rates than commercial loans, and often repayment doesn't begin until the student leaves college. Eligibility for subsidized loans is determined by student need, while unsubsidized loans are available to all students, regardless of need. There are many different types of loans, with different interest rates, repayment schedules, maximum borrowing limits, and interest accrual periods, so it is important for students and their families to thoroughly understand each specific loan offered.

Loan Consolidation -- A new loan that is created by combining the repayment of two or more student loans to reduce the amount of monthly payments and extend the loan repayment term.

Matriculated -- To be enrolled at an eligible institution working toward a degree or certificate in an eligible program.

Merit-based aid -- Financial aid that is awarded based on a student's academic, athletic, or artistic merit, or some other criteria, and does not depend on the existence of financial need. Merit-based awards may look at a student's grades, test scores, special talents, or extra-curricular actives (volunteer activities, clubs, hobbies) to determine eligibility.

Methodologies -- Need analysis formulas used to determine eligibility for student aid. There are three financial aid methodologies: the Federal Methodology, the Institutional Methodologies, and the Simplified Methodology (or Simplified Need Test).

Military Scholarships -- Reserve Office Training Corps (ROTC) -- scholarships available for the Army, Navy, and Air Force at many colleges and universities throughout the United States. These scholarships cover tuition and fees, books and supplies, and include a subsistence allowance.

Minimum monthly payment -- The minimum amount a borrower must pay each month on each separate loan and credit-card account. Sometimes abbreviated as “MMP.” The amount of the minimum monthly payment is based on the total loan amount and the repayment term; on student loans, the MMP is usually at least $50 a month per loan.

NASFAA -- National Association of Student Financial Aid Administrators -- a national professional organization of financial aid administrators.

National of the United States -- A citizen of the United States or a non-citizen who owe permanent allegiance to the United States.

Need -- The difference between cost of college attendance and a student's (and the student's parents') ability to pay that cost:

Cost of attendance - Expected family contribution = Financial need

Need Analysis -- The process that determines a student's financial need by analyzing the financial information provided by the student and his or her parents (or spouse, if applicable) on a financial aid form. The need analysis is the first step in applying for financial aid.
All students must file a FAFSA (Free Application for Federal Aid) to apply for need-based federal financial aid programs . Some schools, particularly private colleges, also require students to fill out other forms (see institutional methodology) for aid funded by that college. For state financial aid programs, the FAFSA may or may not be the only form a student needs to submit -- the best bet is to check with your state agency to find out if any other application form is needed.
Need analysis forms include the Free Application for Federal Aid (FAFSA) and the CSS/Financial Aid PROFILE at www.collegeboard.org

Need Analysis Document -- The original input form completed by an applicant and family for one f the need analysis systems. The document is the foundation for all need analysis computations performed by the agency implementing a need analysis system.

Need Analysis System (NAS) -- A system (usually automated) that calculates an expected family contribution based on information the student reports on the FAFSA.

Need-based aid -- Financial aid that is awarded based on a student's financial situation. Most government student financial aid is need-based. Need-based aid can be awarded in the form of grants, loans, or work-study pay. One of the principles of need-based financial aid is that students (and their families) should pay for educational expenses to the extent they are able. Students who think their educational expenses will be higher than they or their families can afford should apply for need-based aid.

New borrower -- Someone with no outstanding (i.e., unpaid) loan balances on the date he or she signs a promissory note for a particular education loan. New borrowers may be subject to different regulations than borrowers who have existing loan balances.

New York State Regents Professional Opportunity Scholarship Program -- Scholarships available for full-time study in an approved program leading to licensure in a profession designated by the Commissioner of Education. Applicants must be economically disadvantaged, members of a minority group historically under represented in the licensed profession, or a graduate of the State-sponsored EOP, HEOP, SEEK, or College Discovery opportunity programs. Recipients must agree to practice in their licensed profession in New York State for one year for each year that the award is received.

Non-Taxable 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, welfare payments. Untaxed capital gains, interest on tax-free bonds, IRS's, Keogh, dividend exclusion, military and other subsistence and quarters allowances, retirement contributions and child support.

