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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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FAA

Financial Aid Administrator

FAFSA

Free Application for Federal Student 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.

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.

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.

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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.

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. 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.

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