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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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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.

Institution of Higher Education

Colleges and universities are postsecondary institutions of higher education.

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).

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.