An alphabetical listing of college-related terms and acronyms, covering the planning and paying for college process.

 - A -

AA
An associate of arts degree. Can be earned at most two-year colleges.

AAMC
American Association of Medical Colleges.

AAS
An associate of applied science degree. Can be earned at some two-year colleges.

ABA
American Bar Association.

academic period
A measured term of enrollment (such as a semester, quarter, trimester, or clock or credit hour).

academic year
A period of time schools use to measure a quantity of study. For example, a school's academic year may consist of a fall and spring semester, during which a student must complete 24 semester hours. Academic years vary from school to school, and even from educational program to education program at the same school.

accrued interest
Interest that accumulates on the unpaid principal balance of a loan.

achievement tests
Tests required by some colleges to measure student achievement in specific areas of study such as English, Math, or Science.

ACT
A test published by American College Testing to measure a student's ability in math, verbal comprehension, and problem solving. Usually students take this test during their junior or senior year of high school.

ADB
Average daily balance. The sum of unpaid principal balance outstanding on all qualifying loans at each actual interest rate for each day of the quarter, divided by the sum of the number of days in the quarter.

adjusted gross income
All taxable income less IRS allowable adjustments to income. This figure is from U.S. IRS tax forms.

Adobe Acrobat
A computer application suite developed by Adobe Corporation that consists of at least two well known applications: Acrobat and Reader. Acrobat translates files of various formats into a single format, called "portable document format" or PDF. Reader is a free, downloadable application that displays PDF files.

Advanced Placement Test
Test used to earn credit for college subjects studied in high school and scored on a scale from 1 to 5 (the best possible score). They are offered by the Educational Testing Service (ETS) in the spring. Also known as AP tests.

AGD
Anticipated graduation date. The date the lender (or servicer) expects the student to graduate.

AGI
Adjusted gross income. All taxable income less IRS allowable adjustments to income. This figure is from U.S. IRS tax forms.

aid package
A combination of financial aid (scholarships, grants, loans, and/or work study) determined by the financial aid office of a college or university. See also award letter.

allopathic
A term used to describe courses of medical study that are specific to the treatment of disease.

amortization
The process of gradually repaying a loan over an extended period of time through periodic installments of principal and interest.

Annual Percentage Rate
The total annual cost of a loan, including all fees and interest. Usually expressed as a percentage. Also known as APR.

anticipated graduation date
The date the lender (or servicer) expects the student to graduate. Also known as AGD.

APR
Annual Percentage Rate is the total annual cost of a loan, including all fees and interest. Usually expressed as a percentage.

aptitude
An aptitude is the readiness to become proficient in a type of activity, given the opportunity and may refer to an individual's capacity or potential to learn one type of work.

ASVAB
Armed Services Vocational Aptitude Battery. It is a test designed to measure aptitude in 10 different career-related skills or activities and at a particular stage—namely individuals between the ages of 16 and 24—in life.

average daily balance
The sum of unpaid principal balance outstanding on all qualifying loans at each actual interest rate for each day of the quarter, divided by the sum of the number of days in the quarter. Also known as ADB.

award letter
An official document issued by a financial aid office listing all the financial aid awarded to the student. The award letter will include information about the cost of attendance and terms and conditions for the financial aid. See also aid package.

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 - B -

BA or BS
BA stands for bachelor of arts, and BS stands for bachelor of science. Both degrees can be earned at four-year colleges. The type of degree awarded depends on the kinds of courses offered at the particular school.

bankruptcy
A person is declared bankrupt, when found to be legally insolvent and the person's property is distributed among creditors or otherwise administered to satisfy the interests of creditors. Generally, Federal student loans cannot be discharged through bankruptcy.

base year
The tax year prior to the academic year (award year) for which financial aid is requested. Financial information from this year is used to determine eligibility for financial aid. For example, if a student is submitting a FAFSA in March 2002 for academic year 2002-2003, the base year to be used is 2001.

BIA
Bureau of Indian Affairs.

borrower
The person who applies for a loan and receives the proceeds (or money) of the loan.

budget
The total cost of attending a postsecondary institution for one academic year. The student's budget usually includes tuition, fees, room, board, books, supplies, travel, and personal expenses. Each institution develops its own student budget.

Bursar's Office
The university office that is responsible for the billing and collection of university charges.

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 - C -

campus-based aid
Financial aid programs 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. The Perkins Loan Program, Federal Supplemental Education Opportunity Grant (FSEOG), and Federal Work-Study are examples of campus-based aid.

cancellation
The release of a borrower from the obligation to repay his or her loan. There are three different cancellation periods within the loan life cycle: before disbursement is made, after disbursement is made but before repayment begins, and once repayment begins. Before disbursement is made, the borrower may cancel (or un-apply for) the loan by telling the lender that the loan is not wanted. After first disbursement and before repayment, the borrower has the right to return the loan proceeds in full within 120 days (afterwards the borrower owes fees and any accrued interest) and thereby cancel the loan. In this same cancellation period, the borrower may also effect a "partial" cancellation by returning individual (but not all) disbursements. After repayment begins, the borrower must meet certain requirements or conditions to be eligible for discharge from federal student loans. A loan cannot be discharged or cancelled because the borrower didn't complete the program of study at the school (unless the borrower was unable to complete the program because of school closure), didn't like the school or the program of study, or didn't obtain employment after completing the program of study. See also discharge and cancellation options.

