Student Financial Aid Glossary

1040: IRS Form 1040 is a federal income tax return for individual taxpayers.

1040A: IRS Form 1040A is a shorter version of IRS Form 1040 for individual taxpayers who satisfy certain restrictions, such as limitations on the types of income received by the taxpayer and limitations on the types of adjustments to income. Taxpayers who file IRS Form 1040A also cannot itemize their deductions.

1040EZ: IRS Form 1040EZ is a simplified version of IRS Form 1040A for taxpayers who have no dependents.

1098-E: IRS Form 1098-E is used to report student loan interest paid by a borrower.

1098-T: IRS Form 1098-T is used to report tuition and fees paid by a taxpayer. This federal form is issued by the college or university the student attended in the prior calendar year. These payments may entitle the taxpayer to claim education tax credits or certain exclusions from income.

1099: IRS Form 1099 is used to report income other than wages, salaries, and tips. It may be used to report income paid to an independent contractor, interest and dividend income, and implied income from the cancellation of debt. Employers must provide the employee with the IRS Form 1099 by February 15.

1099-C: IRS Form 1099-C is used to report implied income from the cancellation of debt.

1099-DIV: IRS Form 1099-DIV is used to report dividends and other distributions from investments.

1099-INT: IRS Form 1099-INT is used to report interest income from a bank deposit.

1099-MISC: IRS Form 1099-MISC is used to report miscellaneous income.

1099-Q: IRS Form 1099-Q is used to report payments from qualified education programs.

1099-R: IRS Form 1099-R is used to report distributions from pensions, annuities and retirement plans, (including 401(k), 403(b), and IRA plans).

150 Percent: Rules for Satisfactory Academic Progress require the student to be on track to complete the requirements for a degree or certificate within 150% of the normal timeframe for the program.

2555 or 2555EZ: IRS Form 2555 is used to report foreign earned income that is exempt from U.S. income tax.

401(k): A 401(k) plan is a type of retirement savings plan. Contributions are made by employees using before-tax exclusions from income. Some employers may match employee contributions. Earnings grow tax-free.

403(b): A 403(b) plan is a type of retirement savings plan typically offered by non-profit employers and public education organizations.

4506-T: IRS Form 4506-T is used to order a tax transcript from the IRS. Taxpayers may also order a tax transcript online or call 1-800-908-9946.

4868: IRS Form 4868 is used by taxpayers to apply for an automatic extension of the time to file a U.S. federal income tax return.

529 College Savings Plan (529 Plan): 529 College Savings Plans are state-sponsored investment plans that help families save money for college. The plans have tax benefits so savings can grow faster. The money in the accounts can be used only for qualified education expenses. 529 College Savings Plans, Prepaid Tuition Plans, and Coverdell Education Savings Accounts are collectively called Qualified Tuition Programs (QTP).

91-Day T-Bill: The 91-day T-Bill is a short-term U.S. Treasury Bill, a form of debt issued by the U.S. government. It may also be referred to as the 13-Week Treasury Bill.

A.A.: Associate of Arts Degree

AAI: Adjusted Available Income

Above-the-Line: The term “above-the-line” refers to the calculation of the taxpayer’s adjusted gross income (AGI). If an exclusion from income occurs above-the-line, it affects the calculation of AGI. Itemized deductions occur below-the-line and do not affect the calculation of AGI.

Academic Credit: Academic credit signifies that a student completed a course of study. Completion of a degree or certification program may require the student to earn a particular number of academic credits.

Academic Transcript: A transcript is a record of the classes taken by a student and the student’s academic performance.

Academic Year: An academic year is the school year of an educational institution. Most colleges and universities have an academic year that runs from August or September to May or June.

Accelerated Study: Accelerated study refers to a program of study in which the student will be completing the requirements for a degree or certificate in less than the normal timeframe.

Access: The term “access” refers to the concept of enabling low-income or other at-risk students to pursue a postsecondary education. Financial aid improves access by eliminating demonstrated financial need as a barrier to a college education.

Accreditation: Accreditation of an institution of higher education occurs when an accrediting agency conducts an intensive review of the quality of the institution’s education and training programs and certifies that the institution has met the academic standards of the accrediting agency. See Accreditation in the United States and Database of Accredited Postsecondary Institutions and Programs.

Accrual Date: The accrual date is the date when interest begins to be charged on a loan, usually starting on the date of disbursement.

Accrue: To accrue is to accumulate periodically over time.

Accrued Interest: Accrued interest is interest that has accumulated on a debt or investment. Often the term “accrued interest” refers to interest that is payable but not yet been paid.

ACH: Automated Clearing House

ACT: American College Testing Program

Additional Unsubsidized Federal Stafford Loan: When a dependent student’s parents are denied a Federal Parent PLUS loan due to an adverse credit history, the student becomes eligible for increased unsubsidized Federal Stafford loan limits, the same loan limits that are available to independent students.

Adjusted Available Income: Adjusted available income is the income that remains after allowances for taxes, employment expenses and basic living expenses have been subtracted.

Adjusted Gross Income: Adjusted Gross Income (AGI) is total income, including both earned and unearned income, after subtracting certain exclusions from income, but before subtracting deductions and exemptions.

Adjustment: An adjustment is a change to data elements on the FAFSA that are used to calculate the expected family contribution (EFC) or cost of attendance (COA). Adjustments occur at the discretion of the college financial aid administrator after a review of documented special circumstances.

Administrative Forbearance: An administrative forbearance is a short-term suspension of the obligation to repay a loan, granted at the discretion of the lender, usually to accommodate a transition in the status of the loan.

Administrative Wage Garnishment: Administrative wage garnishment (AWG) is a form of wage garnishment (a mechanism used to seize an defaulted borrower’s earnings to repay their debts) available to the U.S. Department of Education, which may implement it administratively, without needing a court order.

Admission: College admission is the process of applying and being accepted for enrollment in a college or university.

Admissions Test Scores: Admissions test scores are the student’s scores on standardized college admissions tests, such as the ACT and SAT.

Admit-Deny: An admit-deny situation occurs when a college grants admission to a student but fails to award the student the financial aid he or she needs to be able to afford to enroll at the college.

Advanced Placement: An Advanced Placement (AP) test (administered by the College Board) is used to award college credit to a student based on the student’s mastery of college-level course material in a specific subject area.

Adversarial Legal Proceeding: In an adversarial proceeding, the party seeking relief must give legal notice to the other party so that the other party has the opportunity to contest the claims of the party seeking relief. In bankruptcy cases it is a separate lawsuit that provides the holder of the loan with an opportunity to object to the discharge of the debt.

Adverse Credit History: Borrowers with an adverse credit history are ineligible for the Federal PLUS loan. An adverse credit history occurs when the borrower has a current delinquency of 90 or more days on more than $2,085 in total debt, the borrower had more than $2,085 in total debt in collections or charged off in the two years preceding the date of the credit report or certain derogatory events (e.g., bankruptcy discharge, default determination, repossession, foreclosure, tax lien, wage garnishment or the write-off of Title IV federal education loan debt) have occurred within the 5 years before the date of the credit report.

AFDC: Aid to Families with Dependent Children (replaced by TANF)

Affected Individual: An affected individual, as defined by the HEROES Act of 2003, is an active-duty member of the U.S. Armed Forces, a person who lives or works in a disaster area or a person who suffers economic hardship because of a war, military operation or national emergency.

Aggregate Loan Limit: The aggregate (or cumulative) loan limit is the maximum amount that may be borrowed in total according to the terms of a loan.

AGI: Adjusted Gross Income

Agreement to Serve (ATS): As a condition of receiving a TEACH Grant, the recipient must sign an agreement to serve, which commits the recipient to teach for four out of the eight years after graduation and explains that the grant will be converted retroactively to an unsubsidized Federal Stafford loan if the recipient fails to fulfill the service requirements.

AI: Available Income

Alien: An alien is a citizen of a foreign country, not the country in which the individual resides.

Alimony: Alimony is court-ordered support paid by a husband or wife to his or her former spouse after divorce or separation.

Alternative Student Loans: An alternative student loan, typically called a private student loan, is a non-federal education loan made by a bank, financial institution or state. The terms of a private student loan are set by the lender, not the federal government, and the loan is not guaranteed against default by the federal government.

Amortization: Amortization spreads out the payments on a loan over time, often requiring installment payments to occur at regular intervals.

AMT: Alternative Minimum Tax

Annual Loan Limit: The annual loan limit is the maximum amount that may be borrowed per year under the terms of a loan.

Annual Percentage Rate: The annual percentage rate (APR) is an annualized interest rate that includes the effects of compound interest. The definition of APR is specified by the Truth in Lending Act (TILA) and Regulation Z.

Ante-nuptial Agreement: An ante-nuptial agreement, often called a prenuptial agreement or premarital agreement, is a contract executed by a couple prior to getting married. The ante-nuptial agreement typically specifies spousal support and the division of property upon divorce.

Anticipated Graduation Date: The anticipated graduation date is the date a student expects to graduate and become available for employment. The commencement of loan repayment is based on the borrower’s actual graduation date.

AP: Advanced Placement

APA: Asset Protection Allowance

Appeal: A financial aid appeal is a request for more financial aid, usually because of special circumstances that affect the family’s ability to pay for college expenses.

Approved Drug Rehabilitation Program: Students whose federal student aid eligibility is suspended because of a conviction for the sale or possession of illegal drugs while receiving federal student aid. Such students may regain eligibility by completing an approved drug rehabilitation program that includes passing two unannounced drug tests. Approved drug rehabilitation programs include those that are administered or recognized by a federal, state or local government agency or court, a federal or state-licensed hospital, clinic or doctor, or which are qualified to receive payment from a federal or state-licensed insurance company or government program.

APR: Annual Percentage Rate

ARN: Alien Registration Number (A-Number)

ARRA: American Recovery and Reinvestment Act of 2009

Arrears: Child support obligations that are owed and unpaid are said to be in arrears. Past-due child support obligations do not affect eligibility for federal or college student aid.

Articulation Agreement: An articulation agreement between two colleges specifies which courses at one college, such as a community college, are accepted for credit at a second college, such as a 4-year college. The articulation agreement will specify the minimum required grade for each class. Articulation agreements may specify whether the courses satisfy prerequisite requirements at the second college. Articulation agreements help ensure a smooth transition for transfer students. California, Florida, Massachusetts, Pennsylvania and Virginia guarantee admission to one of the state’s public 4-year colleges for students who graduate from one of the state’s community colleges.

A.S.: Associate of Science Degree

Asset: An asset is something of value. It may include tangible and intangible property.

Asset Protection Allowance: The asset protection allowance shelters a portion of assets from being assessed by the need analysis formula.

Assistantship: An assistantship is a form of financial aid where the student performs services in exchange for a full or partial tuition waiver and a living stipend. The most common types of assistantships are research assistantships and teaching assistantships.

Associate's Degree: An Associate’s degree is awarded by two-year colleges, such as community colleges.

ATB: Ability-to-Benefit

ATI: Allowances against Total Income

ATM: Automatic Teller Machine

At Risk Youth: An at-risk youth is a student who is at risk of failing to graduate from high school or college. Examples include low-income students, first-generation college students, students who are single parents, students who are homeless or at risk of homelessness and orphans.

Automated Clearing House: The Automated Clearing House (ACH) is an electronic network for financial transfers, such as direct deposit and debit card transactions. It is a form of electronic funds transfer (EFT).

Auto-Zero EFC: Low-income students who are eligible to file an IRS Form 1040A or 1040EZ or who receive certain means-tested federal benefits will have their expected family contribution (EFC) automatically set to zero.

Award Amount: An award amount is the dollar value of a form of financial aid, such as the amount of a private scholarship.

Award Letter: A financial aid award letter (also called a financial aid notification) is a paper or electronic document from a college that describes the types and amounts of financial aid offered to the student. The award letter also explains the terms and conditions of the financial aid, what the student is expected to do to keep the award and a deadline for accepting the award.

Award Year: An award year is a 12-month period that typically runs from July 1 to June 30.

AWG: Administrative Wage Garnishment

AY: Academic Year or Award Year

B.A.: Bachelor of Arts Degree

Bachelor's Degree: A Bachelor’s degree is awarded by four-year colleges and universities.

Balloon Payment: In certain types of loans, the borrower makes interest-only payments throughout the life of the loan, repaying the principal balance at the end of the term of the loan. The payment of principal at the end is referred to as a balloon payment. A balloon payment can also refer to any payment at the end of a loan that is significantly larger than the normal periodic payment.

Bankruptcy: Bankruptcy refers to the cancellation (discharge) of all or part of a borrower’s debts. It allows borrowers who can no longer pay their debts to get a clean slate. It may involve liquidating the borrower’s assets and distributing the proceeds to the borrower’s creditors (Chapter 7) or reorganizing a borrower’s loans to provide a 3-5 year repayment plan (Chapters 11, 12 or 13). Borrowers with a Chapter 7, Chapter 11 or Chapter 12 bankruptcy are ineligible for a Federal PLUS loan for five years from the date of the bankruptcy discharge. The US Bankruptcy Code at 11 USC 523(a)(8) establishes an exception to discharge that makes it almost impossible to discharge federal and private student loans in bankruptcy. Borrowers must demonstrate undue hardship in an adversarial proceeding, which is a very harsh standard.

Base Year: The base year is the prior tax year (calendar year). Applicants report income earned during the base year on the FAFSA. For example, if a student is applying for financial aid for the 2014-2015 award year, the base year is 2013.

BBAY: Borrower-Based Academic Year

BIA: Bureau of Indian Affairs

Board: Board means receiving regular meals (e.g., a meal plan). For example, college costs include room and board.

Borrower: A borrower agrees to repay a loan of money, usually with the addition of interest.

Borrower-based Academic Year: A borrower-based academic year (BBAY) is individualized to each borrower and floats with the borrower’s start date and progress to a degree. For example, if a student starts school in the spring, the BBAY might consist of the spring term and summer term, followed by the fall term.

Borrower Benefit: A borrower benefit, sometimes called a loan discount, reduces the cost of the loan as an incentive to encourage particular types of borrower behavior. For example, a lender might offer to reduce the interest rate on the loan if the borrower makes the monthly loan payments through automatic direct debit (auto-debit) from the borrower’s bank account. Lenders have sometimes offered principal reductions or interest rate reductions to borrowers who make all of their monthly payments on time.

Borrower Status: A borrower status specifies whether the borrower is in repayment on one or more loans, in the grace period before entering repayment or enrolled at least half-time in a college or university.

Bracket: A bracket refers to figures associated with a range of income. For example, a tax bracket is an income range that is taxed at a particular rate.

Branch Campus: A branch campus is a satellite of the main campus that is located in a separate location. A branch campus is usually smaller than the main campus.

