Financial Aid Glossary (page 2)
Financial aid has its own vocabulary. To help you speak the language, here are the most commonly used terms and acronyms.
|ACT||American College Testing Program|
|AFDC||Aid to Families with Dependent Children|
|BIA||Bureau of Indian Affairs|
|CLEP||College-Level Examination Program|
|COA||Cost of Attendance|
|CPS||Central Processing System|
|CSS||College Scholarship Service|
|ED||US Department of Education|
|EFC||Expected Family Contribution|
|EFT||Electronic Funds Transfer|
|ELO||Expanded Lending Option|
|ESAR||Electronic Student Aid Report|
|ETS||Educational Testing Service|
|FAA||Financial Aid Administrator|
|FAF||Financial Aid Form|
|FAFSA||Free Application for Federal Student Aid|
|FAO||Financial Aid Office|
|FAT||Financial Aid Transcript|
|FDSLP||Federal Direct Student Loan Program|
|FFELP||Federal Family Education Loan Program|
|FSEOG||Federal Supplemental Educational Opportunity Grant|
|GPA||Grade Point Average|
|GSL||Guaranteed Student Loan|
|HEAL||Health Education Assistance Loan|
|HHS||US Department of Health and Human Services|
|HPSL||Health Profession Student Loan|
|IRA||Individual Retirement Account|
|IRS||Internal Revenue Service|
|ISIR||Institutional Student Information Report|
|MDE||Multiple Data Entry|
|NHSC||National Health Corps Scholarship|
|NMSQT||National Merit Scholarship Qualifying Test|
|NSL||Nursing Student Loan|
|PCL||Primary Care Loan|
|PHEAA||Pennsylvania Higher Education Assistance Agency|
|PLUS||Parent Loan for Undergraduate Students|
|PSAT||Preliminary Scholastic Assessment Test|
|ROTC||Reserve Officer Training Corps|
|SAP||Satisfactory Academic Progress|
|SAR||Student Aid Report|
|SAT||Scholastic Assessment Test|
|SEOG||Supplemental Educational Opportunity Grant|
|SLMA||Student Loan Marketing Association|
|SLS||Supplemental Loan for Students|
|SSIG||State Student Incentive Grants|
|TOEFL||Test Of English As A Foreign Language|
|USED||US Department of Education|
1040 Form, 1040A Form, 1040EZ Form
The Federal Income Tax Return. Every person who has received income during the previous year must file a form 1040 with the IRS by April 15.
Form used by business to report income paid to a non-employee. Banks use this form to report interest income.
A popular type of retirement fund. It is legal to borrow money from your 401(k) to help pay for your children's education.
The period during which school is in session, consisting of at least 30 weeks of instructional time. The school year typically runs from the beginning of September through the end of May at most colleges and universities.
Access to higher education focuses on providing students with the opportunity to pursue a college education. Choice focuses on allowing students the flexibility to choose among several options. Generally, need-based aid promotes access while merit-based aid promotes choice. Students with no debt are more likely to pursue advanced education (4 year instead of 2 year undergraduate, graduate and professional school) and more likely to pursue public service careers.
The date on which interest charges on an educational loan begin to accrue. See also Subsidized Loan.
Achievement Tests (SAT II)
A collection of tests that measure the student's proficiency and accumulated knowledge of specific subject areas. Different schools require different achievement tests as part of their admissions requirements. Since March 1994, these tests are now known as the SAT II tests. See also SAT and ETS.
Adjusted Available Income
In the Federal Methodology, the remaining income after the allowances (taxes and a basic living allowance) have been subtracted.
A practice in which a school will admit marginal students, but not award them any financial aid. Very few schools use admit-deny, because studies have shown that lack of sufficient financial aid is a key factor in the performance of marginal students.
Advanced Placement Test (AP)
Test used to earn credit for college subjects studied in high school. They are offered by ETS in the spring. AP tests are scored on a scale from 1 to 5 (the best possible score).
An aggregator is a student who wins many scholarships with a cumulative value of more than $100,000. Some aggregators have published books with a theme "I won a gazillion dollars for college and you can too". Although these books contain some good advice, most students will not be able to pay for college entirely through scholarships. Very few students win more than $100,000 in scholarships, and doing so requires a combination of talent and luck. More than 90% of students do not receive any private scholarships, and the average amount received by students who do win scholarships is approximately $2,000.
See Private Loans.
American College Test (ACT)
One of the two national standardized college entrance examinations used in the US. The other is the SAT. The ACT is widely used in the West and Midwest. Most universities require either the ACT or the SAT as part of an application for admission. See also PLAN.
The process of gradually repaying a loan over an extended period of time through periodic installments of principal and interest.