cancellation options
The conditions for federal loan cancellation or discharge are based on the loan program (i.e., FFELP, FDLP, Perkins). The total and permanent disability or death of a borrower are the only conditions that justify 100% cancellation of a loan in any of the programs. Conditions such as being a full-time teacher (in designated studies or demographic areas), nurse or medical technician, Vista or Peace Corp volunteer, or a member of the U.S. Armed Forces MAY qualify the borrower for 50%-100% discharge on Perkins Loans only. Bankruptcy may be a valid condition for discharge. However, this may only occur if repaying the loans would cause the borrower or his/her family "undue hardship."

capitalization
Addition of unpaid interest to the principal balance of a loan which increases the total outstanding balance due. See also interest capitalization.

certification
A process by which the college, university, trade school, or vocation school verifies that a student is enrolled on at least a half-time basis, is making satisfactory academic process, and therefore eligible for federal and private loans. Certification must be made prior to disbursement of funds.

citizen/eligible non-citizen
To be eligible for federal student aid, the borrower must be a: 1) U.S. citizen; 2) U.S. national (including natives of American Samoa or Swain's Island); or, 3) U.S. permanent resident (who has an I-151, I-551, or I-551C (Alien Registration Card). If not in one of these categories, the borrower must have an Arrival-Departure Record (I-94) from U.S. Immigration and Naturalization Service showing one of the following designations in order to be eligible: "Refugee," "Asylum Granted," "Indefinite Parole" and/or "Humanitarian Parole," or "Cuban-Haitian Entrant, Status Pending." If the borrower has only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), the borrower is not eligible for federal student aid. If the borrower is in the U.S. on an F1or F2 student visa only, or on a J1 or J2 exchange visitor visa only, or with a G series visas, then the borrower is not eligible for federal student aid.

claim
An application made to a guarantor for payment of an insured student loan for loss of payment due to borrower death, total and permanent disability, bankruptcy, default, or school closure.

co-borrower
A person who signs the promissory note in addition to the borrower and is responsible for the obligation if the borrower does not pay. A co-borrower must be able to pass a credit review and must live in the United States.

COA
The total cost of attending a postsecondary institution for one academic year. The student's budget usually includes tuition, fees, room, board, supplies, transportation, and personal expenses. See also cost of attendance.

collateral
Property of a borrower that is pledged by the borrower to protect the interests of a lender. In other words, it may become property of the lender if the borrower fails to repay the associated loan. Collateral is the lender's security for loans made.

collection
The activities and/or actions associated with getting payment on unpaid loan principal and interest from a borrower after that borrower defaults on the loan. The players in the loan process that could be taking these actions include lenders, guarantors, servicers, and collection agencies.

CollegeAnswer.com
A comprehensive online resource to take the stress and the guesswork out of planning and paying for college. It walks you through the entire "go-to-college" process—from early planning and estimating to applying for federal and private loans online.

College Scholarship Service
A division of the College Board that collects additional information used by colleges, universities, and scholarship programs in awarding private financial aid funds. Also known as CSS.

comaker
One of two individuals who are joint borrowers on a federal parent (PLUS) loan or on a consolidation loan, and who are jointly liable for the repayment of the loan.

combined billing
Lenders (or servicers) generally offer a combined bill for all of a borrower's loans serviced by that lender/servicer so that the borrower only needs to make one payment per month for all of the loans.

Common Application
The recommended application form for admission to undergraduate programs at many independent colleges and universities. The Common Application was developed to simplify the college application process. Students complete the form only once and send copies to any of the participating colleges to which they wish to apply. Paper and disk copies of the Common Application are available at most high schools. The form can also be downloaded or completed online at commonapp.org.

consolidation
Combining several federal (and possibly private) loans from multiple lenders into a single loan to reduce the monthly payment amount and/or increase the repayment period.

cooperative work-study education
A program in which the student alternates between full-time college study and full-time paid employment related to the student's area of study. Under this plan, a bachelor's degree often requires five years to complete.

cosigner
A person who signs the promissory note in addition to the borrower and is responsible for the obligation if the borrower does not pay. A cosigner must be able to pass a credit review and must live in the United States.

cost of attendance
The total cost of attending a postsecondary institution for one academic year. The student's budget usually includes tuition, fees, room, board, supplies, transportation, and personal expenses. Also known as COA.

coupon book
A loan repayment tool. Generally, coupon books are provided by lenders (or servicers) to borrowers rather than monthly bills to remind borrowers of their obligation to pay and to associate the borrower's payment with his/her account (once received via mail). Coupon books are mailed to the borrower periodically and contain all of the periodic coupons required by the borrower until the next coupon book is scheduled for printing and mailing or until the loan is paid in full.

credit
An amount or sum placed at an individual's disposal by a bank or other lending institution. The individual—or borrower—may use this sum to pay for products and services but must repay (usually over time) the lending institution for that usage.

credit bureau
A credit bureau is an agency that gathers and stores credit information on individuals. When a credit report is needed for a loan application, a credit bureau produces a report to the lender based on the gathered data. The lender also reports back to credit bureaus how much an individual borrowed and whether the individual makes payments when due. This information is then available to potential employers and creditors in the future.

credit report
A report that contains details about your borrowing habits and money-management skills. Lenders use credit reports to determine if they should approve a loan and to set the terms (interest rate, fees, and length) of the loan.

credit score
A number, generally between 300 and 800, that reflects the credit history shown in a borrower's credit report and that is part of the process of setting interest rates and terms for loans. To arrive at a single score, a credit bureau assigns numerical values to specific pieces of a borrower's personal financial information, such as outstanding debt, the number of inquiries on your credit history, the number of open accounts, etc. These values are put through a series of mathematical calculations to produce the single number, the credit score. A borrower's credit score is considered predictive of the borrower's future credit performance.

credit-ready
A credit-ready borrower is one who has no credit history OR a credit history with no excessive number of delinquencies on consumer loans or revolving charge accounts; no prior education loan defaults; no derogatory credit items such as charge offs, foreclosures, open judgments, bankruptcy, etc.

credit-scoring
A method, based on statistical analysis of applicant characteristics, through which lenders determine the applicant's qualification for credit.

credit-worthy
An individual with no negative credit history per the criteria established by the lender.