B.S.: Bachelor of Science Degree

Budget: A budget is an estimate of a consumer’s income and expenses, separated into multiple categories. Descriptive budgets are based on the consumer’s actual spending patterns, while prescriptive budgets set limits on the consumer’s spending. See also Student Budget.

Bursar: The bursar is the college official or office responsible for handling billing and payments for tuition, fees, housing and other related expenses.

Buy-Up Program: In a buy-up program, a member of the U.S. Armed Forces has additional money deducted from his or her military pay in order to increase the amount of veteran’s education benefits.

Cafeteria Plan: A cafeteria plan is a type of employee benefit under section 125 of the Internal Revenue Code. These benefits are excluded from income, except when the plan discriminates in favor of highly compensated employees or more than a quarter of the benefits accrue to key employees. Contributions to a cafeteria plan and payments from a cafeteria plan are not reported as untaxed income on the FAFSA.

CAI: Contribution from Available Income

Calendar Year: A calendar year is a 12-month period that runs from January 1 to December 31.

Campus-Based Aid: Campus-based aid includes the Federal Perkins Loan, Federal Work-Study and Federal Supplemental Educational Opportunity Grant programs.

Cancellation: Cancellation of a debt eliminates the obligation to repay the debt. There are several types of loan cancellation, including loan forgiveness (cancellation in exchange for particular activities by the borrower) and discharge (cancellation based on circumstances that affect the borrower’s ability to repay the debt).

Candidates Reply Date Agreement: Colleges and universities that subscribe to the Candidates Reply Date Agreement (CRDA) have agreed to not ask applicants to respond to an offer of admission and/or financial aid before the May 1 National Candidates Reply Date.

Capital Gains: Capital gains refer to the profit from the sale of an investment or other asset.

Capitalization: Capitalization of interest occurs when unpaid interest is added to the principal balance of the loan. After interest is capitalized, interest may be charged on interest, not just principal, increasing the cost of the loan.

Capital Losses: Capital losses refer to the loss from the sale of an investment or other asset.

Case-by-Case: A case-by-case professional judgment review considers each student’s situation separately from all others. College financial aid administrators may not have broad policies or practices that treat all students the same, regardless of the details of the student’s circumstances.

Cash Support: Cash support includes money and gifts, plus expenses paid by others on the student’s behalf, such as food, clothing, housing, car payments or expenses, medical and dental care and college costs.

CCRAA: College Cost Reduction and Access Act of 2007

CDR: Cohort Default Rate

Central Processing System: The Central Processing System is an automated system that processes applications for federal student aid including FAFSA on the Web and print/PDF versions of the FAFSA.

Certificate: A certificate is an education credential awarded for completion of a one-year program.

Certification: Certification (or loan certification) occurs when a school confirms a borrower’s eligibility for a particular loan amount.

CFR: Code of Federal Regulations

Character of Service: The character of service on a veteran’s discharge papers determines eligibility for veteran’s benefits and whether the veteran is considered an independent student on the FAFSA. There are six entries for character of service on a veteran’s DD-214: honorable, under honorable conditions (general), under other than honorable conditions, bad conduct, dishonorable, and uncharacterized. A veteran with a character of service of “dishonorable” is not considered a veteran on the FAFSA.

Charge-Off: A charge-off or write-off of a debt reduces the value of the debt (usually to zero) because the debt has become uncollectable.

Charge-Off Rate: A loan portfolio’s charge-off rate is the percentage of the portfolio’s outstanding loan balances that were charged-off during the year.

Check: A check is a negotiable order of withdrawal that instructs a financial institution to pay a particular amount of money from a specific bank or brokerage account.

Class Rank: Class rank is a relative measure of academic performance. It compares the student’s performance against the performance of all other students in the class. It may be expressed as a numeric rank (e.g., the class valedictorian had a class rank of one) or as a percentile (e.g., the student ranked in the 95^th percentile).

CLEP: College-Level Examination Program

Clergy: A member of the clergy is an official of a religious group or order. Examples of clergy include priests, bishops, pastors, ministers, rabbis, imams and ayatollahs.

COA: Cost of Attendance

Co-Borrower: A co-borrower is a joint borrower of a loan, equally obligated to repay the debt.

COD: Common Origination and Disbursement System

Cohabit: A couple is said to cohabit when they live together.

Cohort: A cohort is a group of students, such as a group of student borrowers who entered repayment on their loans at the same time or a group of students who enrolled in college for the first time in a particular academic year.

Cohort Default Rate: The cohort default rate is the percentage of borrowers who entered repayment one year that subsequently defaulted by a following year. For example, the 2-year cohort default rate is the percentage of borrowers entering repayment during one federal fiscal year who default by the end of the following federal fiscal year.

Collateral: Collateral is property pledged as security for a loan. If the borrower defaults on the loan, the lender may seize and sell the borrower’s property to repay the debt. For example, a house may be pledged as security on a mortgage and an automobile may be pledged as security on a car loan.

Collection Agency: A collection agency seeks to collect payments on a debt that is delinquent or in default on behalf of the lender. Collection agencies may be paid a flat fee for each debt collected or a percentage of the debt that is recovered.

Collection Costs: Collection costs are the costs that are incurred in collecting a defaulted loan. Collection costs may include collection agency commissions, attorney fees, court costs, postage, telephone calls, cost of skip tracing, and the cost of reporting the debt to credit bureaus. Collection costs are usually charged to the defaulted borrower.

College Board: The College Board is an association of colleges and universities. The College Board prepares and administers standardized tests for college admission and college credit, such as the PSAT/NMSQT, SAT, SAT Subject Tests, AP Tests and CLEP Tests. The College Board is also responsible for the CSS/Financial Aid PROFILE form, which is used by about 250 mostly private colleges and more than 100 private scholarship programs to determine student eligibility for the college’s or scholarship provider’s own financial aid funds.

College Level Examination Program: The College Level Examination Program (CLEP) is a group of standardized tests administered by the College Board for the purpose of granting college-level academic credit to students who demonstrate proficiency in particular subject areas.

College Preparatory Subjects: College preparatory subjects or college prep classes are a set of secondary school subjects that a student must have completed to be considered for admission to a college.

College Work Study: College work-study, usually called Federal Work-Study, is a need-based, part-time student employment program.

Co-maker: A co-maker is a co-signer on a loan.

Combat Pay: Combat pay is a form of hazard pay for soldiers who are deployed to a combat zone or engaged in active combat.

Commercial Paper Rate: The Commercial Paper Rate (CP) is an average of the interest rates that corporations pay to borrow money on a short-term basis. Commercial Paper is a form of unsecured debt.

Common Application: The Common Application is a standard college admissions application form accepted by more than 400 colleges that are members of the Common Application Association.

Common-Law Marriage: A common-law marriage is a marriage established by mutual agreement and cohabitation, as opposed to a ceremony performed by an authorized person in front of witnesses.

Community Property: Community property is property owned jointly by husband and wife.

Commuter Student: A commuter student does not live on campus, but instead commutes to and from campus every day. For example, all of the students who study at a non-residential college, such as most community colleges, are commuter students.

Completion: Completion of a degree or certificate program occurs when the student receives the degree or certificate, typically during a graduation ceremony.

Compound Interest: Compound interest is the charging of interest on interest. This often occurs when interest is added to the principal balance of a loan or capitalized. Compound interest is in contrast with simple interest, where the interest is not added to the principal balance of the loan.

Confirmation Page: The confirmation page is displayed after a student successfully submits FAFSA on the Web. The confirmation page not only confirms the date and time the FAFSA was filed, but also includes the expected family contribution (EFC), estimated Federal Pell Grant and Federal Stafford loan eligibility, and a list of schools that will receive data from the student's FAFSA.

Conflicting Information: Conflicting information is any discrepancy or inconsistency in the information provided to a college, including information from the FAFSA and other financial aid application forms (such as the CSS/Financial Aid PROFILE) and federal income tax returns.

Consolidation Loan: A consolidation loan is a form of refinance, where a new loan repays the outstanding balance on other loans, replacing them with a single new loan. Consolidating a borrower’s loans will streamline and simplify repayment and may result in a lower or higher interest rate, depending on the type of consolidation loan and whether the borrower’s credit has improved.

Consummate: To consummate a loan involves completing the transaction by cashing the loan check or having the loan funds transferred to the school or borrower’s bank account.

Cooperative Education: Cooperative education (co-op) combines classroom learning with work experience for academic credit.

Cosigner: A cosigner agrees to repay a borrower’s debt. A cosigner is a co-borrower, equally obligated to repay the debt. If the primary borrower is late with a payment, the lender will seek payment from the cosigner. Delinquencies and defaults will be reported on the credit history of both the primary borrower and the cosigner. Cosigners often misunderstand the implications of cosigning a loan.

Cosigner Release: Some private student loan programs offer cosigner release, where the cosigner will be released from his or her obligation to repay the loan if the primary borrower satisfies credit underwriting criteria and has made the first 12, 24, 36 or 48 monthly payments on time and in full.

Cost of Attendance: A college’s cost of attendance includes the cost of tuition, fees, room, board, books, supplies, equipment, transportation, loan fees, dependent-care costs, disability-related costs and miscellaneous/personal expenses. See also Student Budget.

Cost of Education: A college’s cost of education or cost of attendance includes the cost of tuition, fees, room, board, books, supplies, equipment, transportation, loan fees, dependent-care costs, disability-related costs and miscellaneous/personal expenses. See also Student Budget.

COTW: Corrections on the Web

Course Load: Course load is the number of classes or credits taken by a student during the academic term. For example, taking five or more classes may be considered to be a heavy course load.

Coverdell Education Savings Account: A Coverdell Education Savings Account, formerly known as an education IRA, is a federal tax-advantaged account for saving for qualified K-12 and higher education expenses. Contributions are limited to $2,000 per year through age 18.

CPA: Certified Public Accountant

CPS: Central Processing System

Credit: Credit is an assessment of the likelihood that a consumer will repay a debt. For example, a borrower is said to have “good credit” if he or she will repay the debt and bad credit if he or she may have difficulty repaying the debt. To pay on credit is to use debt to purchase goods and services. See also Academic Credit.

Credit Bureau: A credit bureau or credit reporting agency collects and analyzes information about a consumer’s borrowing and repaying behavior, summarizing the consumer’s credit performance in a credit rating.

Credit History: A credit history is a record of a consumer’s borrowing and repaying behavior, as tracked by a credit bureau. The credit history includes information about on-time payments, delinquencies and defaults, as well as adverse events such as bankruptcy discharges, repossessions and foreclosures.

Credit Limit: A credit limit is the maximum amount a consumer may borrow from a line of credit.

Creditor: A creditor is a lender or other entity to whom a debt is owed.

Credit Rating: A credit rating or credit score predicts the likelihood that a prospective borrower will repay the debt on time as per the agreement or promissory note. The FICO score is an example of a credit rating. Lenders use credit ratings to determine a borrower’s eligibility for a private student loan and the interest rate and fees that will be charged on the loan. Credit ratings are typically on a range from 300 to 850, with a higher score signifying a lower credit risk. A borrower with a 620 or lower credit rating is considered to be subprime. A 720 credit rating is considered to be good and a 780 or higher credit rating is considered to be excellent.

Credit Report: A credit report is a summary of a consumer’s credit history. Consumers may obtain a free copy of their credit reports from each of the three major credit reporting agencies once a year at annualcreditreport.com.

Credit Reporting Agency: A credit reporting agency or credit bureau collects and analyzes information about a consumer’s borrowing and repaying behavior, summarizing the consumer’s credit performance in a credit rating.

Credit Score: A credit score or credit rating predicts the likelihood that a prospective borrower will repay the debt on time as per the agreement or promissory note. The FICO score is an example of a credit score. Lenders use credit scores to determine a borrower’s eligibility for a private student loan and the interest rate and fees that will be charged on the loan. Credit scores are typically on a range from 300 to 850, with a higher score signifying a lower credit risk. A borrower with a 620 or lower credit score is considered to be subprime. A 720 credit score is considered to be good and a 780 or higher credit score is considered to be excellent.

Credit Underwriting Criteria: Credit underwriting criteria are the standards used by a lender to determine whether a borrower is eligible for a loan. Credit underwriting criteria may include credit reports and credit scores, information about a borrower’s income and debts, and the borrower’s debt-to-income or debt-service-to-income ratios.

CSS: College Scholarship Service

CSS/Financial Aid PROFILE: The CSS/Financial Aid PROFILE is a financial aid application created by the College Scholarship Service of the College Board. The PROFILE is used by more than 400 colleges, universities and private scholarship programs to award their financial aid funds.

Cumulative Loan Limit: The cumulative loan limit is the maximum amount that may be borrowed in total according to the terms of a loan.

Cure: A borrower is said to cure a delinquency by bringing the account current (i.e., making all of the late payments in full, so that the account is no longer delinquent).

Current Delinquency: A current delinquency is a recent delinquency, not a delinquency that occurs in the past. A current delinquency occurs when a borrower is past due on making a payment and has not yet cured the delinquency by making the late payment.

Custodial Account: A custodial account is established to hold assets on behalf a minor.

Custodial Parent: The custodial parent is the parent with whom the student lived the most during the 12 months ending on the FAFSA application date. If the student lived equally with both parents, the custodial parent is the parent who provided more support to the student during the 12 months ending on the FAFSA application date or the most recent calendar year during which either parent provided the student with some support.

CWS: College Work-Study

Data Release Number: The Data Release Number (DRN) is a four-digit number listed in the upper right hand corner of an online Student Aid Report (SAR) and in the lower left hand corner of a paper SAR. Providing the DRN to a college will allow the college to access the FAFSA data. The DRN can also be provided to the Federal Student Aid Information Center (FSAIC); a toll-free hotline, available at 1-800-4-FED-AID (1-800-433-3243), for information about federal student aid - to allow them to correct errors in the FAFSA or add schools to the FAFSA.

DCL: Dear Colleague Letter

DD-214: Also known as a Certificate of Release or Discharge from Active Duty, a DD-214 is a document issued by the U.S. Department of Defense to members of the U.S. Armed Forces upon the servicemember’s retirement or discharge from active-duty service.

DDB: Death, Disability and Bankruptcy

Dear Colleague Letter: A Dear Colleague Letter is a form of subregulatory guidance provided by the U.S. Department of Education to colleges, lenders, states and guarantee agencies.

Death Discharge: A borrower’s federal student loans are discharged (cancelled) if the borrower dies. Federal Parent PLUS loans may also be discharged upon the death of the student on whose behalf the parent borrowed. Some private student loans offer a death discharge.

Debit Card: A debit card allows the cardholder to make purchases by immediately transferring money from the cardholder’s bank account to the vendor. Debit cards may also be used to withdraw money from an ATM (automatic teller machine). Debit cards may bear the logo of a major credit card, such as Visa, MasterCard, Discover or American Express, and can be used at any merchant who accepts those credit cards.