Nursing Student Loans (NSL) -- Loans available for nursing students attending approved nursing schools offering a diploma, associate degree, baccalaureate, or graduate degree in nursing.

NSL -- Nursing Student Loan.

NYSFAAA - New York State Financial Aid Administrators Association -- A professional state organization of financial aid administrators and related professionals associated with the delivery of student financial aid.

Ohio Instructional Grant -- The Ohio Instructional Grant (OIG) is funded by the state of Ohio, and like the Pell Grant does not have to be repaid. Eligibility is based on family income as reported on the Free Application for Federal Student Aid. 

OFSA -- Office of Student Financial Assistance of Department of Education.

Origination fee -- A fee charged by the federal government and deducted from the proceeds of a loan before disbursement; partially offsets the administrative costs of the FFELP and FDSLP.

Other Aid -- Any outside scholarships (high school, community, etc.), grants, fee waivers, veteran's education benefits, Bureau of Vocational Rehabilitation benefits, JTPA, or other aid sources that you expect to receive during the 2000-2001 award year.

Out-of-State Student -- A student who does not meet the residency requirements for the state. State public colleges and universities often charge out-of-state students a higher tuition rate.

Outstanding balance -- The total amount, including both principal and interest, still to be repaid.

Overaward -- Generally, any amount of campus-based aid or a Federal Family Education Loan that exceeds the student's financial need. (The overaward concept does not apply to the Federal Pell Grant Program.)

Overpayment -- Any payment of a Federal Pell Grant, Federal SEOG, or SSIG that exceeds the amount for which the student was eligible, whether the overpayment is the result of an overaward, an error in the cost of attendance or the Expected Family Contribution, or any other eligibility criterion, such as citizenship or enrollment in an eligible program.

Packaging -- See Financial Aid Package.

Parent -- The student's mother, father, or legal guardian; an adoptive parent is considered to be the student's mother or father.

Parent Loans -- see Federal Direct PLUS and Federal Family PLUS loan

Parents' contribution (PC) -- The amount that formulas suggest a dependent student's parents can reasonably be expected to contribute toward that child's educational expenses. (See Estimated family contribution.)

Part-Time Student -- One who attends an institution on less than a full-time basis as defined by the institution.

Paul Douglas Teacher Scholarship -- A scholarship program administered by the states to enable and encourage outstanding high school graduates who demonstrate an interest in teaching to pursue teaching careers at the elementary or secondary levels.

Payment Schedule -- The schedule published annually by the Secretary of Education which enables financial aid administrators to relate the Federal Pell Grant cost of attendance to the Federal Pell Grant Index in order to determine the student's Federal Pell Grant award.

Pell Grant Program -- see Federal Pell Grant Program.

Period of enrollment -- The period for which an education loan is intended and during which a borrower will use the loan funds. The dates must be certified by the school before the loan can be made and coincide with the beginning and ending dates of the school term.

Perkins Loan Program -- see Federal Perkins Loan Program.

PHEAA -- Pennsylvania Higher Education Assistance Agency -- a state guarantee agency for student loans obtained through lending institutions.

PLUS -- see Federal Direct PLUS and Federal Family PLUS loans.

Postsecondary -- "After high school." Refers to all programs for high school graduates. 

Prepayment -- Paying off some or all of a loan early in order to reduce the amount of interest that must otherwise be paid.

Prepayment penalty -- A charge assessed for paying off a loan early. There is no prepayment penalty for most education loans.

Presidential Access Scholarships -- Scholarships that are available to undergraduate students who are eligible for Federal Pell Grants and who demonstrate academic achievement.

Priority Dates -- Timeframes set by colleges that students should try to follow when filing the FAFSA. Students filing by the priority date of a particular school have a better chance of receiving the most possible financial aid from that school. If you miss the priority date, you can still receive financial aid, but the amount may be less or the aid may be in a different form (perhaps a higher loan ratio) than if you had filed earlier.