CSS
College Scholarship Service. A division of the College Board that collects additional information used by colleges, universities, and scholarship programs in awarding private financial aid funds.

custodial account
In a custodial account, a minor is the owner of the account, however, an adult controls the investment until the minor is 18 (i.e., reaches majority). The interest and dividends on the account are then taxed based on the minor's lower income bracket. If the minor has little other income, these earnings may escape tax altogether. Custodial accounts include those governed by the Uniform Gifts to Minors Act and/or the Uniform Transfer to Minors Act.

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 - D -

data release number
Piece of information on the Student Aid Report (SAR) in the upper right hand corner of the first page (next to the printed EFC). This number is needed to identify the appropriate FAFSA data for release to additional schools (beyond the six schools possibly listed by the student in the original FAFSA submission). Also known as DRN.

default
Failure to repay a loan according to the terms agreed to when the borrower signed a promissory note for the loan. Default occurs at 180 days when the delinquency date is prior to 10/7/98, and 270 days when the delinquency date is on or after 10/7/98.

deferment
A period during which a borrower, who meets certain criteria, may suspend loan payments. For some loans the federal government pays the interest during a deferment. On others, the interest accrues and is capitalized, and the borrower is responsible for paying it.

delinquency
Failure to make monthly loan payments when due. Delinquency begins with the first missed payment.

demographics
Information pertaining to the vital data for a borrower (e.g., name address, school, birthdate, SSN). Also known as demographic information.

dependent student
An undergraduate student whose parents provide more than half of their financial support. A dependent student is not married, is under 24 years of age, has no legal dependents, is not an orphan or ward of the court, nor a veteran of the U.S. Armed Forces. Parents of a dependent student must submit parental information on the FAFSA for their son or daughter to be considered for financial aid. (See also Independent.)

Direct Lending
The William D. Ford Federal Direct Loan Program. Stafford and PLUS loans are available directly from the federal government rather than through commercial lenders. Selected colleges and universities participate in this program. Once known as FDSLP for Federal Direct Student Loan Program. Also known as FDLP.

disbursement
The release of loan funds to the school for delivery to the borrower. Disbursements are usually made in equal multiple installments co-payable to the borrower and the school.

discharge
The release of a borrower from the obligation to repay his or her loan. There are three different cancellation periods within the loan life cycle: before disbursement is made, after disbursement is made but before repayment begins, and once repayment begins. Before disbursement is made, the borrower may cancel (or un-apply for) the loan by telling the lender that the loan is not wanted. After first disbursement and before repayment, the borrower has the right to return the loan proceeds in full within 120 days (afterwards the borrower owes fees and any accrued interest) and thereby cancel the loan. In this same cancellation period, the borrower may also effect a "partial" cancellation by returning individual (but not all) disbursements. After repayment begins, the borrower must meet certain requirements or conditions to be eligible for discharge from federal student loans. A loan cannot be discharged or cancelled because the borrower didn't complete the program of study at the school (unless the borrower was unable to complete the program because of school closure), didn't like the school or the program of study, or didn't obtain employment after completing the program of study. See also cancellation and cancellation options.

disclosure statement
Statement of the total cost and amount of a loan, including the interest rate and any additional finance charges.

DRN
Data release number. Piece of information on the Student Aid Report (SAR) in the upper right hand corner of the first page (next to the printed EFC). This number is needed to identify the appropriate FAFSA data for release to additional schools (beyond the six schools possibly listed by the student in the original FAFSA submission).

due diligence
The federal government requires that a lender, holder, or servicer exercise reasonable care and diligence in the making, servicing, and collection of insured federal student loans in order to retain the insurance (against default claims) of the loans.

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- E -

Early Action
A college admissions program that consists of earlier deadlines and notification dates than the regular admissions process, but that does not require a binding commitment of the student if admission is offered. The student applying under this program may apply to many schools. The student will not know what financial aid will be awarded prior to commiting.

Early Admission
A college admissions program that considers high school juniors with enough credits (and remarkable academic and non-academic background) for admission (a year earlier than is typical).

Early Decision
A college admissions program that consists of earlier deadlines and notification dates than the regular admissions process, and that requires a binding commitment of the student if admission is offered. The student applying under this program should apply to only one school. The student will not know what financial aid will be awarded prior to commiting.

ED
U.S. Department of Education. Government agency that administers several federal student financial aid programs, including the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loan, the FFELP, and the FDLP.

Education IRA
An education IRA is a tax-deferred savings and investment account for educational expenses. Parents are allowed to put away $500 a year for each child or grandchild under the age of 18. Like the Roth IRA, contributions aren't tax-deductible, but withdrawals are tax-free. The money must be used for college or graduate school tuition, room, board, or books, by the time the student turns 30. At that point, the funds will be distributed to the beneficiary and will be subject to a 10% penalty and income taxes. Before then, however, the funds can be transferred to a new Education IRA for another family member.

