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Financial Aid Glossary
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| Accrue: To add up, as in the interest accrues from the first of the month. |
Acknowledgement: Sent by a need analysis service to students when their financial aid applications have been processed. |
Assets: Part of a family’s financial worth, including home equity, other real estate, stocks, bonds, and cash savings. |
Award Letter: The official document, issued by a college’s financial aid office, which lists all of the financial aid awarded to a student. |
Capitalization: The act of adding unpaid interest to the principal balance that is owed on a loan. It increases the total amount owed and the monthly payment. |
COA (Cost of Attendance): The total amount it will cost a student to attend a particular school for one year. This includes tuition and fees, room and board, books, supplies, transportation costs, and personal expenses. |
Coverdale ESA (Formerly known as “Education IRA.”): A tax-favored savings plan. Beneficiaries (children) can receive $2,000 per year. Not tax deductible, but growth is tax-deferred, withdrawals are tax-free. |
CSS PROFILE (College Scholarship Service): A secondary financial aid form distributed by The College Board and required by more than 600 schools, most of them private, to determine financial need. It is much more detailed than the FAFSA. |
Default: Failure to make student loan payments or otherwise honor its terms; reported to credit bureaus and can influence future credit scores. |
Dependent Student: According to the federal definition for financial aid purposes, a student who is dependent upon his/her parents for financial support and is declared as a dependent on the family’s federal income tax form. (Refer to Federal definition of “Independent”). |
Dislocated Worker: A person who meets one of the following: lost a job or was laid off; Is receiving unemployment benefits and is unlikely to return to a previous occupation; Is self-employed but is unemployed due to economic conditions or natural disaster; Is a displaced homemaker – someone who previously provided unpaid services to the family, like a stay at home parent, is no longer supported by a partner, and is having trouble finding a job. |
EFC (Expected Family Contribution): The amount the Federal Government, via the FAFSA process, estimates that a student’s family should be able to contribute to the cost of a college education. This figure includes parental contribution as well as the student’s assets and income. |
FAFSA (Free Application for Federal Student Aid): The form on which parents or independent students list all income and net assets to estimate the amount they will be expected to contribute toward college costs and determine eligibility for federal family aid. All families applying for financial aid must complete the FAFSA, regardless of school. |
Financial Need (FN): The difference between the Expected Family Contribution and the total Cost of Attendance. |
Full Time Status: Enrollment in an academic curriculum for 12 or more credit hours. |
Grants: Financial aid that does not have to be repaid. |
Grace Period: The span of time allowed before principal repayment of a Federal Stafford Loan must begin after graduating, leaving school, or dropping down to less than part time status. |
Hope Credit: Parents receive 100% tax credit on the fist $1,100 of each child’s tuition and fees for the first two years of college, 50% for the next $1,100 of expenses for the same period. |
Independent Student: According to the federal definition, a student who meets one of the following criteria: is 24-years old by December 31 of the same year; married; a graduate or professional student; someone with legal dependents other than a spouse; an orphan or ward of the court; an active-duty soldier; or a veteran. |
Interest: The fee charged to borrow money. |
Lifetime Learning Credit: 20% tax credit on the initial $10,000 of “out of pocket” expenses – tuition and fees paid each tax year less grants, scholarships. Phased out once income ceilings are reached. Check with your tax advisor for more details. |
Needs Analysis: The first step in determining financial need, a needs analysis is a detailed study of a family’s finances. |
Origination Fee: The fee charged by the government to offset interest payments. The amount of the fee is usually deducted from the dollar amount of the loan. |
Parental Contribution: The estimated amount that parents, not the student, should be expected to contribute toward college expenses. |
Part Time Status: Enrollment in an academic curriculum with a minimum of 6 credit hours but less than 12 credit hours. |
Pell Grant: This is the largest federal grant program. Qualifying students apply directly to the government for Pell Grants, but the grants are disbursed by the colleges the students attend, to all who qualify for this aid. |
Perkins Loan: A need-based student loan for those with “exceptional” financial need. The lender is the academic institution, but to qualify a FAFSA must be completed. Up to $4,000 may be awarded per year, for a maximum of $20,000. Rates are fixed at 5% with a 10 year repayment term commencing 9 months after graduation. |
Period of Enrollment: The time between the beginning and ending dates of the school term during which the student will use his/her Stafford Loan. |
PLUS Loan: A federal direct loan in the parent’s name to cover undergraduate costs. Typically, these loans involve a 4 point origination fee, an 8.5% interest rate, with a 10 year term. |
Principal: The amount you borrow on which interest will be charged. |
Private Sources of Aid: Financial Aid from non-government sources such as corporations, foundations, civic associations, etc. |
Promissory Note: The signed, legal, binding agreement between student and lender stipulating the amount of the loan and the terms under which it is to be paid back. Keep it until the loan is paid off. |
Satisfactory Academic Progress: The academic standing which meets the financial aid office’s requirements. Anything less will jeopardize the student’s federal aid. |
SAR: Student Aid Report – a report sent to the student which gives the EFC and a Pell Grant Index (PGI) number indicating eligibility. |
Stafford Loan: The most common federal loan offered to students with financial need. The Stafford Loan comes in two varieties, Subsidized and Unsubsidized. With a Subsidized Stafford Loan the Federal Government pays the interest on the loan while the student remains in school. With an Unsubsidized Stafford Loan the student is required to make interest-only payments while the student remains in school. A FAFSA must be completed before receiving a Stafford Loan. The Federal Government limits the amount borrowed via Stafford Loan to $3,500 for freshmen, $4,500 for sophomores, and $5,500 for juniors and seniors. |
“Suck It!”: Andy”s fantasy answer for those annoying questions on the CSS Profile. Don’t use it. |
Unmet Need: The difference between the amounts of money a college or university awards a student and the expected family contribution. |
W-2: A statement of earned wages which employers must issue by January 31. |
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