Professional Judgment -- While the method for determining student's need for federal student aid is defined in the law, the law does give the financial aid administrator's professional judgement. Professional judgment can be used in three areas:

1. the aid administrator can choose to override the student's dependency status to make the student independent
2. the aid administrator can adjust the components of the student's cost of attendance, and
3. the aid administrator can adjust the data elements used to calculate the student's Expected Family Contribution (EFC).

These adjustments must be made on a case-by-case basis and the reasons for the adjustment must be documented in the student's file.

Professional Student -- See Graduate Student.

Promissory note -- The legal document a borrower signs. The promissory note includes the conditions under which the money is borrowed, interest rates, and other terms. Borrowers should retain copies of all promissory notes until the loans are fully paid.

Principal -- The original amount borrowed. Origination and guaranty fees are deducted from this amount before disbursement, and interest is computed as a percentage of principal. If a student borrows $2,500 a year for four years of college, the principal is $10,000. The borrower pays interest on the outstanding (or remaining) principal each month until the entire loan is paid off.

Reauthorization -- A congressional review process intended to refine authorized federal programs to insure they meet the needs of the populations they are intended to serve

Refinancing -- Taking out a new loan or loans to pay off preexisting obligations. (See also consolidation.)

Refund -- The amount due a student who withdraws or fails to pursue his/her course of study when funds have been paid to the institution. When an institution determines that a student is due a refund, if that student has received financial aid funds, a portion of the refund must be allocated to the program(s) from which the student received aid.

Regular Student -- A person who is enrolled or accepted for enrollment at an institution of higher education for the purpose of obtaining a degree or certificate.

Renewal FAFSA -- A partially-preprinted FAFSA mailed by the U.S. Department of Education to students who completed a FAFSA in the previous year.

Repayment disclosure -- Written descriptions of the exact terms, conditions, and requirements of repayment, including the interest rate and the monthly payment. Repayment disclosure statements are mailed to students by lenders before their student loans go into repayment. Borrowers should retain repayment disclosure statements until the loans are fully paid.

Repayment options -- Special repayment features offered at the discretion of lenders and other holders of student loans. Some are designed to reward timely payment, such as the Sallie Mae-sponsored “Great Rewards” Program; when the first 48 loan payments are made on time, the interest rate on the student's unpaid loan balance is automatically reduced by 2 percent for the remaining term. Other programs are designed to make payment both more convenient and less expensive, such as the Sallie Mae-sponsored “Direct Repay” program, which reduces a borrower's interest rate by a quarter-percentage point when payments are made electronically. (See also Graduated repayment.)

Repayment period -- The time during which the principal, plus any accrued and capitalized interest, is repaid. May be expressed in terms of years (e.g., 10 years) or months (e.g., 48 months).

Repayment schedule -- Description of the borrower's monthly payment, interest rate, total repayment obligation, due dates, and length of time for repaying the loan.

Resident Student -- A student who does not live at home (with parents or guardian) during the academic year. An off-campus resident is one who does no live in the institutionally-provided housing. An on-campus resident student is one who lives in housing. An on-campus resident student is one who lives in housing facilities owned and/or maintained by the institution.

Resources -- Other student aid that must be taken into account to prevent an overaward in the campus-based programs, as defined in the regulations for the campus-based programs. (The term "resources" is used differently in the independent student definition, where it includes taxes and untaxed income and other forms of non-parental support as well as student aid.)

ROTC -- Reserve Officers' Training Corps program. A scholarship program in which the military pays most of the cost of tuition, fees, and textbooks, and also provides a monthly allowance. In return, scholarship recipients are expected to participate in summer training while in college and fulfill a service commitment after college.

Sallie Mae -- (See Student Loan Marketing Association.)

SAR -- see Student Aid Report.

SAT -- (See Scholastic Assessment Test.)

Satisfactory Academic Progress -- The progress required of a financial aid recipient according to the school's approved published policy.

Scholarship -- A form of financial assistance which does not require repayment or employment and is made to a student who demonstrates or shows potential for distinction at an institution, usually in academic performance, the arts, or athletics.