Educational Testing Service
Company that produces and administers the SAT and other educational achievement tests. Also known as ETS.

EFC
Expected Family Contribution. Amount a family is expected to contribute to a student's education, based on family earnings, net assets, savings, size of family and number of students in college.

EFT
Any transfer of funds that is initiated through electronic means, such as data transmission by computer rather than a paper based transaction, such as a check.

electronic funds transfer
Any transfer of funds that is initiated through electronic means, such as data transmission by computer rather than a paper based transaction, such as a check. Also known as EFT.

eligible non-citizen
Someone who is not a U.S. citizen but is nevertheless eligible for Federal student aid. Eligible non-citizens include U.S. permanent residents who are holders of valid green cards, U.S. nationals, holders of form I-94 who have been granted refugee or asylum status, and certain other non-citizens. Non-citizens who hold student visas or exchange visitor visas are not eligible for Federal student aid. See also Citizen/Eligible Non-Citizen.

endorser
An individual who endorses the promissory note and is responsible for payment of the loan if the borrower does not pay. Sometimes referred to as the co-signer.

endowment
Funds owned by an institution and invested to produce income to support the operation of the institution. Many educational institutions use a portion of their endowment income for financial aid.

enrollment status
An indication of whether you are a full-time or part-time student. Generally you must be enrolled at least half-time (and in some cases full-time) to qualify for financial aid.

entitlement
Entitlement programs award funds to all qualified applicants. The Pell Grant is an example of such a program.

entrance counseling
Students with Federal educational loans are required to receive counseling before they receive their first loan disbursement, during which the borrower's rights and responsibilities and loan terms and conditions are reviewed with the student. This session may be conducted online, by video, in person with the FAA or FAO, or in group meeting.

ESL
English as a Second Language.

exit counseling
Students with Federal educational loans are required to receive counseling before they graduate or withdraw (i.e., leave school), during which the borrower's rights and responsibilities and loan terms and conditions are reviewed with the student. This session may be conducted online, by video, in person with the FAA or FAO, or in group meeting.

Expected Family Contribution
Amount a family is expected to contribute to a student's education, based on family earnings, net assets, savings, size of family and number of students in college. Also known as EFC.

extended repayment plan
A recent addition to repayment options for the federal loan programs is the extended repayment plan. If a borrower has more than $30,000 in federal loans to repay, he or she may qualify to extend the repayment period to 25 years.

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 - F -

FAA
Financial Aid Administrator. A college or university employee who is involved in the administration of financial aid. Also known as Financial Aid Advisors, Officers, or Counselors.

FAFSA
Free Application for Federal Student Aid. The form that must be completed by students and parents applying for Federal Title IV student aid.

FAO
Financial Aid Officer. A college or university employee who is involved in the administration of financial aid. Also known as Financial Aid Advisors, Administrators, or Counselors.

FAT
Financial Aid Transcript. A record of all federal aid received by students at each school attended.

FDLP
The William D. Ford Federal Direct Loan Program. Stafford and PLUS loans are available directly from the federal government rather than through commercial lenders. Selected colleges and universities participate in this program. Once known as FDSLP for Federal Direct Student Loan Program. Also known as Direct Lending.

Federal methodology
The need analysis formula mandated by federal law to determine a family's Expected Family Contribution (EFC).

Federal Processor
The organization that processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and uses it to compute eligibility for federal student aid.

Federal Student Aid Information Center
Office associated with the Department of Education that is available to assist students and families on applying for financial aid from the federal government. Also known as FSAIC.

Federal Work Study Program
This federal program provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. Also known as FWS.

fellowship
A form of aid given to graduate students to help support their education. Some fellowships include tuition waivers or payments to universities in lieu of tuition. Most fellowships include a stipend to cover reasonable living expenses (e.g., just above the poverty line). Fellowships are a form of gift aid and do not have to be repaid.

FFELP
The Federal Family Education Loan Program. Stafford and PLUS loans are financed by private lenders and guaranteed by the federal government.

financial aid
Financial assistance in the form of scholarships, grants, work-study, and loans for education.

Financial Aid Administrator
A college or university employee who is involved in the administration of financial aid. Also known as Financial Aid Advisors, Officers, or Counselors.

financial aid award letter
The total amount of financial aid (federal and nonfederal) such as scholarships, grants, loans, and/or work-study for which a student is eligible.

Financial Aid Officer
A college or university employee who is involved in the administration of financial aid. Also known as Financial Aid Advisors, Administrators, or Counselors.

financial aid package
The total amount of financial aid (federal and nonfederal) such as scholarships, grants, loans, and/or work-study for which a student is eligible.

financial aid transcript
A record of all federal aid received by students at each school attended. Also known as FAT.

financial need
The difference between the cost of attendance at a college and the Expected Family Contribution. Also known as financial aid eligibility.

fixed interest
On a fixed interest loan, the interest rate remains the same for the life of the loan.

forbearance
Temporary cessation of regularly scheduled payments or temporarily permitting smaller payments than were originally scheduled.

Free Application for Federal Student Aid
The form that must be completed by students and parents applying for Federal Title IV student aid. Also known as FAFSA.

FSAIC
Federal Student Aid Information Center. Office associated with the Department of Education that is available to assist students and families on applying for financial aid from the federal government.

FSEOG
Federal Supplemental Educational Opportunity Grant.

FWS
Federal Work Study Program. The FWS Program provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses.