Debt-Service-to-Discretionary-Income Ratio: The debt-service-to-discretionary-income ratio is the ratio of the borrower’s total monthly loan payments to the borrower’s discretionary income.

Debt-Service-to-Income Ratio: The debt-service-to-income ratio is the ratio of a borrower’s total monthly loan payments to the borrower’s gross monthly income.

Debt-to-Income Ratio: The debt-to-income ratio is the ratio of a borrower’s total debt to the borrower’s annual income. Borrowers with a debt-to-income ratio of 2:1 or more will struggle to repay their debts and may be forced to extend the repayment term on their loans or adopt an austere lifestyle.

Default: When a loan payment is more than a specified number of days late, the loan is considered to be in default. The loan’s promissory note may provide for more aggressive collection activities and penalties when a loan is in default. A private student loan is considered to be in default when it is more than 120 days delinquent. A federal education loan is considered to be in default when it is more than 360 days late.

Default Fee: A default fee, commonly called a guarantee fee, is charged to insure a loan against default. It covers part of the cost to the lender when borrowers default on their loans.

Default Rate: A default rate is a measure of a loan portfolio’s financial health. It may be expressed as a percentage of borrowers, loans or dollars that are in a default status. Examples include the cohort default rate and the charge-off or write-off rate.

Default Resolution Group: The Default Resolution Group at the U.S. Department of Education helps defaulted federal education loan borrowers rehabilitate their loans and get out of default. To reach the Default Resolution Group, call 1-800-621-3115, TDD/TTY 1-877-825-9923 or send email to drghelp@ed.gov.

Deferment: A deferment is a temporary suspension of the obligation to repay a debt, such as an in-school deferment or economic hardship deferment. The federal government pays the interest on subsidized loans during periods of authorized deferment but not during a forbearance.

Deferral: A student who applied for early admission may have consideration of his or her application deferred to the regular admission pool. See also Deferred Acceptance.

Deferred Acceptance: After a student is admitted to a college, the student may ask the college for permission to defer the student’s acceptance for a year. Students often use this gap year for study abroad.

Delinquency: A delinquency is a failure to make a payment on time. On-time payment is usually defined as a payment received by the due date, although some lenders provide a grace period during which late payments are still considered to be on time. For example, a late fee will be charged in the direct loan program if a borrower fails to make a required payment within 30 days of the due date. In the FFEL program, the grace period is 15 days. Delinquencies are often measured in terms of the number of days that have passed since the payment due date (e.g., a 30-day delinquency, a 60-day delinquency and a 90-day delinquency). A serious delinquency is more than 90 days delinquent. If a private student loan is more than 120 days delinquent or a federal education loan is more than 360 days delinquent, the loans are considered to be in default.

Demonstrated Financial Need: Demonstrated financial need is the difference between the cost of attendance (COA) and the expected family contribution (EFC).

Dependency Override: A dependency override changes a student’s status from dependent to independent. College financial aid administrators may perform a dependency override on a case-by-case basis when justified by documented unusual circumstances.

Dependency Status: A student’s dependency status is either dependent or independent. A dependent student must include parental information on financial aid application forms. Independent students do not report parental information on their financial aid application forms.

Dependent Student: A dependent student is a student who does not qualify as an independent student. Dependent students must report parental income and asset information on the FAFSA.

Depreciation: Depreciation occurs when the value of an asset is reduced over the useful life of the asset.

DHS: U.S. Department of Homeland Security

Diploma Mill: A diploma mill is an unaccredited institution that, for a fee, awards bogus diplomas and degrees.

Direct Loan: A direct loan is made under the William D. Ford Federal Direct Loan Program, where funds for federal education loans come from the U.S. Treasury through the U.S. Department of Education. The Direct Loan program started with the 1992-1993 academic year.

Disability: A borrower with a medically-determinable physical or mental impairment that prevents the borrower from engaging in substantial gainful activity is considered to have a total and permanent disability if the disability is expected to result in death, has lasted for a continuous period of at least 60 months or is expected to last for a continuous period of at least 60 months. Veterans who have been determined by the federal Veterans Administration (VA) to be unemployable because of a service-related disability may also be considered to have a total and permanent disability. Borrowers with a total and permanent disability may have their federal education loans discharged.

Disbursement: Disbursement is the payment of student aid funds. After student aid funds are applied to institutional charges such as tuition, fees, room and board, any remaining funds are refunded to the student to pay for other college costs, such as books, supplies, transportation and miscellaneous / personal expenses.

Discharge: Discharge is the cancellation of a debt, usually because of the borrower’s inability to repay the debt. Examples include the death discharge and the total and permanent disability discharge.

Discounted Sticker Price: Grants and other gift aid are effectively a discount on the sticker price of a college education. See also Net Price.

Discretionary Income: Discretionary income is the amount by which the borrower’s adjusted gross income (AGI) exceeds a minimal standard of living, such as the amount by which the borrower’s AGI exceeds 150 percent of the poverty line.

Dishonorable Discharge: A veteran who has been discharged with a character of service other than “Dishonorable” is considered to be an independent student on the FAFSA.

Dislocated Worker: A dislocated worker is an employee who has been laid off or received a layoff notice from his or her job because of a permanent closure of, or substantial layoff at, a plant, facility, or enterprise, or who is employed at a facility where the employer has announced that the facility will close within 180 days, or who is receiving unemployment benefits due to being laid off and is unlikely to return to a previous occupation, or who is self-employed but is unemployed due to economic conditions or a natural disaster, or who is a displaced homemaker. Note that employees who voluntarily quit their jobs are not considered to be dislocated workers.

Displaced Homemaker: A displaced homemaker is someone who previously provided unpaid servicers to the family, such as a stay-at-home parent, who was supported by income from another family member but is no longer supported by that income, who is unemployed or underemployed, and who is having trouble finding or upgrading employment.

Displacement: Award displacement occurs when receipt of one form of financial aid, such as a private scholarship, leads to a reduction in other forms of financial aid, especially grants and scholarships. For example, federal and state statutes and regulations, as well as institutional policies and practices, may require revisions to a student’s need-based financial aid package when the student receives a private scholarship. Institutional policies concerning award displacement are often described in a formal outside scholarship policy. When a private scholarship replaces loans, the net price decreases and the student derives a financial benefit from winning the scholarship. When a private scholarship replaces grants, the net price remains unchanged.

Disposable Pay: The part of a borrower’s compensation that remains after subtracting any amounts required by law to be withheld.

Distribution: A distribution is the withdrawal of money from an account. Distributions from retirement plan accounts may include taxable and untaxed income.

Dividend: A dividend is a periodic payment from a company to its shareholders.

Divorce: A divorce is the permanent legal ending of a marriage.

DL: Direct Loans

DNW: Discretionary Net Worth

D.O.: Doctor of Osteopathic Medicine

DOB: Date of Birth

Doctorate: A doctorate is an advanced graduate degree, such as a Ph.D. or Ed.D.

Documentation: Documentation is a record of information or evidence.

DOE: U.S. Department of Energy, not the U.S. Department of Education

Dollar-Cost Averaging: Dollar-cost averaging is an effective investment strategy that invests a fixed dollar amount at regular intervals. When the cost of an investment is high, fewer shares are purchased. When the cost of an investment is low, more shares are purchased. This follows a strategy of “buy low, sell high.”

DOMA: Defense of Marriage Act

Dormitory: A dormitory or dorm is a residence hall at a college or university that provides bedrooms for a large number of students. Individual bedrooms may be shared by one, two or three roommates. Bathrooms and dining facilities may be communal.

Double Deposit: A double deposit occurs when a student accepts offers of admission at two or more colleges, paying the deposit at each.

DRN: Data Release Number, a 4-digit number

DRT: IRS Data Retrieval Tool

Drug Conviction: A student who has been convicted of the sale or possession of illegal drugs while receiving federal student aid may have his or her eligibility for federal student aid suspended for one or two years or for an indefinite period.

Dual Enrollment: Dual enrollment programs allow high school students to take college courses and simultaneously earn credit toward a high school diploma and a college degree or certificate. Students who are enrolled in a dual enrollment program are not eligible for federal student aid because they are still enrolled in high school.

Due Date: The due date is the date an installment payment is due. If a payment has not been received by the due date, it is considered to be late.

Due Diligence: Due diligence is a set of steps that a lender must take in servicing a loan, such as a required number of attempts to contact a delinquent borrower.

D.V.M.: Doctor of Veterinary Medicine

EA: Early Action (College Admissions)

EAR: Effective Annual Rate

Early Action: Early action (EA) is a non-binding form of early admission to college. Students admitted in an early action program usually have until May 1 to decide if they will attend a specific college or university.

Early Admission: Early admission applications have earlier deadlines than the regular college admission process, typically November 1 instead of January 1. Colleges may notify early admissions candidates about the status of their application early, typically in mid-December instead of late March or early April. Some early admissions candidates will be accepted early, some will be rejected early, and some will have the decision deferred to the regular admission pool. The two main types of early admission are early action and early decision.

Early Decision: Early decision (ED) is a binding form of early admission to college. The applicant has committed to enrolling in the college if he or she is admitted as part of the early decision application pool.

Earned Income: Earned income is money paid for services, typically in the form of salary, wages and tips.

ECASLA: Ensuring Continued Access to Student Loans Act of 2008

Economic Hardship Deferment: A borrower is eligible for the economic hardship deferment if the borrower is receiving federal or state public assistance (e.g., SNAP, AFDC, SSI), the borrower is serving as a Peace Corps volunteer or the borrower is working full-time (at least 30 hours a week for at least 3 months) but earning less than the federal minimum wage or 150% of the poverty line for the borrower’s family size, whichever is greater.

ED: U.S. Department of Education

ED: Early Decision (College Admissions)

Ed.D.: Doctorate in Education

Education Tax Benefit: An education tax benefit is a tax credit, tax deduction or exclusion from adjusted gross income based directly or indirectly on the qualified higher education expenses of the taxpayer, the taxpayer’s spouse or the taxpayer’s dependents.

EEA: Employment Expense Allowance

EFA: Estimated Financial Assistance

EFC: Expected Family Contribution

EFT: Electronic Funds Transfer

EIC: Earned Income Credit

EIN: Employer Identification Number

Electronic Funds Transfer: Electronic funds transfer (EFT) refers to the transfer of money between accounts within a financial institution or over a computer network between financial institutions.

Electronic Signature: An electronic signature is a unique identifier known only to the individual that can function like a handwritten signature on electronic documents. The electronic signature is used to authenticate the identity of the person using it to sign an electronic document. The Federal Student Aid PIN is an example of an electronic signature.

Elementary School: An elementary school or primary school teaches children in grades 1-5 and may sometimes include kindergarten and grade 6.

Eligible Noncitizen: An eligible non-citizen is an individual who is a U.S. national (native of American Samoa, Swain’s Island or the U.S. Minor Outlying Islands), a U.S. permanent resident who has an I-151, I-551 or I-551C Permanent Resident Card, or someone with an Arrival-Departure Record (I-94) from the U.S. Citizenship and Immigration Services (USCIS) showing one of the following designations: Refugee; Asylum Granted; Cuban-Haitian Entrant, Status Pending; Conditional Entrant (valid only if issued before April 1, 1980); Victims of human trafficking with a T Visa (T-2, T-3 or T-4, etc.); or Parolee who has been paroled into the United States for at least one year for other than a temporary purpose with the intent to become a U.S. citizen or permanent resident.

Elite College: An elite college is a very selective or prestigious college.

ELO: Expanded Lending Option

Emancipated Minor: An emancipated minor is a child who is released from the control of his or her parents prior to reaching the age of majority.

Emancipation: Emancipation occurs when a minor child is released from the control of his or her parents, usually upon reaching the age of majority. An emancipated minor is a child who is released from the control of his or her parents prior to reaching the age of majority.

Endorser: An endorser is a cosigner on a Federal PLUS loan. The endorser may not have an adverse credit history. The student on whose behalf a parent is borrowing may not serve as an endorser on the parent’s Federal Parent PLUS loan.

Endowment: An endowment is a pool of money donated to an institution to generate income to fund an activity, program or faculty position indefinitely. A portion of the endowment income is retained by the endowment to protect the value of the endowment against inflation.

Enrollment Status: A student’s enrollment status indicates whether the student is enrolled full-time or part-time. A student must be enrolled on at least a half-time basis to qualify for federal student loans. The Federal Pell Grant is available on a prorated basis to students who are enrolled less than half-time. Campus-based aid and the TEACH Grant do not require half-time enrollment.

Entitlement: An entitlement is permanently funded by the mandatory portion of the federal or state budget, as opposed to the discretionary portion of the budget. Discretionary spending must first be authorized, then periodically have funding appropriated as part of the annual budget-setting process.

Entrance Counseling: Entrance counseling reviews the borrower’s rights and responsibilities and the terms of the borrower’s loans. Borrowers must undergo entrance counseling before they receive federal student loans for the first time.

EOP: Educational Opportunity Program

Equity: Equity is the dollar amount of a person’s financial interest in a property or asset, generally equal to the market value of the property minus any debt secured by the property.

Estimated Financial Aid (EFA): Estimated financial aid is a college financial aid office’s estimate of the amount of financial aid a student is expected to receive during a period of enrollment. It may include private scholarships and state financial aid that the student has not yet received.

ETS: Educational Testing Service

Exclusion from Income: An exclusion from income is an “above the line” deduction that occurs before calculation of the adjusted gross income (AGI).

Exemptions: A tax exemption is a personal allowance that shelters a portion of the taxpayer’s income from taxation. The taxpayer, the taxpayer’s spouse and the taxpayer’s dependents are usually counted in the number of exemptions. These individuals are often referred to as exemptions.

Exit Counseling: Shortly before a federal student loan borrower graduates or drops below half-time enrollment, the borrower must undergo exit counseling. Exit counseling reviews the terms of the borrower’s loans and repayment plan options. Exit counseling also collects contact information from the borrower.

Expected Family Contribution: The expected family contribution (EFC) is a measure of the family’s financial strength. It is calculated based on the FAFSA and is a minimum measure of the family’s share of college costs. It is used to determine the student’s eligibility for student financial aid in the calculation of financial need. Despite the name, it is not the amount of money the family will pay for college. Most families will pay more than the EFC because some colleges do not provide enough student financial aid to cover the student’s full demonstrated financial need. Even among the colleges that cover full demonstrated financial need, the financial aid package may include loans and/or student employment.

Extended Repayment: Extended repayment reduces the monthly loan payment by increasing the term of the loan. However, increasing the number of years in repayment also increases the total cost of the loan.

FAA: Financial Aid Administrator

FAFSA: Free Application for Federal Student Aid

FAFSA4caster: FAFSA4caster is a simplified tool provided by the U.S. Department of Education for estimating a student’s eligibility for need-based financial aid.