Scholarship Search Service -- A service that charges a fee to compare a student's profile against a database of scholarship programs. Beware of these services ... few students who use them ever actually win a scholarship.

Scholastic Assessment Test (SAT I) -- The SAT is one of two national standardized college entrance examinations use in the United States. The other is the ACT.

School -- A postsecondary educational institution. In the Federal Student Aid Handbook the term "school" refers to postsecondary educational institution.

School Year -- A period of time, generally not less than eight months, in which a full-time student would normally be expected to complete the equivalent of two semesters, two trimesters, three quarters, or 900 clock hours.

Secondary market -- An organization that purchases loans from lenders in order to allow lenders to make new loans. Some secondary markets are national, like the Student Loan Marketing Association (Sallie Mae); others are state or regional. If your lender sells your loan to a secondary market, you will be advised of the new holder (or owner) of your loan. Selling loans is a common practice among lenders and does not affect the terms and conditions under which a loan was originally made.

Self-help aid -- Self-help aid includes earnings from student employment and student loans.

Self-Help Expectation -- The assumption that a student has an obligation to help pay for a portion of his/her education. See Student Contribution.

Selective Service Registration -- all male students 18 years old and born after December 31, 1959, must be registered with selective service in order to receive federal student aid.

Servicer -- A company employed by a lender or a secondary market organization to perform administrative duties, such as billing and collecting. Some lenders and secondary markets service their own loans, while others contract with a servicing company. A servicer may handle accounts for several different lenders and/or secondary markets. Your loan may be moved from one servicer to another over the life of the loan, but it will not alter any of the terms or conditions under which the loan was originally made.

SFA (Student Financial Aid) Programs -- The programs administered by the Office of Student Financial Assistance within the U.S. Department of education, namely, Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, Federal Work-Study, Federal Perkins Loans, Federal Stafford Loans, Federal PLUS Loans, State Student Incentive Grants, Byrd Scholarships, and Federal Consolidation Loans.

Simplified Methodology (Simplified Need Test) -- Need analysis used by families whose total adjusted gross incomes are under $50,000 and who are eligible to file a 1040EZ, 1040A, or who do not file a tax return. (In the case of independent students, the same criteria is applied to the student and, if applicable, the student's spouse.) The Simplified Methodology is essentially the same as the Federal Methodology, except the Simplified Methodology does not count either parent or student assets in the Expected Family Contribution calculation.

Stafford Loan Program -- See Federal Stafford Loan Program.

Statement of Educational Purpose -- formerly known as the "Affidavit of Educational Purpose," this document is signed by the student financial aid recipient indicating his/her agreement to sue the financial aid funds awarded for the educational or educationally-related purposes only.

Statement of Selective Service Registration -- a document male students must sign for federal, need-based assistance in which students notate that they have registered with the Selective Service if required to do so.

Student Aid Report (SAR) -- The SAR summarizes the information included in the FAFSA and contains your expected family contribution (EFC). When you receive your SAR, check it for any mistakes. If you find a mistake, make the correction(s) on Part 2 of the form and return it to the processor in the envelope provided. If there aren't any mistakes, and if you did not receive the report electronically, copy the form for your records and send the original to your school's financial aid office.

Student's contribution (SC) -- the amount that a student can reasonably be expected to contribute towards his or her own educational expenses, based on federal and/or alternative guidelines. (See also “Dependency status” and “Estimated family contribution.”)

Student expense budget -- The total annual cost of attending a particular college or university.

Student Loan Marketing Association (SLMA) -- Also known as Sallie Mae, the SLMA is the nation's largest secondary market, holding approximately one third of all educational loans.

Subsidized Loan -- The government pays the interest on the loan while the student is in school, during the six-month grace period, and during any deferment periods. Subsidized loans are awarded based on financial need and may not be used to finance the family contribution. The Perkins Loan and the Subsidized Stafford Loans are subsidized loans.

Supplemental Education Opportunity Grant -- (SEOG) -- See  Federal SEOG.