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 - G  -

GED
General Education Development Certificate. A certificate students receive if they've passed a specific, approved high school equivalency test. Students who don't have a high school diploma but who have a GED may still qualify for federal student aid. A school that admits students without a high school diploma must make a GED program in the vicinity of the school available to these students and must inform them about the program.

General Education Development Certificate
A certificate students receive if they've passed a specific, approved high school equivalency test. Students who don't have a high school diploma but who have a GED may still qualify for federal student aid. A school that admits students without a high school diploma must make a GED program in the vicinity of the school available to these students and must inform them about the program. Also known as the GED.

gift aid
Financial aid, such as grants and scholarships, which does not need to be repaid.

GPA
Grade point average. An average of a student's grades, where the grades have been converted to a 4.0 scale—with 4.0 being an A, 3.0 being a B, and 2.0 being a C.

grace period
Specified period of time between the date a student graduates or drops below half-time status and the date loan repayment begins. There is only one grace period per federal student loan.

grade point average
An average of a student's grades, where the grades have been converted to a 4.0 scale—with 4.0 being an A, 3.0 being a B, and 2.0 being a C. Also know as GPA.

graduate student
A student in a postsecondary institution who is enrolled in a master's or higher level degree program.

graduated repayment
A repayment schedule where the monthly payments are smaller at the start of the repayment period and become larger later on.

grants
Financial aid awards that do not have to be repaid. Grants are available through the federal government, state agencies and colleges.

gross income
Income before taxes, deductions, and allowances have been subtracted.

guarantor
State agency or private non-profit institution that insures student loans for lenders and helps administer the FFELP. See also guaranty agency.

guaranty agency
State agency or private non-profit institution that insures student loans for lenders and helps administer the FFELP. See also guarantor.

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 - H -

half-time
At schools measuring progress by credit hours and semesters, trimesters, or quarters, half-time enrollment is at least six semester hours or quarter hours per term. At schools measuring progress by credit hours but not using semesters, trimesters, or quarters, half-time enrollment is at least 12 semester hours or 18 quarter hours per year. At schools measuring progress by clock hours, half-time enrollment is at least 12 hours per week. Note that schools may choose to set higher minimums than these. A student must attend school at least half time to be eligible to receive FDLP or FFELP loans. Half-time enrollment is not a requirement to receive aid from the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work Study, and Federal Perkins Loan programs.

holder
The institution that owns a loan.

home equity
The portion of a home's value that the homeowner owns outright; it is the difference between the fair market value of the home and the sum of the principal balances remaining on mortgage loans held by the homeowner for that home.

home equity line of credit
A variation of the home equity loan that allows a homeowner to draw money against (i.e., write checks) the home's equity on an ongoing basis. Generally, a home equity line of credit features a variable interest rate, a specific time period during which money may be withdrawn, and a repayment period following any withdrawal. The credit also revolves on a home equity line of credit: as soon as principal is repaid, it may be borrowed again. Also abbreviated as HELOC.

home equity loan
A loan based on a homeowner's equity in the home. The home equity loan features a fixed rate, payment, and term.

HOPE Scholarship
The HOPE Scholarship provides a family up to a $1,500 maximum tax credit per year per dependent student.

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 - I -

in-school
The status of a borrower which is defined as beginning on the date on which the borrower is enrolled on at least a half-time basis and continuing until the borrower terminates enrollment on at least a half-time basis at a participating school.

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

income-based repayment
(Income Sensitive/Income Contingent) Repayment schedule where the amount of the monthly payments is based on the income earned by the borrower.

independent student
A student who is either married, 24 years of age or older, enrolled in a graduate or professional education program, has legal dependents other than a spouse, is an orphan or ward of the court, or a veteran of the U.S. Armed Forces.

Individual Retirement Account
An individual tax-deferred savings and investment account meant to accumulate funds for retirement. Also known as IRA. Currently, the maximum yearly contribution to all retirement IRAs is $3,000 or if you are 50 or older $3,500. Before 1997, there was only one type of IRA, now often referred to as a traditional IRA.

Information Review Form
A document associated with the Student Aid Report (SAR) on which the borrower can correct any incorrect information on the SAR. Document is returned to the Department of Education.

institutional loan
Loans specific to a college, university, or other postsecondary educational institution. Eligibility and loan characteristics will vary among institutions.

institutional methodology
When a college or university uses its own formula to determine financial need for allocation of the school's own financial aid funds, the formula is referred to as the Institutional Methodology.

Institutional Student Information Record
The Department of Education forwards information electronically about a student who has applied for federal student aid via the FAFSA to the schools indicated by the student on that application. Also known as ISIR.

insurance
The agreement between the guaranty agency and the lender for the lender to receive reimbursement from the guaranty agency for its losses on claims.

insurance fee
A fee charged by guaranty agencies, which is deducted from loan proceeds and used to insure against defaulted loans.

interest
An amount, calculated as a percent of the principal loan amount, that is charged for borrowed money. See fixed interest and variable interest.

interest capitalization
Addition of unpaid interest to the principal balance of a loan which increases the total outstanding balance due. See also capitalization.

interest subsidy
Interest the federal government pays on certain loans while borrowers are in school, during authorized deferment, or during grace periods.

interest-only payment
A payment that covers only accrued interest owed on a loan and none of the principal balance. Interest-only payments do not prohibit borrowers from making additional or larger payments at any time if the borrower desires.

international student
A student who is not a citizen or resident of the U.S. who intends to attend or is attending a college, university, or other postsecondary educational institution.

internship
Part-time job during the academic year or the summer months in which a student receives supervised practical training in a field.

