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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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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.

Gapping

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

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

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.

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.

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.

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.