TANF -- Welfare benefits, including Temporary Assistance for Needy Families. Don't include food stamps.  

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.

Three-Quarter Time Student -- A student who is carrying at least a three-quarter time academic workload as determined by the institution at which the student is enrolled and which amounts to at least three-quarters of the workload of a full-time student.

Title IV Financial Aid -- Those student Aid programs which are called "Title IV" programs are those which are authorized under Title IV or the Higher Education Act of 1965, as amended. Funds for the Title IV programs are appropriated each year by Congress. The basic philosophy of Title IV aid is that the family -- the student, student's spouse, and parents -- have the primary responsibility to pay for higher education expenses to the extent of their ability.

Title IV Need Analysis -- or Federal Methodology, is intended to include a consistent, fair evaluation of a family's financial circumstances. Most Title IV programs require a student applicant to demonstrate financial need.

Title VII Financial Aid -- Financial Aid programs administered by the Department of Health and Human Services.

Truth-in-Lending Statement -- The document provided to loan recipients that delineates the interest rate and other information relative to the loan the student has received. The use of the statement is required by the Consumer Credit Act. The Title IV loan programs are exempt from compliance with Truth-in-Lending.

Tuition -- The amount of money colleges charge for instruction and use of facilities. Room, board, and fees are charged in addition to tuition, so the terms "tuition" and "college costs" are not synonymous.

Undergraduate Student -- A student who has not achieved the educational level of a baccalaureate or first professional degree.

University Award -- The University Award is available to incoming freshmen from Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, New York, Pennsylvania, Virginia, or West Virginia. Effective Fall 2005 first time freshmen* students from California, Texas, North Carolina, South Carolina, Georgia, and Florida will also be eligible to receive this award. No application is required. Transfer students are not eligible to receive this award. *First-time freshmen are those who have not attempted or completed ANY postsecondary coursework after graduation from high school. The University Award is renewable for up to 8 semesters (4 years), if the student maintains a 2.25 cumulative GPA and completes 24 credit hours each academic year.

Unmet Need -- The difference between a specific student's total available resources and the total cost for the student's attendance at a specific institution.

Unsubsidized Loan -- The government does not pay the interest, making the borrower responsible for paying it from the date the loan is disbursed -- even while the student is still in school. Unsubsidized loans are not based on financial need and may be used to finance the family contribution.

Untaxed Income and Benefits -- From Worksheet A (page 8 of the paper FAFSA). Worksheet A collects information about certain untaxed income and benefits. Any income or benefits already reported elsewhere on the application are not include on Worksheet A. Includes: deductible IRA and/or Keogh payments, untaxed Social Security payments, benefits received on behalf of dependents, underpayments and overpayments of benefits, housing allowances, other untaxed income and benefits, and cash payments. For descriptions of these items click here.

VA -- Veteran's Administration -- Administered assistance programs for veterans and their dependents.

Verification -- A procedure whereby the school checks the information the student reported on the financial aid application, usually by requesting a copy of the tax returns filed by the student, and if applicable, the student's spouse and/or parent(s). Many schools conduct their own form of verification. In addition, schools must verify students selected through the federal central processing system, following the procedures established by regulation. The contractor will print an asterisk next to the Expected Family Contribution (EFC) on the Institutional Student Information Report (ISIR) to identify students who have been selected for verification.

Veteran -- a person who has served on active duty in the Army, Navy, Air Force, Marines, or Coast Guard, and who was discharged other than dishonorably. Veterans are considered to be independent. There is no minimum length of service requirement.

Veterans Educational Benefits -- Assistance programs for veterans and service persons 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.

Ward of the Court -- A person who is under the care of the court.

Work Study -- Another form of self-help aid. The Federal Work-Study Program is probably the most familiar example of this type of program, although many colleges may offer similar programs. Work-study aid is money a student must earn by working a part-time job, usually at the college or university the student is attending or at a nonprofit organization. Funds for most of the wages a work-study student earns come from the Federal Work-Study Program.