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Financial Aid Information

Find explanations for common financial aid terms and check out expert tips on how to proceed if your financial aid package isn't enough to make college affordable:

Financial Aid and Student Loan Glossary

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Academic Year

A period of time schools use to measure a quantity of study. For example, a school’s academic year may run from September to May during which a student must complete 24-30 semester hours. Each school has its own definition of academic year which often varies between educational programs at the same school.

Advanced Placement Test (AP)

Standardized Test used to earn credit for college subjects studied in high school. Each school has its own policy on the acceptance of AP test scores for college credit. Contact the school or department for more information.

American College Test (ACT)

National standardized college entrance exam. Most universities require either an ACT or SAT score as part of an application for admission.

Associate Degree

Degree granted by two-year colleges.


Bachelor's Degree

Undergraduate degree granted by four-year colleges and universities.

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Campus-based Aid

Financial aid programs administered by the college or university. This includes some federal programs, such as Federal Stafford Loans, Pell Grants, Perkins Loans, Federal Work-Study Program, and the SEOG, that each university administers for the government, as well as the school's own financial aid programs.


Adding unpaid interest to a loan's principal for the calculation of future interest. Each interest charge increases as a result of the unpaid interest from previous periods. This is especially relevant to students with Unsubsidized Stafford Loans and private loans, where payment is deferred while the student is in school. Because capitalization occurs, the principal and future interest payments are increased, possibly considerably.

Consider the following simple example:

  • $1,000 / year Loan
  • 6% Annual interest
  • Deferred payments for four years while student attends college

The student has borrowed $4,000 dollars over the four year period ($1,000/year * 4 years). However, due to capitalization and interest, that student owes $4,637 upon graduation, a 16% increase on the original $4,000 principal.

Cost of Attendance (COA)

The total amount it will cost a student to attend a school generally expressed as a yearly figure. The COA, as required by law, includes:

  • Tuition and fees
  • On-campus room and board or a housing and food allowance for off-campus students
  • Allowances for books, supplies, transportation, and loan fees
  • * Dependent care
  • * Costs related to a disability
  • * Miscellaneous expenses, including an allowance for the rental or purchase of a personal computer
  • * Reasonable costs for eligible study-abroad programs.

  • * If applicable

For part-time students, the COA includes only tuition and fees and an allowance for books, supplies, transportation, and dependent-care expenses. Talk to the financial aid administrator at the school you are planning to attend if you have any expenses not listed above that might affect your cost of attendance.

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Early Action

Some colleges and universities offer an Early Action option. This allows students to apply to a school a few months early, often in November. Early Action is generally non-binding. This means that you are not required to enroll in the school if admitted. You are free to apply to and consider attending other universities. Early Action policies vary by university so it is important to find out more from your prospective school.

Early Decision

Similar to Early Action programs, Early Decision programs allow a student to apply early to a university. Unlike Early Action, however, Early Decision is generally binding. This means that if the university accepts a student and provides a financial aid package that meets the students financial aid needs, the student must attend that university. You can only apply to a single university through an Early Decision program. Applying to multiple universities can result in the automatic rejection of your applications.

Eligible Non-Citizen

US resident who is eligible for federal financial aid despite not being a US citizen. Eligible non-citizens include the following:

  • Permanent US residents with Alien Registration Card I-551 or I-151
  • Conditional Permanent Resident with I-151C card
  • Holder of Arrived-Departure Record (I-94) with any of the following designations "Refugee", "Asylum Granted", "Indefinite Parole", "Humanitarian Parole", or "Cuban-Haitian Entrant"

Student Visa (F-1 or F-2), Exchange Visitor Visa (J-1, J-2), and international organization G-series visa holders are not considered Eligible Non-Citizens.

Expected Family Contribution (EFC)

An estimate of the parents' and/or student's ability to contribute to post-secondary educational expenses.

  • Use an EFC Calculator to get a ballpark estimate of your expected family contribution based on the federal methodology.

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See Free Application for Federal Student Aid.