FAFSA Renewal: Students who have filed the FAFSA during the previous year may file a Renewal FAFSA. The Renewal FAFSA prefills the answers to some questions on the FAFSA with answers submitted during the previous year. This reduces the amount of time required to complete the Renewal FAFSA.

Family Educational Rights and Privacy Act of 1974 (FERPA): The Family Educational Rights and Privacy Act of 1974 (FERPA) protects the privacy of student educational records, including financial aid application forms. FERPA does not allow colleges and universities to reveal parent financial information to the student. FERPA also does not allow colleges and universities to reveal the student’s academic and personal information to the parents, unless the student is claimed as an exemption on the parents’ federal income tax return.

FAO: Financial Aid Office

FAT: Financial Aid Transcript (replaced by NSLDS)

FC: Foreign Country

FDSLP: Federal Direct Student Loan Program

Federal Aid: Federal student aid is financial aid funding provided by the federal government. It includes the Federal Pell Grant, FSEOG, Federal Work-Study, the Federal Perkins Loan, the Federal Stafford Loan, the Federal PLUS Loan and Federal Consolidation Loans.

Federal Consolidation Loan: A federal consolidation loan combines two or more federal education loans into a single loan. This can streamline the repayment process by replacing multiple monthly loan payments with a single loan payment. The interest rate on a federal consolidation loan is the weighted average of the interest rates on the loans which are included in the federal consolidation loan, rounded up to the nearest 1/8^th of a percentage point. See also Consolidation Loan.

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In order to qualify for private student loan refinancing, lenders require a strong credit score with proof of income and employment history. In some cases a cosigner may be required. Also, if you have adverse credit history, including a prior student loan default*, you may not be eligible. * Default = 270 days late/missed payment on a federal loan and typically 90 days late/missed payment on a private loan(contact your lender for exact definition of default).

Federal Direct Student Loan Program: The Federal Direct Student Loan Program (FDSLP) or direct loans makes federal education loans that are funded by the U.S. Treasury through the U.S. Department of Education, originated by colleges and universities and serviced by federal contractors.

Federal Education Loans: Federal education loans include federal student loans, such as the Federal Perkins loan, Federal Stafford loan and Federal Grad PLUS loan, and federal parent loans, such as the Federal Parent PLUS loan. Federal education loans are made through the federal direct loan program and previously also through the Federal Family Education Loan Program.

Federal Family Education Loan Program: The Federal Family Education Loan (FFEL) program made federal education loans that were funded and serviced by banks and other financial institutions and guaranteed against default by the U.S. Department of Education. The FFEL program ended on June 30, 2010. All new federal education loans made on or after July 1, 2010 have been made through the Direct Loan program.

Federal Grad PLUS Loan: The Federal Grad PLUS Loan is borrowed by graduate and professional school students.

Federal Interest Subsidy: The U.S. Department of Education pays the interest on subsidized federal student loans, such as the Federal Perkins Loan and the subsidized Federal Stafford Loan, while the student is in periods of authorized deferment, such as the in-school deferment and the economic hardship deferment.

Federal Methodology (FM): The Federal Methodology is a standardized formula, defined by federal law, for determining a student’s (and family’s) ability to pay for postsecondary education expenses. The formula is also used to determine an Expected Family Contribution (EFC) for the Federal Pell Grant, campus-based and Federal Direct Loan programs.

Federal Parent PLUS Loan: The Federal Parent PLUS Loan is borrowed by parents of undergraduate students.

Federal Pell Grant: The Federal Pell Grant program is the largest federal grant program to help students pay for college.

Federal Perkins Loan: The Federal Perkins Loan is a fixed-rate loan for undergraduate and graduate students with “exceptional financial need” as defined by the college or university.

Federal PLUS Loan: The Federal PLUS Loan is borrowed by parents of undergraduate students (Parent PLUS) or by graduate and professional school students (Grad PLUS).

Federal Processor: The federal processor receives FAFSA applications, performs edit checks to ensure consistency of the data, performs database matches to verify eligibility, calculates a student’s expected family contribution (EFC), produces the student’s SAR and ISIR and processes corrections, updates and adjustments to the FAFSA data.

Federal Register: The Federal Register is published by the U.S. federal government to disseminate notices and announcements of public interest, as well as proposed and final regulations.

Federal School Code: The Federal School Code is a six-digit number assigned by the U.S. Department of Education to a college or university that is eligible for Title IV federal student aid. If an applicant lists a federal school code on the FAFSA, the college or university will receive a copy of the student’s financial aid application data in the form of an Institutional Student Information Record (ISIR).

Federal Stafford Loan: The Federal Stafford Loan is the largest federal student loan program. Federal Stafford loans may be subsidized, where the government pays the interest that accrues during periods of authorized deferment, or unsubsidized, where the borrower is responsible for the interest that accrues.

Federal Student Aid Information Center: The Federal Student Aid Information Center (FSAIC) is a toll-free hotline, 1-800-4-FED-AID (1-800-433-3243), which answers questions about federal student aid and the FAFSA. It is sponsored by the U.S. Department of Education.

Federal Student Aid PIN: The Federal Student Aid Personal Identification Number or PIN is four-digit number used to electronically sign an online FAFSA, Renewal FAFSA or Master Promissory Note (MPN). It can also be used to make corrections to a FAFSA, add schools to a FAFSA, access that National Student Loan Data System (www.nslds.ed.gov) to review student loans received by the student, to access other federal sites. The PIN is obtained at www.pin.ed.gov.

Federal Supplemental Educational Opportunity Grant: The Federal Supplemental Educational Opportunity Grant (FSEOG) is a grant to low-income undergraduate students who demonstrate exceptional financial need. Exceptional financial need is defined as the students with the lowest expected family contribution (EFC) at the school, with a preference for Federal Pell Grant recipients. Part of the FSEOG funding is provided by the school and part by the federal government. The FSEOG program is a form of campus-based aid.

Federal Work-Study: Federal Work-Study is a need-based, part-time student employment program.

Fees: Tuition is the cost charged to students for academic instruction at a college or university. Although fees are intended to be payments for specific services, at many colleges the fees are a way of increasing direct revenue without increasing tuition. Families should consider the sum of tuition and fees as part of total college costs.

Fellowship: A fellowship is a form of gift aid that is awarded to a graduate or professional student. It is similar in concept to an undergraduate scholarship.

FERPA: Family Educational Rights and Privacy Act of 1974

FFELP: Federal Family Education Loan Program

FHFA: Federal Housing Finance Agency

FICA: Federal Insurance Contributions Act

FICO: A FICO score is one of the most well-known credit scores, generated by Fair Isaac Corporation (FICO).

Financial Aid: Financial aid is money given, earned or loaned to help pay for college. Financial aid can come from federal and state governments, colleges, businesses, and private and social organizations. Financial aid can include gift aid (scholarships, grants, fellowships and tuition waivers) and self-help aid (student work and/or loans).

Financial Aid Administrator: A financial aid administrator is a college employee who administers student financial assistance programs and counsels families about how to pay for college costs.

Financial Aid Appeal: A financial aid appeal, sometimes called a professional judgment or special circumstances review, is the process by which a college financial aid administrator reviews, on a case-by-case basis, documented special circumstances affecting a student’s ability to pay for college. During a financial aid appeal review, the financial aid administrator may decide to make an adjustment to the cost of attendance or to the data elements on the FAFSA that are used to calculate the student’s expected family contribution (EFC).

Financial Aid Award: A financial aid award, often called a financial aid package, is a collection of multiple types of financial aid from multiple sources to help the student pay for college. The financial aid package is described in the financial aid award letter.

Financial Aid Eligibility: Financial aid eligibility is the determination of the award types and amounts of financial aid for which a student is eligible.

Financial Aid Notification: A financial aid notification (also called an award letter) is a paper or electronic document from a college that describes the types and amounts of financial aid offered to the student. The award letter also explains the terms and conditions of the financial aid, what the student is expected to do to keep the award and a deadline for accepting the award.

Financial Aid Offer: A financial aid offer (also called a financial aid award letter) is a paper or electronic document from a college that describes the types and amounts of financial aid offered to the student. The award letter also explains the terms and conditions of the financial aid, what the student is expected to do to keep the award and a deadline for accepting the award.

Financial Aid Office: The financial aid office is the college office that administers student financial aid programs.

Financial Aid Package: A financial aid package is a collection of multiple types of financial aid from multiple sources to help the student pay for college. The financial aid package is described in the financial aid award letter.

Financial Aid Safety School: A financial aid safety school is a college that will not only admit the student, but where the student could afford to enroll even if he or she gets no financial aid.

Financial Aid Transcript: The financial aid transcript (FAT) is a record of the financial aid previously received by the student. It has been replaced with the National Student Loan Data System.

Financial Need: Financial need (officially known as demonstrated financial need) is the difference between the cost of attendance (COA) and the expected family contribution (EFC).

First Dollar: A scholarship or grant is said to be “first dollar” if it is awarded before all other forms of financial aid and is not reduced, even if the student is overawarded. The Federal Pell Grant is an example of first dollar funding.

First Generation Student: A first-generation student is a student who is the first in his or her family to go to college, usually defined as a student whose parents did not receive Bachelor’s degrees.

First-Time Borrower: A first-time borrower has not previously borrowed from the federal education loan programs. See New Borrower.

Fiscal Year: The federal government’s fiscal year is a 12-month period that runs from October 1 to September 30.

Fixed Interest Rate: A fixed interest rate is an interest rate that does not change throughout the life of the loan. Fixed interest rates yield a more predictable loan payment.

FM: Federal Methodology

Forbearance: A forbearance is a temporary suspension of the obligation to repay a debt. Forbearances are provided to a student who is willing to repay his or her loans but has demonstrated an inability to do so. Forbearances may also be provided when a loan transitions from one status to another or from one servicer to another. Interest continues to accrue during a forbearance and will be capitalized (added to the loan balance) if the borrower does not pay it as it accrues. Unlike a deferment, the federal government does not pay the interest on subsidized loans during a forbearance.

Foreclosure: Foreclosure is a legal process where a mortgage lender takes possession of a mortgaged property because of the borrower’s failure to make payments on the mortgage.

Forgiveness: Loan forgiveness is the cancellation of debt, usually for performing employment or other services for a period of time.

Foster Care: Foster care occurs when a foster child is placed in the care of a foster parent or group home by a social service agency.

Free Application for Federal Student Aid: The Free Application for Federal Student Aid (FAFSA) is a financial aid application form used to apply for student financial aid from the federal and state governments and most colleges and universities. The FAFSA is available online at www.fafsa.ed.gov. The FAFSA may be filed no sooner than the January 1 preceding the start of the award year and must be filed no later than the last day of the award year (an 18-month window). The FAFSA asks questions about the student (and parents’ or spouse’s) income and assets, the family size and the number of family members (excluding the student’s parents) who are enrolled in college. Note that the FAFSA is just a form used to apply for financial aid from several sources. There is no such thing as a FAFSA grant or a FAFSA loan (as opposed to a federal grant or federal loan).

Freely Associated States: The Freely Associated States include the Republic of the Marshall Islands, the Federated States of Micronesia and the Republic of Palau.

Front-Loading: Front-loading is a financial aid strategy used by colleges to award more grants and scholarships to a student in his or her first year of attendance. In subsequent years, the college will reduce the amount of grants and scholarships and offer more self-help aid, such as student employment and student loans.

FSA: Federal Student Aid

FSA Ombudsman: The FSA Ombudsman investigates complaints involving federal student loans. To reach the FSA Ombudsman, call 1-877-557-2575 or send email to fsaombudsmanoffice@ed.gov.

FSEOG: Federal Supplemental Educational Opportunity Grant

FTC: Federal Trade Commission

Full-Time: A full-time student carries a full-time academic workload, which, as an undergraduate, typically involves at least 12 credit hours per academic term or 24 clock hours per week.

Furlough: A furlough is a temporary leave of absence for some of a company’s employees, often due to economic conditions or changes in demand for the company’s products and services.

FWS: Federal Work-Study

Gapping: Gapping occurs when a student is left with unmet demonstrated financial need.

Gap Year: After a student is admitted to a college, the student may ask the college for permission to defer the student’s acceptance for a year. Students often use this gap year for study abroad.

Garnishment: Up to 15 percent of a defaulted borrower’s wages may be seized to repay defaulted student loans. The U.S. Department of Education may garnish the wages of a defaulted borrower of federal education loans administratively, without obtaining a court order. Private student loan programs, on the other hand, must obtain a court order to garnish a defaulted borrower’s wages. Employers must comply with wage garnishment orders or face severe consequences.

GED: General Educational Development Certificate

General Educational Development Certificate: A General Educational Development Certificate, or GED, may be earned by passing five subject tests covering science, mathematics, reading, writing and social studies. It is often considered to be the equivalent of a high school diploma.

Gift Aid: Gift aid is money that does not need to be repaid, such as grants, scholarships, fellowships and tuition waivers.

GMAT: Graduate Management Admission Test

Good Faith Effort: A borrower is considered to have made a good faith effort to repay his or her loans if the borrower has exhausted all other options for financial relief as provided in the promissory note. A borrower who did not make payments on his or her loans when he or she was capable of doing so is not considered to have made a good faith effort to repay the loans. The borrower must have tried to increase income and decrease expenses. The borrower must have also used alternatives to default before seeking a bankruptcy discharge.

GPA: Grade Point Average

Grace Period: The grace period is a period of time, usually 6 or 9 months, between the in-school period and the beginning of the repayment period.

Grade Level: A student’s grade level corresponds to the student’s year in school as measured by academic progress.

Grade Point Average: A student’s Grade Point Average (GPA) is a measure of the student’s academic performance, typically reported on a 0.0 to 4.0 scale. An “A” grade corresponds to a 4.0, a “B”; grade to a 3.0, a “C” grade to a 2.0. Students must maintain at least a 2.0 GPA to retain eligibility for federal student aid.

Graduated Repayment: Graduated repayment is a repayment plan where monthly payments start at or slightly above the new interest that accrues and are increased every two years. No payment will be more than three times the lowest payment.

Graduate Student: A graduate student pursues a higher-level education, such as a Master’s degree or a doctoral degree, after receiving a Bachelor’s degree.

Graduation Rate: The graduation rate is the percentage of students receiving a degree or certificate within 150% of the normal timeframe for attaining a degree or certificate (e.g., 6 years for a 4-year program).

Grant: A grant is a type of gift aid, money that does not need to be repaid. Grants are usually awarded based on demonstrated financial need.

GRE: Graduate Record Examination

Groan: A groan is a loan masquerading as a grant. The term “groan” is a hybridization of the words “grant” and “loan.” The TEACH Grant is an example of a groan, a grant that retroactively turns into a loan if the borrower doesn't fulfill the service requirement. The TEACH Grant is more accurately described as a forgivable loan.

