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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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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.