Federal Consolidation Loan Program

Under this program, a borrower's loans are paid off and a new consolidation loan is created. This simplifies loan repayment by combining several types of Federal education loans (that may have different terms and repayment schedules or may have been made by different lenders) into one new loan. The interest rate may be lower than on one or more of the underlying loans. In addition, the monthly payment amount on a consolidation loan is usually lower and the amount of time to repay may be extended beyond what was available in the separate loan programs. These features should result in more manageable debt and should make borrowers less prone to default. These loans are available from both the federal government and private lenders.

The US Department of Education has more information on the Federal Consolidation Loan Program.

Federal Direct Student Loan Program (FDLP or Direct Loan Program)

The William D. Ford Federal Direct Student Loan Program includes Stafford and PLUS loans that are available directly from the federal government rather than through commercial lenders. Selected colleges and universities participate in this program. A student need only fill out a FAFSA to apply for FDSLP loans.

The US Department of Education has more information on the FDSLP.

Federal Family Education Loan Program (FFELP)

Includes the Federal Stafford, Federal PLUS, and Federal Consolidation Loan Programs. These programs offer loans available to students and their families that are funded by private lenders and reinsured by the federal government.

Federal Student Aid(FSA)

Financial assistance offered by the federal government.

Federal Work-Study

The Federal Work-Study Program provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to each student’s course of study.

The US Department of Education has more information on the Federal Work-Study Program.


Grant given to graduate students to help support their education generally including a tuition waiver and/or stipend to cover living expenses.

Financial Aid

Money supplied by a source other than the student or family to help pay for the student’s education costs.

Types of Aid

Categories of Aid

Financial Aid Package

Total amount of financial aid from a student receives from any source. The school financial aid administrator combines various forms of aid into the package to help meet a student’s need. Due to limited funds, a financial aid package might fall short of the amount a student is eligible for. Also, note that the amount of federal student aid received is affected by other sources of aid awarded.

Financial Need

As measured by the federal government, need equals COA (Cost of Attendance) minus the EFC (Expected Family Contribution). Need is used to determine the financial aid package for which the student qualifies. The definition of financial need may vary from organization to organization.

Free Application for Federal Student Aid (FAFSA)

The official federal student aid application form. Schools use the FAFSA to determine student eligibility for federal financial aid, such as grants, loans and federal work-study. Many financial aid awards require the FAFSA to determine financial need. A renewal FAFSA is also available for students to fill out in subsequent years after filling out the complete application.

The US Department of Education has more information on the FAFSA.

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Grade Point Average (GPA)

Average of a student's grades, generally on a 4.0 scale (4.0 is an A, 3.0 is a B, 2.0 is a C, etc.)

  • Test the impact of various scenarios on your grade point average using this GPA Calculator.

Graduate Student

Student enrolled in a Masters or PhD program.


Financial aid which does not have to be repaid. Scholarships are a type of grant.

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In-State Student

Student who is a resident of the state, having met the legal residency requirements, and is therefore eligible for reduced in-state student tuition at public colleges and universities within the state.


The fee charged by a lender to a borrower for the use of borrowed money, usually expressed as an annual percentage. Also called interest rate.


Job during the academic year or the summer in which a student receives supervised training generally in a field related to the student’s academic or career interests. Internships may be either paid or unpaid.

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Financial aid which must be repaid with interest over a period of time. Loans are offered by the federal government and private lenders. The federal Stafford loan program generally offers lower interest rates than private loans.

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Master's Degree

Graduate degree offered by universities generally requiring 1-3 years of study.


Financial aid for which financial need is not used to determine the recipient. The recipient may be determined by students’ athletic, academic, or artistic abilities.

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Need Analysis

Process used to determine student’s need for financial assistance by comparing COA (cost of attendance) with the EFC (expected family contribution).


Financial aid for which the student and family’s financial situation is a factor that determines the recipient.

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Out-of-State Student

Student who is not a resident of the state, having not met the legal residency requirements. The student is therefore generally charged the higher out-of-state tuition at public colleges and universities within the state.

Outside Scholarship

Scholarship provided by a source other than the school or government.

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Pell Grant

Need-based federal grant of up to $4000. Size and eligibility are determined by financial need. Pell Grants are given only for undergraduate or teacher education programs.