A formal request to have a financial aid administrator review your aid eligibility and possibly use Professional Judgment to adjust the figures. For example, if you believe the financial information on your financial aid application does not reflect your family's current ability to pay (e.g., because of death of a parent, unemployment or other unusual circumstances), you should definitely make an appeal. The financial aid administrator may require documentation of the special circumstances or of other information listed on your financial aid application.
An item of value, such as a family's home, business, and farm equity, real estate, stocks, bonds, mutual funds, cash, certificates of deposit (CDs), bank accounts, trust funds and other property and investments.
Asset Protection Allowance
A portion of your parents' assets that are not included in the calculation of the parent contribution, as calculated by the Federal Methodology need analysis formula. The asset protection allowance increases with the age of the parents.
See Graduate Assistantship.
The degree granted by two-year colleges.
An official document issued by a school's financial aid office that lists all of the financial aid awarded to the student. This letter provides details on their analysis of your financial need and the breakdown of your financial aid package according to amount, source and type of aid. The award letter will include the terms and conditions for the financial aid and information about the cost of attendance. You are required to sign a copy of the letter, indicating whether you accept or decline each source of aid, and return it to the financial aid office. Some schools call the award letter the "Financial Aid Notification (FAN)".
The academic year for which financial aid is requested (or received).
The undergraduate degree granted by four-year colleges and universities.
A larger than usual payment used to pay off the outstanding balance of a loan without penalty. Not all loans allow balloon payments. Simple interest loans, like many educational loans, generally do allow balloon payments.
When a person is declared bankrupt, he is found to be legally insolvent and his property is distributed among his creditors or otherwise administered to satisfy the interests of his creditors. Federal student loans, however, cannot normally be discharged through bankruptcy.
The tax year prior to the academic year (award year) for which financial aid is requested. The base year runs from January 1 of the junior year in high school through December 31 of the senior year. Financial information from this year is used to determine eligibility for financial aid.
The person who receives the loan.
See Loan Discount.
See Cost of Attendance.
(Also called Student Accounts Office) The university office that is responsible for the billing and collection of university charges.
Financial aid programs are administered by the university. The federal government provides the university with a fixed annual allocation, which is awarded by the financial aid administrator to deserving students. Such programs include the Perkins Loan, Supplemental Education Opportunity Grant and Federal Work-Study. Note that there is no guarantee that every eligible student will receive financial aid through these programs, because the awards are made from a fixed pool of money. This is a key difference between the campus-based loan programs and the Direct Loan Program. Do not confuse the two, even though both loans are issued through the schools.
Some loan programs provide for cancellation of the loan under certain circumstances, such as death or permanent disability of the borrower. Some of the Federal student loan programs have additional cancellation provisions. For example, if the student becomes a teacher in certain national shortage areas, they may be eligible for cancellation of all or part of the balance of their educational loans. Repayment assistance is available if you serve in the military; the military pays off a portion of your loans for every year of service.
An increase in the value of an asset such as stocks, bonds, mutual funds and real estate between the time the asset was purchased and the time the asset was sold.
The practice of adding unpaid interest charges to the principal balance of an educational loan, thereby increasing the size of the loan. Interest is then charged on the new balance, including both the unpaid principal and the accrued interest. Capitalizing the interest increases the monthly payment and the amount of money you will eventually have to repay. If you can afford to pay the interest as it accrues, you are better off not capitalizing it. Capitalization is sometimes called compounding. See also Unsubsidized Loans.
Property that is used to secure a loan. If the borrower defaults on the loan, the lender can seize the collateral. For example, a mortgage is usually secured by the house purchased with the loan.
A company often hired by the lender or guarantee agency to recover defaulted loans.
A nonprofit educational association of colleges, universities, educational systems and other educational institutions. For more information, see College Board Online (CBO).
College Work-Study (CWS)
College Work-Study is simply a part time job. This term is sometimes erroneously used to refer to the Federal Work-Study Program.
Color of Federal Forms
The FAFSA and SAR change color each year in a four color rotation: Yellow (2003-04), Pink (2004-05), Green (2005-06), and Blue (2006-07) then it repeats. This will help you make sure you're filing the correct form. Purple has been the stable parent color since 1999-2000.
Common Law Marriage
If a couple cohabits while holding themselves out as being married, they are considered to be married in 16 states.
Community property laws specify that property is owned jointly by husband and wife unless there is a specific agreement to the contrary (i.e., prenuptial agreements). According to IRS Publication 555, the following is a list of Community Property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In addition, Alaska has community property laws.
Reprinted with the permission of FinAid. © 2008 by FinAid Page, LLC. All rights reserved.
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