Gross Income: Gross income is a taxpayer’s total income from all sources, including wages, salaries and tips.

GSL: Guaranteed Student Loan

Guarantee Agency: A guarantee agency or guarantor administers federal loans in the FFEL program, reimbursing lenders when a borrower defaults and collecting defaulted loans on behalf of the federal government.

Guarantee Fee: A guarantee fee is charged to insure a loan against default. It covers part of the cost to the lender when borrowers default on their loans.

Guardian: A legal guardian has been granted legal custody of another person by a court in the child’s state of legal residence, such as a child whose parents are incapacitated or deceased.

Half-Time: A half-time student carries half of the academic workload of a full-time student. Recipients of federal education loans must be enrolled on at least a half-time basis. Recipients of the Federal Pell Grant, TEACH grant and other federal campus-based aid may be enrolled less than half-time.

HBCU: Historically Black Colleges and Universities are accredited colleges and universities established prior to 1964 to educate Black and African-American students.

HCERA: Health Care and Education Reconciliation Act of 2010

HEA: Higher Education Act of 1965

HEAL: Health Education Assistance Loan

HEOA: Higher Education Opportunity Act of 2008

HERA: Higher Education Reconciliation Act of 2005

Heroes Act: Higher Education Relief Opportunities for Students (HEROES) Act of 2013

HHS: U.S. Department of Health and Human Services

HIS: Hispanic-Serving Institutions are accredited colleges and universities where more than a quarter of the enrollment is Hispanic or Latino.

Holder: The holder of a loan is the financial institution that holds title to the loan and derives the financial benefit from the loan payments. The holder of a loan may differ from the lender that originally made the loan.

Home Equity: Home equity is the net worth of the family home, the difference between the fair market value of the home and any debt secured by a mortgage against the home.

Homeless: A homeless student does not have a fixed, regular, and adequate place of nighttime residence.

Homemaker: A homemaker is a stay-at-home parent who manages the household and cares for children or other dependents.

Homeschool: A homeschooled student is taught at home by his or her parents or tutors instead of in a public or private school.

Honorable Discharge: To receive an honorable discharge, a veteran must have received a good or better rating for his or her performance and personal conduct during his or her military service.

Household: A household is a group of people who live together as a family. The federal need analysis methodology includes children in a parent’s household if they receive more than half their support from a parent even if they don’t live with the parent.

Housing: Housing generally refers to on-campus residences, such as dormitories or residence halls. It is the “room” in “room and board.”

HPSL: Health Professions Student Loan

HRSA: Federal Health Resources and Services Administration

HSA: Health Savings Account

I-551: Permanent Resident Card (Green Card)

I-551C: Conditional Permanent Resident Card

I-94: Arrival-Departure Record

IB: The International Baccalaureate (IB) program provides K-12 students with rigorous college-level course work that is accepted for credit by many colleges.

ICSF: International Student Certification of Finances

IDOC: Institutional Documentation Service

IM: An institutional methodology (IM) is a financial aid formula used by a college or university to award its own financial aid funds. Each college or university may use a different institutional methodology. For example, some colleges consider the net worth of the family’s principal place of residence, while others do not. Some of those that consider the net worth of the family home may cap the net home equity, typically at 2-3 times income, while some do not.

Incarceration: An incarcerated student is serving a prison sentence. Incarcerated students may have more limited eligibility for federal student aid. Incarcerated students are not eligible for federal student loans. Students imprisoned in a federal or state penal institution are not eligible for the Federal Pell Grant, while students imprisoned in other penal institutions are eligible for the Federal Pell Grant. These eligibility restrictions are removed when the student is released from prison. However, students who have a conviction for the sale or possession of illegal drugs while enrolled in college or who are subject to an involuntary civil commitment for a sexual offense may have limitations on their eligibility for federal student aid.

Income: There are two types of income: earned and unearned. Earned income is money paid for services, typically in the form of salary, wages and tips. Unearned income is money received not for work, such as interest, dividends and capital gains.

Income-Based Repayment: Income-based repayment (IBR) is a loan repayment plan where monthly payments are based on a percentage (15%) of the borrower’s discretionary income. Any remaining debt is forgiven after 25 years in repayment (300 payments). IBR is available for loans in the direct loan program and the FFEL program.

Income-Contingent Repayment: Income-contingent repayment (ICR) is a loan repayment plan where monthly payments are based on a percentage (20%) of the borrower’s discretionary income. Any remaining debt is forgiven after 25 years in repayment (300 payments). ICR is available only for loans in the direct loan program.

Income-Sensitive Repayment: Income-sensitive repayment (ISR) is a loan repayment plan where monthly payments are based on a percentage of the borrower’s gross income, typically 4% to 25%. The monthly payment must be at least the new interest that accrues.

Independent Student: An independent student is not required to provide parental income and asset information on the FAFSA. Independent student status is defined by the Higher Education Act of 1965 as including students who are age 24 as of December 31 of the award year, married, have dependents other than a spouse, have children, are on active duty in the U.S. Armed Forces, are veterans of the U.S. Armed Forces, are graduate or professional school students, are an orphan or ward of the court, are in a legal guardianship, are in foster care, are an emancipated minor or are an unaccompanied youth who is homeless or who is self-supporting and at risk of becoming homeless. College financial aid administrators may also use a dependency override to change a student’s dependency status from dependent to independent in unusual circumstances.

Index Rate: An index rate is a variable interest rate upon which other variable interest rates are based. Examples include the LIBOR index, the Prime Lending Rate and the interest rates of various U.S. Treasury securities.

Individual Retirement Account: An individual retirement account (IRA) plan is a type of retirement savings plan. Contributions to a traditional IRA are made by employees using before-tax exclusions from income. Contributions to a Roth IRA are made by employees using after-tax income.

Individual Taxpayer Identification Number (ITIN): The Individual Taxpayer Identification Number (ITIN) is a 9-digit number that begins with the number 9 and which is used to identify taxpayers who are not eligible to have a Social Security Number.

INS: Immigration and Naturalization Service (now known as USCIS)

In-School Period: The in-school period is a period of continuous enrollment during which the student maintains at least half-time enrollment. The grace period begins after the end of the in-school period.

Installment Loan: An installment loan is repaid through a scheduled set of periodic payments, as opposed to one lump sum payment.

In-State Public College: An in-state college is one that is located in the same state as the student’s state of residence. In-state students usually pay lower tuition at in-state public colleges than out-of-state students and international students.

In-State Student: An in-state student is a student who has legal residence in the same state as the state in which the student’s college or university is located. In-state students at public colleges and universities may be charged lower tuition than out-of-state students.

In-State Tuition: In-state tuition is a reduced tuition rate offered by public colleges and universities to legal residents of the state.

Institutional Aid: Institutional aid is financial aid provided from a college or university’s own funds.

Institutional Methodology (IM): An institutional methodology is a financial aid formula used by a college or university to award its own financial aid funds. Each college or university may use a different institutional methodology. For example, some colleges consider the net worth of the family’s principal place of residence, while others do not. Some of those that consider the net worth of the family home may cap the net home equity, typically at 2-3 times income, while some do not.

Institutional Student Information Record (ISIR): The Institutional Student Information Record (ISIR) is a set of database records containing the information in a student’s Student Aid Report (SAR), including financial and demographic information and the student’s expected family contribution (EFC).

Institution of Higher Education: Colleges and universities are postsecondary institutions of higher education.

Interest: Interest is a fee paid for the use of borrowed money, usually expressed as a percentage of the outstanding principal balance of the loan.

Interest Rate: An interest rate is the percentage of the outstanding principal balance of a loan that is paid to the lender in exchange for the use of the borrowed money.

Interest Rate Reduction: An interest rate reduction is a discount on a loan provided as an incentive to encourage particular borrower behavior, such as making monthly payments through automatic direct debit from the borrower’s bank account.

Internal Revenue Service: The Internal Revenue Service (IRS) is the federal agency responsible for processing federal income tax returns and for collecting and refunding tax payments from taxpayers.

International Baccalaureate: The International Baccalaureate (IB) program provides K-12 students with rigorous college-level course work that is accepted for credit by many colleges.

Internship: An internship is a form of on-the-job training of short duration (e.g., for an academic term or the summer). Internships may be paid or unpaid.

IPA: Income Protection Allowance

IPEDS: Integrated Postsecondary Education Data System

IRA: Individual Retirement Account

IRS: Internal Revenue Service

ISFAA: International Student Financial Aid Application

ISIR: Institutional Student Information Record

Ivy League: The Ivy League is a group of eight elite colleges: Brown University, Columbia University, Cornell University, Dartmouth College, Harvard University, Princeton University, the University of Pennsylvania and Yale University.

J.D.: Juris Doctor, a law degree.

Job Placement Rate: The job placement rate is the percentage of the students who received a degree or certificate from a college or university during the award year who got a job within 180 days of receiving the degree or certificate and have been employed for at least 13 weeks.

Judgment Lien: A judgment is a lien against a person’s property that results from a court judgment in a lawsuit against the person.

K-12: Kindergarten through 12th grade, comprising elementary, middle and secondary school.

K-16: Kindergarten through undergraduate school.

Kiddie Tax: The Kiddie Tax refers to the taxation of investment income on a child’s assets at the child’s rate, as opposed to the parent’s rate. The child is usually in a lower tax bracket than the child’s parents. This leads to income shifting strategies, where parents would move assets into the child’s name to reduce the parent’s tax liability. The Kiddie Tax was enacted by the Tax Reform Act of 1986, but subsequent legislation raised the age threshold from age 14 to age 18, and later to age 19 (age 24 for full-time students). This significantly reduced the tax benefit of shifting assets into the child’s name.

Last Dollar: A grant or scholarship is said to be “last dollar” if it is intended to be awarded after all other forms of financial aid and will be reduced if the student is overawarded. Many state grants are last dollar programs.

Late Fee: When a loan payment is delinquent, the borrower may be charged a late fee. Late fees on federal education loans may be no more than 6 percent of the overdue payment.

Leave of Absence: A leave of absence is an approved period of time away from work or school.

Legacy Applicant: A legacy applicant is an applicant whose relatives (including parents and grandparents) are alumni of the college. Some colleges provide admissions preferences to legacy applicants.

Legal Custody: Legal custody of a child is the right to make decisions concerning a child’s welfare, including the child’s education, health, religion and finances. This is in contrast with physical custody of the child, which determines where the child resides.

Legal Dependent: A legal dependent is a child who receives more than half of his or her support from the student, including biological, adopted and unborn children. The children do not have to live with the student. Legal dependents also include other people, other than a spouse, who live with and receive more than half their support from the student and will continue to do so through the end of the award year.

Legal Guardian: A legal guardian has been granted legal custody of another person by a court in the child’s state of legal residence, such as a child whose parents are incapacitated or deceased.

Lender: A lender is a bank or financial institution that lends money to a borrower in exchange for payments of principal and interest.

Lender Subsidies: Lender subsidies are payments made by the federal government to lenders in the FFEL program to encourage the lenders to participate in the loan programs. These include guarantees of a minimum spread between the interest rate received by the lender and the lender’s cost of funds in the form of special allowance payments. It also includes the guarantees against borrower default.

LEU: Lifetime Eligibility Used

Level Amortization: Level amortization or level payments refers to a repayment schedule where every payment is the same.

Leveraging: Leveraging uses financial aid funding as a recruitment tool to attract academically or athletically talented students or wealthy students. It can involve the awarding of non-need-based aid as well as adjusting the mix of grants and loans in a need-based financial aid package (preferential packaging).

LIBOR: The London Interbank Offered Rate (LIBOR) is the average interest rate at which large banks in London lend money to each other. The interest rates on variable-rate private student loans are often pegged to the LIBOR index plus a fixed margin.

Lifetime Eligibility Used (LEU): A Federal Pell Grant may be received for up to the equivalent of six years. The Lifetime Eligibility Used (LEU) is a measure of the number of years’ worth of Federal Pell Grant funding that has been used, up to 600%.

LIHEAP: Low Income Home Energy Assistance Program

Line of Credit: A line of credit is an amount of credit made available to a borrower. The borrower may borrow up to the credit limit, but isn’t charged interest until the borrower draws down on the line of credit. Interest is charged only on the outstanding balance. Interest rates on a line of credit are usually variable.

Litigation: Litigation is a lawsuit or other legal action.

L.L.B.: Bachelor of Laws (Legum Baccalaureus), a law degree.

Loan: A loan is money borrowed from the government, a bank or another source. Loans must be repaid, usually with interest, over a specific period of time.

Loan Discount: A loan discount, sometimes called a borrower benefit, reduces the cost of the loan as an incentive to encourage particular types of borrower behavior. For example, a lender might offer to reduce the interest rate on the loan if the borrower makes the monthly loan payments through automatic direct debit (auto-debit) from the borrower’s bank account. Lenders have sometimes offered principal reductions or interest rate reductions to borrowers who make all of their monthly payments on time.

Loan Forgiveness: Loan forgiveness is the cancellation of debt, usually for performing employment or other services for a period of time.

Loan Holder: The loan holder is the bank or financial institution that holds title to the loan. Since loans may be sold, the loan holder is not necessarily the lender that originated the loan.

Loan Limit: A loan limit is the maximum amount that may be borrowed. Examples include annual limits and cumulative limits.

Loan Origination: Origination of a loan involves processing a borrower’s loan application, denying or approving the loan application, and disbursing the loan.

Loan Period: A loan period is the portion of an academic year for which a loan is obtained. The loan period comprises one or more academic terms or an entire academic year.

Loan Portfolio: A loan portfolio is a collection of loans that are the assets of a single holder.

Loan Rehabilitation: Loan rehabilitation is a process that returns a defaulted federal education loan to active repayment status and clears the default from the borrower’s credit history. There are two ways to rehabilitate a defaulted federal education loan. One involves making 9 out of 10 consecutive, on-time, full, voluntary, reasonable and affordable monthly payments on the loan. The other involves consolidating the loan with a requirement that the borrower repay the loan in the income-based repayment plan. Rehabilitation is a one-time opportunity to remove the default from the borrower’s credit history and regain eligibility for federal student aid. If the borrower defaults again, the only option to clear the default is to repay the debt in full.

Loan Servicer: A loan servicer is a company that manages sending out statements and coupon books and collecting payments on a loan, as well as other customer service functions. Some lenders service their own loans, while others outsource it to a third party company that specializes in servicing loans.

Loan Status: The loan status indicates the repayment status of a loan, such as the loan being in an in-school deferment, grace period, repayment (current or delinquent), economic hardship deferment, forbearance, charged-off or paid-in-full.

LSAT: Law School Admissions Test

M.A.: Master of Arts Degree

Major: A major is an academic field of study. CIP codes are a standardized method of identifying academic majors.