The US Department of Education has more information on Pell Grants.

Perkins Loan

A Federal Perkins loan is a low-interest (5 percent) loan for students with financial need. The loan funds are provided by both the federal government and your school and administered by your school. Undergraduate students can borrow up to $4000 a year (up to $20,000) and graduate students can borrow up to $6000 a year (up to $40,000 including undergraduate Perkins Loans).

The US Department of Education has more information on Perkins Loans.


Practice test for the ACT usually taken in the sophomore year of high school.


Loan parents can take out to pay for their dependent child’s education expenses (Parent PLUS Loans). Graduate students may also take out loans through the PLUS loan program (Grad PLUS Loans). PLUS loans are not based on need (they do not require submission of the FAFSA) and cannot exceed the COA (Cost of Attendance) minus other financial aid received.

The US Department of Education has more information on the Parent PLUS and Graduate PLUS programs.

Preliminary Scholastic Assessment Test / National Merit Scholarship Qualifying Test (PSAT/NMSQT)

Practice test for the SAT usually taken in the sophomore or junior year of high school. PSAT scores are used to qualify students as National Merit semifinalists and finalists, which may make them eligible to receive merit-based scholarships from private foundations or their university or college.


In a loan, the amount borrowed, or the amount on which you pay interest and must pay back. The principal may increase as a result of capitalization of interest.

Professional Degree

Graduate degree in a field like law, education, medicine, pharmacy or dentistry that leads to a specific profession.

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Renewable Scholarship

A scholarship that is awarded for more than one year. The student may need to reapply or maintain a specified GPA to retain the scholarship each year.

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Sallie Mae

Sallie Mae, or the Student Loan Marketing Corporation, holds and guarantees a large portion of federal student loans. Sallie Mae also offers education loans to students.


National standardized college entrance exam. Most universities require either an ACT or SAT score as part of an application for admission.

SAT II Achievement Tests

Tests that measure a student's proficiency in specific subject areas. Some schools require students take specific SAT II to be admitted.


Grant to help pay for a student's education. As a grant, scholarships do not need to be repaid. Scholarships are awarded based on a variety of criteria, such as financial need, academics, athletics, career goals, hobbies, interests, talents, etc.

Stafford Loan

A federally financed student loan. There are two types of Stafford Loans:

  • Subsidized Stafford Loan - After filing the FAFSA students with financial need may be eligible to receive the subsidized Stafford Loan, which does not charge interest until the student graduates or leaves school.
  • Unsubsidized Stafford Loan – Unsubsidized loans are available for students who do not file the FAFSA or do not qualify for the subsidized loans. However, although loan payments are not required until after the student graduates or leaves school, interest charges will accrue (accumulate to be paid at a later date) while the student attends school (See Capitalization)

Other conditions such as health or personal problems and various jobs or professions also allow the postponement of Stafford Loan payments.

The US Department of Education has more information on Stafford Loans.

Supplemental Educational Opportunity Grant (SEOG)

Federal grant for students with exceptional financial need. Depending on need and Cost of Attendance (COA), the grant ranges from $100-$4,000.

The US Department of Education has more information the SEOG program.

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Test Of English As A Foreign Language (TOEFL)

Test that evaluates a student's ability to speak, write, and understand English. International students may be required to take this test to be admitted to many colleges and universities.

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Undergraduate Student

Student enrolled in a bachelor or associate degree program.

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The following criteria determine a student’s veteran status for federal financial aid:

  • A veteran is former member of the United States Army, Navy, Air Force, Marines, or Coast Guard who served on active duty and was discharged other than dishonorably.
  • There is no minimum length of service requirement, but it does have to be active service.
  • National Guard or Reserve members are not considered members of the Armed Forces and do not qualify as veterans
  • National Guard and Reserves members who serve on active duty for non-training purposes are veterans
  • Training is not considered active military duty
  • Students who attended a U.S. military academy for at least one day but withdrew in good standing are also counted as veterans
  • Students who are currently attending a U.S. military academy are not veterans. ROTC students are not veterans.

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Work Study

A college or university program allowing students to work part-time to help fund their education, similar to federal work-study program.

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