IRA
Individual Retirement Account. An individual tax-deferred savings and investment account meant to accumulate funds for retirement. Currently, the maximum yearly contribution to all retirement IRAs is $3,000 or if you are 50 or older $3,500. Before 1997, there was only one type of IRA, now often referred to as a traditional IRA.

IRS
Internal Revenue Service. U.S. government's tax assessment and collection agency.

ISIR
Institutional Student Information Record. The Department of Education forwards information (electronically in the form of the ISIR) about a student who has applied for federal student aid via the FAFSA to the schools indicated by the student on that application.

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 - L -  

Laureate
An online loan application system developed by Sallie Mae that simplifies the financial aid process for students, schools, guarantors, and lenders.

LEAP Program
Leveraging Educational Assistance Partnership Program. Program was formerly known as the State Student Incentive Grant (SSIG) Program. This program, through matching formula grants to states, provides grant aid to students with substantial financial need to help them pay for their postsecondary education costs. The Secretary of Education is authorized to accept applications from the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the Virgin Islands.

lender
A financial institution, agency, or school that provides the money to make a loan to a borrower.

Leveraging Educational Assistance Partnership Program
Also known as the LEAP Program. Program was formerly known as the State Student Incentive Grant (SSIG) Program. This program, through matching formula grants to states, provides grant aid to students with substantial financial need to help them pay for their postsecondary education costs. The Secretary of Education is authorized to accept annual applications from the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the Virgin Islands for distribution of the LEAP funds.

Lifetime Learning Tax Credit
A tax credit of up to $1,000 per family, for postsecondary education courses. Only one credit may be claimed per tax year. To claim this credit, the individual (or in the case of a dependent child, the parents) must file a tax credit and owe taxes for that tax year.

loan
A type of financial aid that is available to students and their parents. Student loan programs have varying interest rates and repayment provisions. An education loan must be repaid.

loan counseling
Students with Federal educational loans are required to receive counseling before they receive their first loan disbursement and before they graduate or withdraw, during which the borrower's rights and responsibilities and loan terms and conditions are reviewed with the student. These sessions may be conducted online, by video, in person with the FAA or FAO, or in group meeting. See entrance and exit counseling.

loan proceeds
The money the borrower receives from a loan (or the amount borrowed minus fees).

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 - M -

Master Promissory Note
The promissory note a student signs when taking out a Stafford Loan. The Master Promissory Note covers both the Subsidized and Unsubsidized Stafford loans the student may receive for the same enrollment period. If the student is attending a four-year or graduate school, the Master Promissory Note also covers Subsidized and Unsubsidized Stafford loans the student may receive for future enrollment periods. Also known as MPN.

merit-based
A means of determining eligibility for certain types of financial aid using merit, such as a specific accomplishment or talent, as the determining factor, rather than financial need.

MPN
Master Promissory Note. The promissory note a student signs when taking out a Stafford loan. The master promissory note covers both the subsidized and unsubsidized Stafford loans the student may receive for the same enrollment period. If the student is attending a four-year or graduate school, the master promissory note also covers subsidized and unsubsidized Stafford loans the student may receive for future enrollment periods.

multiple data entry processor
Company that processes FAFSAs submitted by students. Also known as MDE.

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 - N -

National Service Trust
A U.S. national community service program. If you participate in this program before attending school, the funds may be used to pay your educational expenses. If you participate after graduating, the funds may be used to repay your federal student loans. Eligible types of community service include education, human services, the environment, and public safety.

National Student Loan Clearinghouse
Acts as a central repository for the collection of postsecondary enrollment status and related information. Its primary responsibility is to assist postsecondary institutions to meet their reporting responsibilities to student loan industry participants and the federal government.

need
The difference between the Cost of Attendance and the Expected Family Contribution (EFC) is the student's financial need.

need analysis
Technique used to determine a student's need for financial assistance for college expenses. The analysis determines the family's ability to contribute to costs compared to the student's cost of attendance.

need-based
A means of determining eligibility for certain types of financial aid using financial need as the determining factor.

net income
This is income after taxes, deductions, and allowances have been subtracted.

NMSQT
National Merit Scholastic Qualifying Test. The National Merit Scholastic Qualifying Test is given during the junior year of high school in the form of the Preliminary Scholastic Assessment Test (PSAT). Sometimes abbreviated as PSAT/NMSQT (See also PSAT).

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 - O -

open admissions
When most or all students that apply to a college are admitted.

origination
The process whereby the lender, or a servicing agent on behalf of the lender, handles the initial application processing and disbursement of loan proceeds.

origination fee
Fee, payable by the borrower and deducted from the principal of a loan prior to disbursement to the borrower. For federally-backed loans, the origination fee is paid to the federal government to offset the cost of the interest subsidy to borrowers. For private loan programs, the origination fee is generally paid to the originator to cover the cost of administering and insuring the program.

overaward
The amount of loan proceeds that, when added to other student financial assistance, exceeds the borrower's educational need.

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 - P -

Parent Loans for Undergraduate Students
Federally-insured loans for parents of dependent students. Also known as PLUS loans.

parent's contribution
Amount parents can be expected to contribute each year to the cost of their student's education as determined by the Federal Methodology. Also known as PC.

PDF
Portable document format. Format of files created by the Adobe Acrobat application.

Pell Grant Program
The largest federal grant program. Eligibility and award amounts are determined by the college based on established federal guidelines.

period of enrollment
The period for which aid is made as determined by the school. A period of enrollment coincides with an academic term such as the academic year, semester, trimester, or quarter, and starts on the day classes begin.

