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Financial Terms Glossary

Finance & Financial aid terms can be an alphabet soup of acronyms like FAFSA, SAR, SAP and EFC and technical terminology. It is almost like speaking a foreign language. This glossary defines the terms and acronyms that are most frequently used in basic finance or student financial aid.

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B.A.

Bachelor of Arts Degree

B.S.

Bachelor of Science Degree

Bachelor's Degree

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

Balance Transfer Credit Card

A type of credit card that lets you transfer debt from other credit cards onto it in order to take advantage of lower interest rates.

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.

Bank

A company chartered by state or federal government to offer numerous financial services, such as checking and savings accounts, loans and safe-deposit boxes; the Federal Deposit Insurance Corporation (FDIC) insures accounts in federally chartered banks and most state-chartered banks.

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

Beta

A measure of how an investment changes relative to a broader index that can be helpful in determining whether a stock, fund, or entire portfolio could experience large swings in the future.

BIA

Bureau of Indian Affairs

Board

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

Bond

A fixed-income security that represents the ownership of debt and serves as a loan between a company or government and an investor.

Borrower

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

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.

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.

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.

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.