Master Promissory Note: The Master Promissory Note (MPN) is an agreement to repay federal education loans received during a continuous period of enrollment. It sets forth the terms and conditions of the loans.

Match School: A match school is a college or university where the student’s academic performance falls within the range of academic performance of the school’s typical freshman class.

Matriculate: A student matriculates when he or she enrolls in college.

Matriculation: Synonym for enrollment in a school.

Maturity Date: The maturity date is the date of the final payment on a loan. The last payment includes all remaining principal and interest due on the loan.

MCAT: Medical College Admissions Test

M.D.: Doctor of Medicine

Means-Tested: A means-tested benefit is provided to an individual based on the individual’s income and assets.

Merit: Merit refers to some form of noteworthy talent, skill or achievement, such as academic, artistic or athletic talent.

Merit-Based Aid: Merit-based aid is financial aid awarded to students based on their personal achievements. Most scholarships are considered merit aid, as they are generally awarded for success in school, the arts, athletics or another area.

Methodology: A methodology is a financial aid formula.

Middle School: A middle school teaches children in grades 6-8. Grades 7 and 8 are sometimes referred to as junior high.

Mortgage: A mortgage establishes a piece of real property, such as real estate, as security for a loan.

MPN: Master Promissory Note

National Candidates Reply Date: May 1 is the National Candidates Reply Date, the date by which students must notify the college or university that they have accepted the school’s offer of admission.

National Defense Student Loan: The National Defense Student Loan was a predecessor of the Federal Perkins Loan.

National Student Clearinghouse (NSC): The National Student Clearinghouse provides degree and enrollment verification services.

National Student Loan Data System: The National Student Loan Data System (NSLDS) is a database that records all federal education loans and grants made by the U.S. Department of Education as well as student enrollment status information. It replaced the Financial Aid Transcript.

Naturalization: Naturalization is the process through which a foreign citizen or national is granted citizenship.

NDSL: National Defense Student Loan (now known as the Federal Perkins Loan)

Need: Demonstrated financial need is the difference between the cost of attendance (COA) and the expected family contribution (EFC).

Need Analysis: Need analysis is a process that evaluates household income, asset and demographic information to determine the family’s financial strength and ability to pay for school.

Need-Aware Admissions: A college has a need-aware or need-sensitive admissions policy if it considers the student’s ability to pay alongside other criteria while deciding whether to admit the student.

Need-Based Aid: Need-based aid is awarded to students based on demonstrated financial need, to help them pay for the cost of college. Need-based aid usually comes in the form of grants, student employment opportunities and student loans. Most need-based aid comes from the federal and state governments and from the colleges and universities.

Need-Blind Admissions: A college has a need-blind admissions policy if the college admits students without regard to their demonstrated financial need. Some colleges that are need-blind become need-sensitive when admitting international students, transfer students and wait-listed students. Not all need-blind colleges meet the full demonstrated financial need of admitted students. This leads to an “admit-deny” situation in which the student is admitted but the college does not provide the student with the financial aid that he or she needs to be able to afford to attend the college.

Need-Sensitive Admissions: A college has a need-sensitive or need-aware admissions policy if it considers the student’s ability to pay alongside other criteria while deciding whether to admit the student.

Negative Amortization: Negative amortization occurs when the loan payments are less than the new interest that accrues.

Negotiation: When special circumstances affect the family’s ability to pay for college expenses, negotiation with the financial aid office is necessary to request more aid. Professional judgment (PJ) is the process by which a college financial aid administrator reviews, on a case-by-case basis, documented special circumstances affecting a student’s ability to pay for college. During a professional judgment review, the financial aid administrator may decide to make an adjustment to the cost of attendance or to the data elements on the FAFSA that are used to calculate the student’s expected family contribution (EFC).

Net Cost: Net cost is the difference between the college’s full cost of attendance and the full financial aid package, including loans and student employment, in addition to gift aid. The actual cost to the family will be higher, since loans have to be repaid and student employment must be earned.

Net Present Value: The net present value is an equivalent current value of a future series of cash flows. It is the amount an independent third party would be willing to pay now to receive the future payments. It discounts each of the future payments back to the present, calculating the amount of money that would be needed to produce each future payment, assuming a particular return on investment (discount rate).

Net Price: Net price is the difference between the college’s full cost of attendance and only the gift aid a student receives. Gift aid includes scholarships, grants and other money that does not need to be earned or repaid. The net price is the true amount of money a student will pay to attend a college. It is the equivalent of a discounted sticker price.

Net Price Calculator: A net price calculator is an online tool that provides a personalized estimate of what it will cost to attend a specific undergraduate college. Most undergraduate colleges are required by law to provide a net price calculator on their web sites.

Net Value: The net value or net worth of an asset is the difference between the market value of the asset and any debts secured by the asset.

Net Worth: The net worth of an asset is the difference between the market value of the asset and any debts secured by the asset.

New Borrower: A new borrower as of a specified date has no outstanding balance on any Title IV federal education loans when receiving a federal education loan on or after that date. A borrower with previous loans may qualify as a new borrower by paying off all previous federal education loans before obtaining a new federal education loan. However, consolidating the previous federal education loans does not qualify the borrower as a new borrower, since the federal consolidation loan was received while the borrower still had the old federal education loans.

NHCS: National Health Corps Scholarship

NMSQT: National Merit Scholarship Qualifying Test

Noncustodial Parent: If a student’s parents are divorced, one parent is the custodial parent and the other parent is the noncustodial parent. The non-custodial parent is the parent with whom the student did not reside for the majority of the 12 months prior to the filing of the FAFSA.

Non-Custodial Parent PROFILE: The Non-Custodial Parent PROFILE or NCP PROFILE is a financial aid application form that is filed by the non-custodial parent.

NSL: Nursing Student Loan

NSLDS: National Student Loan Data System

OIG: Office of the Inspector General

OMB: Office of Management and Budget

Ombudsman: An ombudsman investigates individual’s complaints. The FSA Ombudsman investigates complaints involving federal student loans while the Private Student Loan Ombudsman investigates complaints involving private student loans.

OPE: Office of Postsecondary Education at the U.S. Department of Education

Open Admission: An open admission college admits most students who apply. The admission criteria are minimal and unselective, generally requiring only a high school diploma, GED or the equivalent.

Origination: Origination of a loan involves processing a borrower’s loan application, denying or approving the loan application, and disbursing the loan.

Origination Fee: An origination fee is a fee charged to process a borrower’s loan application. With federal education loans, the origination fee is deducted from the disbursement check when the loan proceeds are received.

Orphan: An orphan is a child both of whose biological parents are dead.

Out-of-Pocket Cost: The out-of-pocket cost, also known as net price, is the difference between the college’s full cost of attendance and only the gift aid a student receives. Gift aid includes scholarships, grants and other money that does not need to be earned or repaid. The net price is the true amount of money a student will pay to attend a college. It is the equivalent of a discounted sticker price.

Out-of-State Student: An out-of-state student is a student who has legal residence in a state other than the student in which the student’s college or university is located. Out-of-state students at public colleges and universities may be charged higher tuition than in-state students.

Outside Scholarship Policy: A college’s outside scholarship policy specifies how a student’s financial aid package is adjusted when the student receives a private scholarship. An ideal outside scholarship policy would first allow the scholarship to address unmet need, then use it to replace student loans and student employment, and last replace institutional grants.

Outstanding Balance: The outstanding balance on a loan is the sum of unpaid principal, unpaid interest and any unpaid fees. This may be less than the loan’s payoff amount, which will include any applicable additional interest that will accrue by the payoff date, as well as any collection charges.

Outstanding Interest: The outstanding interest on a loan is the accrued, but unpaid interest on the loan.

Overaward: A student is said to be overawarded when the total need-based financial aid exceeds the student’s demonstrated financial need or when the total financial aid plus the expected family contribution exceeds the college’s annual cost of attendance.

Overpayment: An overpayment occurs when a student receives more money than the student is entitled to receive.

Override: A dependency override changes a student’s status from dependent to independent. College financial aid administrators may perform a dependency override on a case-by-case basis when justified by documented unusual circumstances.

Package: A financial aid package is a collection of multiple types of financial aid from multiple sources to help the student pay for college. The financial aid package is described in the financial aid award letter.

Parent: A parent is the student’s adoptive or biological mother or father. If the student’s parents are divorced and the custodial parent has remarried, the federal definition of parent includes the stepparent.

Parent Contribution: The parent contribution is an estimate of the parents’ ability to contribute to the cost of attendance of a dependent student. Among the key components comprising the parent contribution are base year taxable and untaxed income, net value of assets as of the date of FAFSA submission, age of the older parent, family size, number of family members in college, and, possibly, any other documented extenuating or special family circumstances the college is willing to consider. The expected family contribution is the sum of the student contribution and parent contribution.

Partial Financial Hardship: A borrower is in a partial financial hardship when the monthly payment under income-based repayment is less than the monthly payment under standard 10-year repayment (i.e., the monthly payment under standard repayment is more than 15% of the borrower’s discretionary income). This generally occurs when the total debt is greater than the borrower’s annual income.

Past Due: A loan payment is past due when it is not paid by the due date.

Pay-as-You-Earn Repayment: Pay-as-you-earn repayment (PAYER) is a federal loan repayment plan where monthly payments are based on a percentage (10%) of the borrower’s discretionary income. Any remaining debt is forgiven after 20 years in repayment (240 payments). PAYER is available only for loans in the direct loan program.

Payoff Amount: The payoff amount is the amount that must be paid to pay off the debt in full, including the outstanding principal balance, accrued but unpaid interest, and any late fees and collection charges. The payoff amount may be greater than the current balance on the debt.

PBO: Principal Balance Outstanding

PC: Parent Contribution

PCA: Parent Contribution from Assets

PCI: Parent Contribution from Income

PCL: Primary Care Loan

Pell Grant: The Federal Pell Grant program is the largest federal grant program to help students pay for college.

PEP Test: The Proficiency Examination Program (PEP) is an academic test of college-level learning that is administered by American College Testing (ACT).

Per Capita: Per capita is the portion attributable to each person.

Perkins Loan: The Perkins Loan is a fixed-rate federal student loan for undergraduate and graduate students with “exceptional financial need” as defined by the college or university.

Personal Identification Number: The Personal Identification Number or PIN is four-digit number used to electronically sign an online FAFSA, Renewal FAFSA or Master Promissory Note (MPN). It can also be used to make corrections to a FAFSA, add schools to a FAFSA, access that National Student Loan Data System (www.nslds.ed.gov) to review student loans received by the student, to access other federal sites. The PIN is obtained at www.pin.ed.gov.

Ph.D.: The Ph.D. is a doctoral degree, generally demonstrating proficiency in teaching and research.

PII: Personally Identifiable Information

PIN: Personal Identification Number

PJ: Professional Judgment

P.L.: Public Law

PLUS: Parent Loan for Undergraduate Students

Postsecondary: Education beyond high school.

Postsecondary Institution: A postsecondary institution is a college or university, or vocational or trade school.

Poverty Line: The poverty line is the minimum net income required to pay for basic living expenses. The poverty line, also referred to as the poverty guidelines, is published annually in the Federal Register by the U.S. Department of Health and Human Services. The poverty line is used to determine eligibility for various means-tested federal benefit programs.

PPY: Prior Prior Year

Predatory Lending: Predatory lending involves making a loan with unfair or abusive terms and conditions, such as unusually high interest rates and fees that the borrower cannot afford, where the lender coerces or deceives the borrower into accepting the loan. Examples of predatory lending may include payday loans, overdraft loans, tax refund anticipation loans, high interest auto loans, title loans and subprime mortgages that exploit low-income borrowers. Most predatory loans involve secured loans, where the lender can profit from seizing a valuable asset such as a car or property if the borrower defaults. Warning signs of a predatory loan may include prepayment penalties, balloon payments, negative amortization, capitalization of interest, high interest rates and fees, and mandatory arbitration clauses.

Preferential Packaging: Preferential packaging is the awarding of non-need-based aid as well as adjusting the mix of grants and loans in a need-based financial aid package. Typically, preferential packaging is used by colleges as a recruitment tool to attract academically or athletically talented students or wealthy students.

Premarital Agreement: A premarital agreement is a contract executed by a couple prior to getting married. The premarital agreement typically specifies spousal support and the division of property upon divorce. A premarital agreement may also be called an ante nuptial agreement or prenuptial agreement.

Prenuptial Agreement: A prenuptial agreement is a contract executed by a couple prior to getting married. The prenuptial agreement typically specifies spousal support and the division of property upon divorce. A prenuptial agreement may also be called an ante nuptial agreement or premarital agreement.

Prepaid Debit Card: A prepaid debit card or stored value card is a special version of a debit card for consumers who are “unbanked.” Prepaid debit cards are linked to a virtual bank account. Some prepaid debit cards are reloadable and some are not. Some government agencies use prepaid debit cards to disburse funds because they are less expensive than printing and mailing checks.

Prepaid Tuition Plan: A prepaid tuition plan is a form of college savings plan where an investor purchases shares that represent a fixed percentage of future college tuition.

Prepay: To prepay a debt is to make extra payments on the debt to accelerate repayment.

Prepayment Penalty: A prepayment penalty is a fee charged if a borrower makes a full or partial prepayment on the debt. There are no prepayment penalties on federal and private student loans.

Preponderance of Evidence: A preponderance of evidence occurs when there is more evidence in favor of a conclusion than against it.

Prime Lending Rate: The Prime Lending Rate is the interest rate at which banks lend to their best credit customers.

Principal Balance: The principal balance of a loan is the outstanding balance upon which interest is charged.

Principal Place of Residence: A family’s principal place of residence is the family’s home.

Priority Date or Deadline: The priority date or deadline is the date by which an application - whether it’s for college admission, student housing, financial aid or other college services - must be received to be given the strongest consideration.

Prior Prior Year: Prior Prior Year (PPY) refers to the year before the prior tax year. Under current law, financial aid eligibility is based on income during the prior year, but not the prior prior year. Policymakers have considered proposals to shift the base year from the prior year to the prior prior year, since this would allow students to apply for financial aid before applying for college admissions, instead of afterward.

Prior Tax Year: The prior tax year is the tax year (usually a calendar year) that ends before the award year. For example, applications for financial aid for the 2014-2015 award year will be based on income and tax data from the 2013 tax year.

Prior Year: The prior tax year is the tax year (usually a calendar year) that ends before the award year. For example, applications for financial aid for the 2014-2015 award year will be based on income and tax data from the 2013 tax year.

Private Scholarship: A private scholarship is a form of gift aid, money that does not need to be repaid. Private scholarships are awarded by private organizations (e.g., foundations, corporations, associations, individual philanthropists and nonprofit organizations) based on some form of merit, such as academic, artistic or athletic talent, or activities, such as community service. Also called Outside Scholarships.