Perkins Loan Program
Federally-insured loans funded by the federal government and awarded by the school. The loans feature a low interest rate and are repayable over an extended period.

PIN
Personal identification number. A number entered into computer and/or telephone systems to authenticate the user. PINs are frequently used to identify those who are taking online entrance and exit counseling.

PLUS
Parent Loans for Undergraduate Students. Federally-insured loans for parents of dependent students.

postsecondary
This term means "after high school" and refers to all programs for high school graduates, including programs at two and four-year colleges, and vocational and technical schools.

prepaid tuition plan
A college savings plan that is guaranteed to rise in value at the same rate as college tuition. For example, if a family purchases shares that are worth half a year's tuition at a state college, they will always be worth half a year's tuition, even 10 years later when tuition rates may have doubled.

prepayment
Payment received for a borrower account for more than the amount due.

prime rate
The prime interest rate is the rate charged by commercial financial institutions for short-term loans to corporations or individuals whose credit standing is so high that little risk to the lender is involved in making the loan. This rate fluctuates based on economic conditions and may be different among financial institutions. The prime rate serves as a basis for the interest rates charged for other, higher-risk loans.

principal
Amount borrowed, which may increase as a result of interest capitalization, and the amount on which interest is calculated. Also known as principal balance.

private loans
Private loans provide supplemental funding when other financial aid does not cover costs. These loans (not sponsored by government agencies) are offered by banks or other financial institutions and schools to parents and students.

professional judgment
The financial aid administrator's ability to make changes to a student's financial aid package based on extenuating circumstances.

PROFILE
(CSS/Financial Aid PROFILE) A customized financial aid application form required at certain colleges, which collects additional financial information to determine eligibility for institutional aid.

promissory note
Contract between a borrower and a lender that includes all the terms and conditions under which the borrower promises to repay the loan.

proprietary school
Postsecondary schools that are private and are legally permitted to make a profit. Most proprietary schools offer technical and vocational courses.

PSAT
The Preliminary Scholastic Assessment Test, which helps prepare students for the SAT and, if taken during junior year, is part of the qualifying criteria for the National Merit Scholarship Program. A student usually takes this test as a high school sophomore or early in the junior year. Sometimes abbreviated as PSAT/NMSQT (See NMSQT).

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 - R -

reference
An individual to whom inquiries may be made regarding another person's character, ability, or whereabouts. A lender generally will ask a borrower to provide the names, phone numbers, and addresses of at least three individuals to be used as references for the borrower. In the event that the lender loses track of the borrower's whereabouts, the lender will contact these individuals to try to find the borrower.

reinsurance
The agreement between the guaranty agency and ED for the guarantor to receive reimbursement from ED for its losses on default claims.

renewal application
A FAFSA application that is used for subsequent-year applications after the initial FAFSA has been filed.

repayment
The time during which a borrower actively pays back an education loan.

Reserve Officers Training Corps
Programs that combine military education with baccalaureate degree study, often with financial support and required commitment to future service in the Armed Services. Scholarship recipients participate in summer training while in college and meet a service commitment after college. Also known as ROTC.

ROTC
Reserve Officers Training Corps. Programs that combine military education with baccalaureate degree study, often with financial support and required commitment to future service in the Armed Services. Scholarship recipients participate in summer training while in college and meet a service commitment after college.

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 - S -

SAP
Satisfactory academic progress. To be eligible to receive federal student aid, a student must maintain satisfactory academic progress, based on the school's written standard, toward a degree or certificate. If the student is enrolled in a program that is longer than two years, the student must have a C average by the end of the second academic year of study or have an academic standing consistent with the school's graduation requirements, and must continue to maintain satisfactory academic progress for the rest of the course of study.

SAR
Student aid report. A report, summarizing financial and other information reported on the FAFSA, sent to a student by the federal government. The student's financial aid need or eligibility is indicated by the Expected Family Contribution (EFC), which is printed on the document.

SASE
Self-addressed, stamped envelope.

SAT or SAT Reasoning Test
Used to measure a student's ability in math, verbal comprehension, and problem solving. SATs are administered during the junior and senior years in high school.

SAT Subject Tests or Subject Tests
(Formerly known as SAT I.) Offered in many areas of study including English, mathematics, many sciences, history, and foreign languages. Some colleges require students to take one or more SAT tests when they apply for admission.

Satisfactory Academic Progress
(Formerly known as SAT II.) To be eligible to receive federal student aid, a student must maintain satisfactory academic progress, based on the school's written standard, toward a degree or certificate. If the student is enrolled in a program that is longer than two years, the student must have a C average by the end of the second academic year of study or have an academic standing consistent with the school's graduation requirements, and must continue to maintain satisfactory academic progress for the rest of the course of study. Also known as SAP.

savings plan
A methodical approach to periodically putting money into an account with a financial institution with the goal of reaching a target amount that is to be used for a stated purpose. The account preferably is an interest-bearing account.

scholarships
Funds used to pay for higher education that do not have to be repaid. Scholarships may be awarded based on any number of criteria, such as academics, achievements, hobbies, talents, affiliations with various groups, or career aspirations. They usually do not provide funds for living expenses.

screen name
The name by which you, as a user of College Answer, are known.

secondary market
Institutions that buy student loans from the institutions that originate or own them.

Section 529 Plans
State tuition savings plans, named for the section of the IRS code authorizing their existence.

