Financial Aid Glossary
A to F
A
Academic Year
A period of time usually consisting of two semesters or three
quarters or trimesters, each with a certain amount of credit
hours.
Accrued Interest
Interest on loans that accumulates and must be paid at a later
date, usually when the principal becomes due.
Amortization
A schedule of repayment which includes payments consisting of
both principal and interest.
Assets
Financial holdings such as cash in checking and savings accounts,
stocks, bonds, trusts and other securities, loan receivables,
home and other real estate equity, business equipment, and
business inventory.
Award Letter
A college's notification of financial aid qualification. The
award letter usually gives information about the types and
amounts of aid offered, specific program information, and the
conditions that govern the award.
B
Base Year
The 12-month period ending on December 31 preceding the year for
which financial aid is sought (i.e., for the 2000-01 academic
year, the base year is January 1 - December 31, 1999).
Borrower
The person who takes out a loan and is responsible for repayment
of the loan.
C
Campus-Based Aid
The three federal Title IV 1355 financial aid programs
administered by eligible colleges. They include the Federal
Supplemental Educational Opportunity Grant (FSEOG), Federal
Work-Study, and the Federal Perkins Loan.
Cancellation
Clause in which a portion or all of a student's loans can be
canceled. Promissory notes outline the circumstances under which
loans can be canceled.
Capitalization
Unpaid interest is added to the principal of the loan, increasing
the monthly payment and the total balance of the loan.
College Board
A non-profit membership organization which administers the SAT,
CSS PROFILE applications, and other education-related
services.
College Scholarship Service
(CSS)
The arm of the College Board that administers and processes the
CSS PROFILE application.
Compound Interest
Interest that is computed on the sum of an original principal and
any accrued interest.
Consolidation
The process of combining several individual loan balances into
one loan through a single lender, reducing the monthly payment
but increasing the amount of time to repay the loan.
D
Default
The failure to meet the conditions of repayment of a student
loan. Students may be ineligible to receive federal financial aid
when in default.
Deferment
A specified period during which a borrower does not have to repay
a loan.
Dependent Student
Any undergraduate student under the age of twenty-four who is not
a veteran of the U.S. Armed Forces, not married, not a ward of
the court, and who does not have legal dependents other than a
spouse.
Disbursement
The release of loan funds to the school by the lender for the
borrower.
Disclosure Statement
A statement from a lender to a borrower that provides the
borrower with information about the terms of the loan and the
consequences of defaulting on that loan.
E
Expected Family
Contribution
The out-of-pocket expenses a family and/or student is expected to
contribute toward the cost of college, graduate or professional
school. The EFC is the basis for financial need.
F
Financial Aid
Any type of financial assistance available to families and
students for the purpose of funding higher education.
Financial Need
The basis for need-based financial aid. A student's financial
need is determined at each financial aid office by subtracting
the total cost of education (as determined by each school) from
the EFC. Financial need may or may not be met with the award of a
financial aid package.
Forbearance
A condition under which a lender allows a borrower to temporarily
stop making payments on a loan or take an extension of time for
making payments or agrees to accept smaller payments than
previously scheduled.
Free Application for Federal
Student Aid (FAFSA)
A financial aid application administered by the federal processor
which is the determinant of eligibility for all types of federal
financial aid, including federal student loan programs.
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