Private Student Loan: A private student loan or alternative student loan is a non-federal education loan made by a bank, financial institution or state. The terms of a private student loan are set by the lender, not the federal government, and the loan is not guaranteed against default by the federal government.

Private Student Loan Ombudsman: The Private Student Loan Ombudsman, which is part of the Consumer Financial Protection Bureau (CFPB), investigates complaints involving private student loans. To reach the Private Student Loan Ombudsman, call 1-855-411-CFPB (1-855-411-2372), fax 1-855-237-2392 or visit http://www.consumerfinance.gov/students/.

Procrastinate: To procrastinate is to delay or postpone taking action.

Professional Judgment: Professional judgment (PJ) is the process by which a college financial aid administrator reviews, on a case-by-case basis, documented special circumstances affecting a student’s ability to pay for college. During a professional judgment review, the financial aid administrator may decide to make an adjustment to the cost of attendance or to the data elements on the FAFSA that are used to calculate the student’s expected family contribution (EFC). Some colleges call PJ a special circumstances review or financial aid appeal.

Professional School: A professional school is a college or university offering advanced degrees in law, medicine, dentistry, veterinary medicine, pharmacy, optometry, podiatry, osteopathic medicine, chiropractic medicine or business.

PROFILE: The CSS/Financial Aid PROFILE is a financial aid application created by the College Scholarship Service of the College Board. The PROFILE is used by more than 400 colleges, universities and private scholarship programs to award their financial aid funds.

Promissory Note: A promissory note is a legal document in which a borrower promises to repay a loan. The promissory note lists the terms of the loan, including the amount borrowed, the interest rate and the repayment term.

Proprietary School: A proprietary school is a for-profit college or university.

PSAT/NMSQT: Preliminary SAT/National Merit Scholarship Qualifying Test

PY: Prior Year

Qualified Education Benefit: Qualified education benefits include the three tax-advantaged methods of saving for college: 529 college savings plans, prepaid tuition plans and Coverdell Education Savings Accounts.

Qualified Tuition Plan: Qualified tuition plans include 529 college savings plans and prepaid tuition plans.

R2T4: Return of Title IV Funds

RA: Research Assistantship

Reach School: A reach school is a college or university where the student’s academic performance falls short of the academic performance of the school’s typical freshman class. A student is unlikely to be admitted to a reach school.

Reaffirmation: A reaffirmation is a legal agreement by a borrower that acknowledges the validity of a repayment obligation.

Reauthorization: Some federal legislation expires and must be periodically reauthorized. For example, the Higher Education Act of 1965 is reauthorized every five years or so.

Recourse Fee: A recourse fee is a fee paid by a college or university to compensate the lender for a high risk of default by the school’s students. Recourse fees are a form of risk sharing by colleges and lenders.

Recourse Loan: A recourse loan is a subprime loan where the college or university pays a recourse fee to the lender to compensate the lender for the high risk of default.

Refund: A refund is money disbursed to the student from a student’s account at the college after the student aid funds are applied to institutional charges, such as tuition and fees, leaving a credit balance in the student’s account.

Regulation B: Regulation B bans discrimination by lenders according to race, color, religion, national origin, sex, marital status or age.

Regulation Z: Regulation Z is a regulation of the Federal Reserve Board that implements the Truth in Lending Act. It defines, among other things, the calculation of APR and establishes disclosure requirements for private student loans.

Rehabilitation: Loan rehabilitation is a process that returns a defaulted federal education loan to active repayment status and clears the default from the borrower’s credit history. There are two ways to rehabilitate a defaulted federal education loan. One involves making 9 out of 10 consecutive, on-time, full, voluntary, reasonable and affordable monthly payments on the loan. The other involves consolidating the loan with a requirement that the borrower repay the loan in the income-based repayment plan. Rehabilitation is a one-time opportunity to remove the default from the borrower’s credit history and regain eligibility for federal student aid. If the borrower defaults again, the only option to clear the default is to repay the debt in full.

Rejection: A student whose application for admission is rejected by a college is denied admission to the college. The student may receive a rejection letter telling him or her about the admission committee’s decision.

Renewable Scholarship: A renewable scholarship is available for all four years of the student’s undergraduate education, instead of for just one year. Scholarship recipients may have to maintain satisfactory academic progress, write annual reports to the sponsor and/or participate in particular activities to retain the renewable scholarship.

Renewal FAFSA: Students who have filed the FAFSA during the previous year may file a Renewal FAFSA. The Renewal FAFSA prefills the answers to some questions on the FAFSA with answers submitted during the previous year. This reduces the amount of time required to complete the Renewal FAFSA.

Repayment Period: The repayment period is when a borrower must begin repaying his or her student loans. The repayment period begins after the end of the grace period.

Repayment Plan: A repayment plan determines the monthly payments on a loan. Examples include standard repayment, extended repayment, graduated repayment, income-contingent repayment, income-based repayment, income-sensitive repayment and pay-as-you-earn repayment.

Repayment Schedule: The repayment schedule is a schedule of the monthly or quarterly payments on a loan, showing the due date and amount for each payment.

Repayment Term: The repayment term is the number of monthly or quarterly payments, usually expressed as a number of years in repayment.

Repossession: Repossession involves a lender seizing an asset that was specified as security on the loan when the borrower fails to make a payment when due. For example, an auto lender will repossess the automobile when the borrower fails to make timely payments on the auto loan.

Research Assistantship: A research assistantship (RA) is a form of financial aid where a graduate student receives a full or partial tuition waiver and perhaps a living stipend in exchange for performing research duties.

Reserve Officers’ Training Corps (ROTC): ROTC is a program offered by the military and available at some colleges. ROTC offers scholarships to students who agree to serve in the military after they graduate. The program combines a military education with college study leading to a bachelor’s degree.

Reset: A variable interest rate will reset (change) periodically according to changes in the underlying index rate.

Residence Hall: A residence hall is a dormitory or dorm at a college or university that provides bedrooms for a large number of students. Individual bedrooms may be shared by one, two or three roommates. Bathrooms and dining facilities may be communal.

Residency Requirement: A residency requirement is the amount of time a student has to live in a state before he or she is eligible for in-state tuition prices and state aid at public colleges and universities.

Retention Rate: The retention rate is the percentage of first-time, first-year undergraduate students who return to the college the next year.

Return of Title IV Aid: Return of Title IV (R2T4) is a complicated set of regulations that determine how much Title IV federal student aid funds must be returned when a student withdraws. Generally, a student is considered to have earned his or her federal student financial aid on a proportional basis up to 60% of the way through the academic term, at which point the student is considered to have earned 100% of the federal student financial aid funds. Any unearned aid must be returned to the source. A preference order returns loan funds before returning grant funds, to ensure that the student is left with as little debt as possible.

Return on Investment: A return on investment (ROI) is the income, capital gains or other financial benefit that an investor derives from an investment.

Rising: A student who moves from one academic year class level to another. For example, a student who has completed his or her high school junior year would be called a “rising high school senior.”

Risk: Risk is exposure to potential loss or other harm to an investment.

Robert C. Byrd Honors Scholarship Program (Byrd Program): The Byrd Program was a federally-funded merit-based scholarship program established in 1985. Funding for the program was eliminated starting with the 2011-2012 academic year after Senator Byrd’s death in 2010.

ROI: Return on Investment

Rolling Admission: A college with a rolling admission policy evaluates applications as they are received during a long period of time (in some cases, throughout the year). Admissions decisions are made within a few months of receipt of a completed admissions application. Some rolling admissions colleges admit the students on a first-come, first-served basis. Admitted students may start throughout the year, usually at the start of the next academic term.

Room and Board: Room and board refers to housing and dining costs paid by a student who lives on campus in a college’s dormitories or other college-owned or controlled residences.

ROTC: Reserve Officers’ Training Corps

Roth IRA: A Roth IRA is a type of retirement account in which after-tax money is invested and earnings grow on a tax-deferred basis. Qualified distributions are tax-free after the account owner reaches age 59 1/2.

rrta: RRTA is the Railroad Retirement Tax Act. It is a substitute for Social Security taxes for railroad workers.

Safety School: A safety school is a college or university where the student’s academic performance falls above the range of academic performance of the school’s typical freshman class. A student is likely to be admitted to a safety school.

SAFRA: Student Aid and Fiscal Responsibility Act

Salutatorian: The salutatorian gives the introductory speech at a graduation ceremony. The salutatorian is usually the second-highest ranked student in a class of students.

SAP: Satisfactory Academic Progress

SAR: Student Aid Report

SAR Acknowledgement: If you filed your FAFSA online but did not provide a valid email address, you will receive a paper SAR Acknowledgement by mail after your FAFSA is processed. Like the SAR (Student Aid Report), the SAR Acknowledgement includes a summary of the information you submitted on your FAFSA as well as your expected family contribution (EFC). To make corrections to your SAR Acknowledgement, log in to FAFSA on the Web at FAFSA.ed.gov.

SAT: Previously called the Scholastic Assessment Test and Scholastic Aptitude Test, this college admissions test is now known as just the SAT.

Satisfactory Academic Progress: Satisfactory academic progress (SAP) includes quantitative and qualitative measures of a student’s progress to a degree or certificate. Students must generally maintain at least a 2.0 GPA on a 4.0 scale and be passing enough classes to graduate within 150 percent of the normal timeframe for the degree. For example, a student in a Bachelor’s degree program that normally requires four years of study is considered to be making satisfactory academic progress if the student’s progress is consistent with completion the requirements for a Bachelor’s degree within six years.

Satisfactory Repayment Arrangement: A satisfactory repayment arrangement is an agreement between a borrower and a lender to repay a defaulted or delinquent debt, such as making a certain number of consecutive, on-time, voluntary, full, reasonable and affordable monthly payments.

SAY: Scheduled Academic Year

SC: Student Contribution

SCA: Student Contribution from Assets

Scholarship: A scholarship is a form of gift aid, money that does not need to be repaid. Scholarships are usually awarded by private organizations (e.g., foundations, corporations, associations, individual philanthropists and nonprofit organizations) based on some form of merit, such as academic, artistic or athletic talent, or activities, such as community service. Also called Private Scholarships or Outside Scholarships.

Scholarship Matching Service: A scholarship matching service matches a student’s background profile against a database of scholarships to identify the scholarships for which the student is eligible.

Scholarship Search Service: A scholarship search service matches a student’s background profile against a database of scholarships to identify the scholarships for which the student is eligible.

School Code: The Federal School Code is a six-digit number assigned by the U.S. Department of Education to a college or university that is eligible for Title IV federal student aid. If an applicant lists a federal school code on the FAFSA, the college or university will receive a copy of the student’s financial aid application data in the form of an Institutional Student Information Record (ISIR).

SE9W: Substantially Equal 9 Week

Secondary Market: A secondary market is a financial institution that purchases loans from lenders to enable the lenders to obtain the liquidity (capital) needed to make new loans.

Secondary School: A secondary school teaches children in grades 9-12.

Secured Loan: A secured loan is a loan where the borrower pledges an asset as collateral to ensure payment of the debt. Examples include home mortgages and auto loans.

Selective Service: Male U.S. citizens and immigrants age 18-25 are required to register with the Selective Service System. Male students who fail to register may be ineligible for federal, state and, frequently, institutional student financial aid for college.

Selectivity: A college’s selectivity is the percentage of applications that receive offers of admission. Selectivity measures the difficulty of getting in to the college.

Self-Help Aid: Self-help aid includes financial aid in the form of student employment and student loans.

SEOG: [Federal] Supplemental Educational Opportunity Grant

SEP: Simplified Employee Pension Plan

Separation: A legal separation is a court-ordered agreement in which husband and wife remain married but live apart. An informal separation is not court-ordered. An informal separation is sometimes called a trial separation.

Separation Date: The separation date is the date a student borrower graduates or drops below half-time enrollment. The separation date may also refer to the date the student or parent got separated or divorced from his or her spouse.

Serious Delinquency: A delinquency that is 90 or more days past due.

Servicer: A loan servicer is a company that manages sending out statements and coupon books and collecting payments on a loan, as well as other customer service functions. Some lenders service their own loans, while others outsource it to a third party company that specializes in servicing loans.

Servicing: Servicing a loan involves sending statements and coupon books, collecting payments and responding to customer service inquiries from borrowers.

Settlement: A student loan settlement is a lump sum payment on a defaulted student loan that is accepted by the lender as payment in full. The settlement amount may be less than the loan’s payoff amount.

SFA: Student Financial Assistance

Sibling: A sibling is a brother or sister.

SIC: Dependent Student’s Income Contribution

SID: Student Identifier (for COD)

Signature Page: The signature page is a document that can be printed and signed instead of using a PIN to sign the FAFSA electronically. Signing the FAFSA with a PIN is faster.

SIMPLE: Savings Incentive Match PLan for Employees

Simple Daily Interest: Simple daily interest multiplies the outstanding principal loan balance by the product of the interest rate with the number of days since the last payment divided by the number of days in the year.

Simple Interest: Simple interest is interest that is not compounded because it is not added to the principal loan balance.

Simplified Needs Test (SNT): The simplified needs test ignores assets from the calculation of a student’s EFC for low- and moderate-income students who are eligible to file an IRS Form 1040A or 1040EZ or who are eligible for certain means-tested federal benefit programs

Skip Tracing: Skip tracing is the process of locating a borrower’s current contact information.

SLS: Supplemental Loan for Students

SNAP: The Supplemental Nutrition Assistance Program (SNAP), previously known as food stamps, provides nutrition assistance to low-income individuals and families.

SNT: Simplified Needs Test

Social Security Number: A Social Security number (SSN) is a 9-digit identification number issued by the Social Security Administration. An individual’s citizenship status is usually associated with his or her Social Security number.

Special Allowance Payments: Special allowance payments (SAP) are payments from the U.S. Department of Education to a lender to compensate the lender for a below-market rate of return on a federal education loan.

Special Circumstances: Special circumstances include significant changes in a family’s financial circumstances from one year to the next or circumstances that differentiate the family from the typical family. Examples include job loss, salary reduction, death of a wage-earner, high unreimbursed medical and dental expenses, high dependent care costs and private elementary and secondary school tuition for a sibling.

Special Circumstances Review: A special circumstances review is the process by which a college financial aid administrator reviews, on a case-by-case basis, documented special circumstances affecting a student’s ability to pay for college. During the review, the financial aid administrator may decide to make an adjustment to the cost of attendance or to the data elements on the FAFSA that are used to calculate the student’s expected family contribution (EFC). Some colleges call a special circumstances review professional judgement or financial aid appeal.