Selective Service
Registration for the military draft. If required by law, you must register, or arrange to register, with the Selective Service to receive federal student aid. The requirement to register applies to males who were born on or after January 1, 1960, are at least 18 years old, are citizens or eligible noncitizens, and are not currently on active duty in the U.S. Armed Forces. (Citizens of the Federated States of Micronesia, the Marshall Islands, or Palau are exempt from registering.)

self-help aid
Financial aid in the form of loans or student employment.

SEOG
Supplemental Educational Opportunity Grant Program; federal grant funds made available through some schools to a limited number of undergraduate students with financial need.

serialization
Combining several loans into one account so that the borrower only pays one monthly bill. Original loan terms do not change with serialization.

servicer
Organization that administers and collects loan payments. May be either the loan holder or an agent acting on behalf of the holder.

SSN
Social Security (account) Number. Unique nine-digit number assigned to individuals that identifies location of birth (or registration), becomes the key to contributing and receiving Social Security funds for retirement, and is used by the IRS in associating income with an individual for the purpose of assessing taxes.

Stafford loans
Loans, both subsidized (need based) and unsubsidized (non-need based), guaranteed by the federal government and available to students to fund education.

standard repayment
A repayment schedule reflecting equal monthly payments over a 10 to 15 year period.

Statement of Educational Purpose
A legal document in which the student agrees to use the financial aid for educational expenses only.

Student Aid Report
A federal output document, containing financial and other information reported by the student on the FAFSA, sent to a student by the Federal application processor. The student's eligibility for aid is indicated by the Expected Family Contribution (EFC), which is printed on the document. Also known as SAR.

subsidized Stafford loans
Subsidized Stafford loans are awarded to students who demonstrate financial need (i.e., need-based loans). Because the Department of Education subsidizes the interest, borrowers are not charged interest while they are enrolled in school at least half-time and during grace and deferment periods.

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 - T -

tax credit
An amount subtracted from your federal income taxes dollar-for-dollar. A tax credit will save the taxpayer more than a deduction. Taxes must be owed for the given tax year and a tax return must be filed to receive any tax credit.

term
A length of time in which to repay a loan. The term is usually agreed to by lender and borrower within the borrower's contract or promissory note. Also refers to language used in legal documents, such as the promissory note, that defines how a loan will be borrowed and repaid. Also refers to some postsecondary educational institutions' academic period.

TOEFL
Test of English as a Foreign Language.

transcript
A list of all the courses that a student has taken at a particular high school or college with the grades that the student earned in each course. Transcripts are usually required for college applications.

tuition
The amount of money colleges charge for classroom and other instruction, and use of some facilities such as libraries.

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 - U -

UGMA
Uniform Gifts to Minors Act. Legislation that introduced a tax effective manner of transferring property to minors without the complications of trusts or guardianship restrictions. In essence, this federal act allows an adult to place up to $10,000/year in a custodial account for a child without incurring a gift tax. The monies in a UGMA account can be invested into mutual funds, bank accounts, or stocks. The adult controls the fund until the child reaches the age of majority.

undergraduate student
A degree-seeking student at a college or university who has not earned a first bachelor's degree.

Uniform Gifts to Minors Act
Legislation that introduced a tax effective manner of transferring property to minors without the complications of trusts or guardianship restrictions. In essence, this federal act allows an adult to place up to $10,000/year in a custodial account for a child without incurring a gift tax. The monies in a UGMA account can be invested into mutual funds, bank accounts, or stocks. The adult controls the fund until the child reaches the age of majority. Also known as UGMA.

Uniform Transfer to Minors Act
This law offers you the same advantages as the Uniform Gifts to Minors Act, but allows the adult to control the custodial account for a longer period of time. The monies in a UTMA account can be invested into mutual funds, bank accounts, or stocks and extends the definition of gifts to include real estate, paintings, royalties, and patents. Also known as UTMA.

unsubsidized Stafford loans
Unsubsidized Stafford loans are available to students regardless of financial need (i.e., non-need based). Borrowers are responsible the interest that accrues during any period.

U.S. Department of Education
Government agency that administers several federal student financial aid programs, including the Federal Pell Grant, the Federal Work Study Program, the Federal Perkins Loan, the FFELP, and the FDLP. Also known as ED.

U.S. Department of Health and Human Services (DHHS, HHS)
Government agency that administers several federal health education loan programs, including the HEAL, HPSL, and NSL loan programs.

UTMA
Uniform Transfer to Minors Act. This law offers you the same advantages as the Uniform Gifts to Minors Act, but allows the adult to control the custodial account for a longer period of time. The monies in a UTMA account can be invested into mutual funds, bank accounts, or stocks and extends the definition of gifts to include real estate, paintings, royalties, and patents.

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 - V -

variable interest
With a variable interest loan, the interest rate changes periodically. For example, the interest rate might be pegged to the cost of U.S. Treasury Bills (e.g., T-Bill rate plus 1.7%) and be updated monthly, quarterly, semi-annually, or annually.

verification
A process used to make sure that the information students report on their FAFSA is accurate. Verification prevents ineligible students from receiving aid by reporting false information and ensures that eligible students receive all of the aid for which they are qualified.

verification worksheet
A form sent by the college to students who are selected for verification by the Department of Education's Central Processing System.

veteran
For Federal financial aid purposes, such as determining dependency status, a veteran is a former member of the U.S. Armed Forces who served on active duty and was discharged other than dishonorably.

Viewbooks
Promotional pieces offered by colleges often referred to as "mini-catalogs."

 - W -

W2
A form listing an employee's wages and taxes withheld. Employers are required by the IRS to issue a W2 for each employee before February 2.

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