SSA: Social Security Administration

SSDI: Social Security Disability Insurance

SSI: Supplemental Security Income

SSIG: State Student Incentive Grant

SSN: Social Security number

SSS: Selective Service System

Stafford Loan: The Stafford Loan is the largest federal student loan program. Stafford loans may be subsidized, where the government pays the interest that accrues during periods of authorized deferment, or unsubsidized, where the borrower is responsible for the interest that accrues.

Standardized Test: A standardized test, like the SAT or ACT, requires all students taking the test to answer the same questions or a statistically equivalent set of questions. The standardized nature of the test allows test scores from different students to be compared on the same scale.

Standard Repayment: Standard repayment is a repayment plan involving level amortization with a 10-year repayment term. The loan will be repaid in full after 120 equal monthly payments (10 years).

State Aid: State aid is student financial aid provided by a state.

Statement of Educational Purpose: The statement of educational purpose is an agreement by the student to use federal student financial aid funds for educational expenses only.

Stepparent: A stepparent is a stepfather or stepmother. A stepparent is a parent by marriage, not birth. A stepfather is the husband of a child’s natural mother after the death or divorce of the child’s natural father. A stepmother is the wife of a child’s natural father after the death or divorce of the child’s natural mother.

Sticker Price: A college’s sticker price is the college’s cost of attendance, including tuition, fees, room, board, books, supplies, equipment, transportation, loan fees, dependent-care costs, disability-related costs and miscellaneous/personal expenses.

Sticker Shock: Sticker shock refers to the anxiety and dismay students and parents feel when they learn about the total cost of attendance of the student’s dream college or university.

Student Aid: Student aid is financial aid funding provided to a student to enable him or her to pay for a college education. See also Financial Aid.

Student Aid Report: The Student Aid Report (SAR) summarizes the information you submitted on your FAFSA and includes your expected family contribution (EFC). You'll receive your SAR soon after your FAFSA is processed. You should review the SAR to ensure that the information is accurate and correct it, if necessary.

Student Budget: The student budget is the college’s cost of attendance. Usually there will be three student budgets, one for students who live on campus in college housing, one for students who live off campus with their parents and one for students who live off campus on their own.

Student Contribution: The student contribution is an estimate of the student’s ability to contribute to his or her cost of attendance. Among the key components comprising the student contribution are base year taxable and untaxed income, net value of assets as of the date of FAFSA submission, family size, number of family members in college, and, possibly, any other documented extenuating or special family circumstances the college is willing to consider. The expected family contribution is the sum of the student contribution and parent contribution.

Student Employment: Student employment is a program that allows students to take a part-time job, on- or off-campus, as part of their financial aid package.

Student Financial Aid: Student financial aid is funding provided to a student to enable him or her to pay for a college education. See also Financial Aid.

STX: State and Other Tax Allowance

Subprime: A subprime loan is made to a borrower with bad credit, typically a borrower with a credit score of 620 or less. Subprime loans often have high interest rates and fees to compensate for the high risk of default.

Subsidized: A student loan is subsidized if the federal government pays the interest on the loan during periods of authorized deferment, such as during the in-school deferment and the economic hardship deferment.

Subsidized Interest: The U.S. Department of Education pays the interest on subsidized federal student loans, such as the Federal Perkins Loan and the subsidized Federal Stafford Loan, while the student is in periods of authorized deferment, such as the in-school deferment and the economic hardship deferment.

Substantial Gainful Activity: Substantial gainful activity is work for pay involving significant physical and/or mental activities.

Summer Melt: Summer melt occurs when a student accepts a college’s offer of admission and pays the deposit but does not enroll at the college in the fall following high school graduation.

Supplemental Educational Opportunity Grant: The Federal Supplemental Educational Opportunity Grant (FSEOG) is a grant to low-income undergraduate students who demonstrate exceptional financial need. Exceptional financial need is defined as the students with the lowest expected family contribution (EFC) at the school, with a preference for Federal Pell Grant recipients. Part of the FSEOG funding is provided by the school and part by the federal government. The FSEOG program is a form of campus-based aid.

TA: Teaching Assistantship

TANF: Temporary Assistance for Needy Families (TANF) is a federal assistance program that provides cash assistance to low-income families with dependent children. It replaced the Aid to Families with Dependent Children (AFDC) program in 1996.

Tax Credit: Tax credits directly reduce the amount of taxes paid by a tax filer.

Tax Deduction: Tax deductions reduce the amount of an individual’s income that is taxed.

Tax Exemption: A tax exemption excludes a form of income from taxes. For example, interest earned on municipal bonds is exempt from federal income tax. It can also refer to a reduction in taxable income based on the number of dependents; see Exemptions.

Tax Return: A tax return is a form that is filed by a taxpayer to determine the taxpayer’s tax liability. For example, IRS Form 1040 is a type of form used to file a federal income tax return.

T-Bill: A T-Bill or Treasury Bill is a form of short-term debt issues by the U.S. Treasury. T-Bills may be bought and sold on the open market in addition to being purchased directly from the U.S. Treasury.

TDD: Telephone Device for the Deaf

TEACH: Teacher Education Assistance for College and Higher Education Grant

TEACH Grant: The TEACH Grant is a forgivable loan that requires the recipient to work as a teacher in a national need area for a specified number of years after graduation. Although identified as a grant, it converts retroactively to an unsubsidized Federal Stafford Loan if the recipient fails to fulfill the service requirement.

Teaching Assistantship: A teaching assistantship (TA) is a form of financial aid where a graduate student receives a full or partial tuition waiver and perhaps a living stipend in exchange for performing teaching duties such as grading homework and exams, holding tutorial sessions and teaching classes.

Testamentary: Testamentary means established by a deceased person’s last will and testament.

TI: Total Income

TILA: Truth in Lending Act of 1968

TIN: Taxpayer Identification Number

Title IV: Title IV refers to federal student aid programs authorized under Title IV of the Higher Education Act of 1965.

TIV: Title IV of the Higher Education Act of 1965

TOEFL: Test Of English as a Foreign Language

Total and Permanent Disability: A borrower with a medically-determinable physical or mental impairment that prevents the borrower from engaging in substantial gainful activity is considered to have a total and permanent disability if the disability is expected to result in death, has lasted for a continuous period of at least 60 months or is expected to last for a continuous period of at least 60 months. Veterans who have been determined by the federal Veterans Administration (VA) to be unemployable because of a service-related disability may also be considered to have a total and permanent disability. Borrowers with a total and permanent disability may have their federal education loans discharged.

Total Income: Total income is the sum of taxable income (the adjusted gross income) and untaxed income.

Transaction Number: Each time a student’s FAFSA is processed, a transaction number is assigned. For example, the initial FAFSA has a transaction number of 01. A correction to the initial FAFSA will have a transaction number of 02. If the applicant then adds several colleges to the FAFSA, the new Student Aid Report (SAR) will have a transaction number of 03. The transaction number is located in the lower right hand corner of each page of a paper SAR (after the Social Security number and the first two letters of the applicant’s last name) and in the upper right hand corner of the online version of the SAR (after the Social Security number).

Transcript: A transcript is a record of the classes taken by a student and the student’s academic performance.

Transfer Rate: The transfer rate is the percentage of the first-time, first-year undergraduate students who transfer to another college within 150 percent of the normal timeframe for attaining a degree or certificate.

Transfer Student: A transfer student is a student who enrolls in a college after having attended another college without completing the requirements for the degree. Transfer students may also include students who have graduated from a 2-year college with an Associate’s degree and are enrolling in a 4-year college to obtain a Bachelor’s degree.

Treasury Bill: A Treasury Bill is a form of short-term debt issues by the U.S. Treasury. Treasury Bills may be bought and sold on the open market in addition to being purchased directly from the U.S. Treasury.

Treasury Offset: A Treasury Offset occurs when the U.S. Treasury intercepts payments from the federal government to an individual, such as income tax refunds and Social Security benefit payments, and applies them to the individual’s debts.

TSP: Thrift Savings Plan

TTY: Teletype

Tuition and Fees: Tuition is the cost charged to students for academic instruction at a college or university. Although fees are intended to be payments for specific services, at many colleges the fees are a way of increasing direct revenue without increasing tuition. Families should consider the sum of tuition and fees as part of total college costs.

Tuition Installment Plan: A tuition installment plan is a short-term payment plan that allows the family to pay college costs in 9 or 10 equal monthly installments. Tuition installment plans typically charge an up-front fee of less than $100 but do not charge interest.

Tuition Waiver: A tuition waiver reduces or eliminates a student’s tuition and fee obligation, usually in exchange for services performed by the student, such as teaching or research duties, or serving as a resident assistant in a dormitory. Some colleges provide full or partial tuition waivers for employees and their dependents.

UGMA: Uniform Gift to Minors Act

UNCF: The United Negro College Fund (UNCF) provides college scholarships for Black and African-American students and provides funding for HBCUs.

Undergraduate Student: An undergraduate student is pursuing a Certificate, Associate’s degree or Bachelor’s degree. Undergraduate education typically does not require more than four years of academic study beyond a high school diploma. Engineering degrees may sometimes require five years of academic study.

Undue Hardship: For a borrower to get a student loan discharged in bankruptcy, the borrower must demonstrate undue hardship in an adversarial legal proceeding. Generally, undue hardship involves a three-part test: (1) the borrower must be unable to repay the loans and maintain a minimal standard of living for the borrower and the borrower’s dependents, (2) the circumstances that prevent the borrower from repaying the loan must be expected to continue for most of the life of the loan and (3) the borrower must have made a good faith effort to repay the loan.

Unearned Income: Unearned income is money received not for work, such as interest, dividends and capital gains.

Uniform Gift to Minors Act: Minors are not able to own property. The Uniform Gift to Minors Act (UGMA) establishes a type of trust where an adult custodian holds assets in a custodial bank or brokerage account on behalf of and for the benefit of a minor child. The assets in a custodial account become the property of the child when the child reaches the age of majority for the state, usually age 18 or 21. The age of trust termination for most UGMAs is age 18. Money in a custodial bank or brokerage account is treated as a child asset on the FAFSA and other financial aid application forms, reducing eligibility for need-based financial aid by 20% to 25% of the asset value. See also Kiddie Tax.

Uniform Transfer to Minors Act: The Uniform Transfer to Minors Act (UTMA) is similar to the Uniform Gift to Minors Act and supersedes that legislation in the states that have adopted it. The age of trust termination for most UTMAs is age 21.

United Negro College Fund: The United Negro College Fund (UNCF) provides college scholarships for Black and African-American students and provides funding for HBCUs.

Unmet Need: Unmet need is the difference between the student’s demonstrated financial need and the student’s financial aid package. Unmet need may also be referred to as a “gap.”

Unsecured Loan: An unsecured loan is made without an asset pledged as security against default. Federal education loans and most private student loans are examples of unsecured loans.

Unsubsidized: The interest on an unsubsidized loan is the responsibility of the borrower. The government does not pay the interest on an unsubsidized loan.

Untaxed Income: Untaxed income includes all income received that is not reported to the Internal Revenue Service (IRS) or is reported to the IRS but excluded from taxation. Such income includes, but is not limited to, child support, untaxed retirement plan distributions, untaxed capital gains, interest on tax-free bonds and dividend exclusion, as well as military and other subsistence and living allowances.

Upperclassmen: Upperclassmen include sophomores, juniors and senior.

USC: United States Code

USCIS: U.S. Citizenship and Immigration Services

U.S. Department of Education: The U.S. Department of Education (ED or USED) is a cabinet-level agency of the United States federal government. It administers all Title IV federal student aid programs.

USED: U.S. Department of Education

UTMA: Uniform Transfer to Minors Act

VA: U.S. Department of Veterans Affairs

Valedictorian: The valedictorian gives the closing speech at a graduation ceremony. The valedictorian is usually the top-ranked student in a class of students.

Variable Interest Rate: A variable interest rate is an interest rate that changes (or “resets”) periodically. Often a variable interest rate is expressed as the sum of a variable-rate index, such as the LIBOR index, Prime Lending Rate or 91-Day T-Bill, plus a fixed margin that does not vary.

Variable-Rate Index: A variable-rate index establishes a variable interest rate upon which other variable interest rates are based. Examples include the LIBOR index, the Prime Lending Rate and U.S. Treasuries.

Verification: If a student’s FAFSA is selected for verification, the college financial aid administrator will compare the information submitted on the FAFSA with independent documentation of the information, such as IRS tax transcripts and W-2 and 1099 forms. The U.S. Department of Education uses a risk-based model to select approximately one third of FAFSAs for verification.

Veteran: A veteran for federal student aid purposes is a student who has served on active duty for at least one day in the U.S. Armed Forces (Army, Navy, Air Force, Marines, Coast Guard), who is a member of the National Guard or Reserves who was called to active national duty for purposes other than training, who enrolled at one of the service academies or who enrolled at a U.S. military academy preparatory school. The student must also have been discharged with a character of service other than “Dishonorable” (or will be by the end of the award year).

Veterans Administration: The Veterans Administration (VA), also known as the U.S. Department of Veterans Affairs, is a cabinet-level federal agency that serves the needs of military veterans, including veterans education benefits and health care.

W-2: IRS Form W-2, the Wage and Tax Statement, is used to report income from wages, salaries and tips, and the amount of taxes withheld. Employers must mail the W-2 statements to employees by January 31.

Wage Garnishment: Up to 15 percent of a defaulted borrower’s wages may be seized to repay defaulted student loans. The U.S. Department of Education may garnish the wages of a defaulted borrower of federal education loans administratively, without obtaining a court order. Private student loan programs, on the other hand, must obtain a court order to garnish a defaulted borrower’s wages. Employers must comply with wage garnishment orders or face severe consequences.

Waiting List: If a student has not been admitted by a college, the college admissions office might place the student on a waiting list instead of rejecting the student’s college admissions application. If enough of the college’s admitted students do not accept the offer of admission, the college admissions office may decide to extend offers of admission to some of the wait-listed students.

Ward of the Court: A child is a ward of the court if the court has taken legal custody of the child.

WIA: Workforce Investment Act

WIC: Special Supplemental Nutrition Program for Women, Infants and Children

Withdraw: A student who ceases to be enrolled in college is said to have withdrawn. This includes students who have dropped out of college as well as students who have transferred to another college. When the college learns that a student has withdrawn, the college’s financial aid office must calculate how much of the student’s financial aid was earned, so that the unearned aid may be returned to the source of funding.

Withdrawal Date: The withdrawal date is the date a student withdrew from the school. The withdrawal date may be determined by consulting attendance records or other records of the student’s participation in the academic program.

Work Study: Federal Work-Study is a need-based, part-time student employment program.

Write-Off: A write-off or charge-off of a debt reduces the value of the debt (usually to zero) because the debt has become uncollectable.

Yield: A college’s yield is the percentage of admitted students who enroll. Yield is a measure of a college’s desirability.

YTD: Year-To-Date

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