Financial Aid Sense can help you familiarize yourself with some of the more common terms related to financial aid and the college financing process and includes a handy financial aid glossary. Included below are some of the more common financial aid related terms for your reference.
See a helpful financial aid glossary below:
Award Letter: includes the offer of financial aid to a student from a college. The award letter typically is provided at the same time as or directly following the admissions acceptance letter, providing all financial aid application requirements have been satisfied.
Cost of Attendance (COA): the total annual cost of college and may also be referred to as a Student Budget. The COA is determined by the specific college and includes billable expenses, such as tuition, room and board, and fees (such as insurance, athletic, and activity fees), as well as additional categories of related educational expenses, such as transportation, books and supplies, and personal expenses. The Cost of Attendance (COA) is a main component of the financial aid formula and can differ greatly between colleges.
CSS Profile Form: a financial aid application required (above and beyond the FAFSA) by some private colleges.(CSS stands for College Scholarship Service). The CSS Profile Form is a financial aid form developed by the College Board and may be required by some private colleges that use the information to determine eligibility for institutional grants. (This form may or may not be required ~ check with individual colleges). There is a fee to complete the CSS Profile Form.
Deferment: is a postponement of payment on a loan. If the loan is subsidized, interest does not accrue during a deferment period.
Disclosure Statement: is a required statement given to loan borrowers that provides a summary of the actual cost of the loan, including all interest and finance charges applicable to the loan.
Early Action: is an accelerated college application process in which students submit their college admission applications early in the fall of their senior year and receive college admission decisions by early December. If a student is admitted under an early action application process, they are not bound to attend that college and can apply to other colleges as well.
Early Decision: is also an accelerated college application process in which students submit their college admission applications early in the fall of their senior year and receive college admission decisions by early December. If a student is admitted to a college under an early decision application process it is a binding offer. What this means is that the student is required to fully commit to that college and must withdraw all other applications of admission made to other colleges. Students must think very carefully before deciding on this binding process.
Expected Family Contribution (EFC):. is the calculated amount that a family is expected to pay towards educational expenses for the academic year. The Expected Family Contribution (EFC) is derived from a federal needs analysis formula, Federal Methodology, which uses the information submitted on the FAFSA. The Expected Family Contribution (EFC) and the Cost of Attendance (COA) are used together to determine a student’s eligibility for financial aid.
FAFSA: the Free Application for Federal Student Aid is a required application for all federal financial aid programs, state programs, and many institutional programs. Parent and student financial information submitted on the FAFSA is used to establish the Expected Family Contribution (EFC). As the name indicates, it is free to complete the FAFSA.
Federal Methodology: is a standard federal needs analysis formula that uses the data submitted on the FAFSA to determine the Expected Family Contribution (EFC).
Federal Work Study Program (FWS): A need-based federal work program available to students who demonstrate financial need. This program allows students to work on their college campus or at off campus non-profit agencies and earn an hourly wage.
Financial Need: is determined by subtracting the Expected Family Contribution (EFC) amount from the Cost of Attendance (COA). The resulting figure is referred to as financial need and is ultimately used to determine eligibility for financial aid funds.
Grace Period: is a stated period of time during which payments on a loan are not required.
Interest: is a fee (money) paid to a lender for being able to borrow loan funds. Interest can be a fixed rate or variable rate.
Interest Capitalization: occurs when interest on a loan that has accrued during a deferment or grace period is added to the original amount of the loan at the time of repayment. This in turn makes the original loan amount that much greater and the new total loan amount will subsequently accrue interest, adding an additional expense to the loan.
Lender: is a private or public entity which makes funds available to borrow. Lenders can be banks, credit unions, agencies, colleges and private organizations, all of which may provide funds for private education loans.
Loan Disbursement: the release of monies to a loan borrower from the lender.
Master Promissory Note (MPN): a legal contract that is signed when borrowing a loan which the signatory promises to repay the loan with specific terms and within a stated time period.
Need-based: is a financial aid term that means that decisions are made based on demonstrating financial need.
Net Price: is the estimated difference between a college’s Cost of Attendance (COA) and the total grant aid awarded (need-based and merit-based). It is an important metric when considering colleges as the net price is essentially the true out-of-pocket cost to the student to attend college.
Net Price Calculator: is a calculator that is available on college websites and provides a vehicle for the student to determine the net price of that particular college.
PIN: is the abbreviation for Personal Identification Number which is a secret password used to access an online system and is used in part to authenticate the user. A PIN is required to complete the FAFSA by both the student and the parent.
Preferred Lender List (PLL): A list provided by a college financial aid office listing recommended lenders for private education loans.
School Code: each college that awards financial aid is assigned a federal school code (also known as a Title IV Institution Code). When completing the FAFSA, the applicant will need to enter a code for each college or university to which they are applying so that the colleges- receive the processed FAFSA data.
Student Aid Report (SAR): is generated after completing the FAFSA and is essentially a confirmation and summary of what you reported on the FAFSA. The Student Aid Report (SAR) also includes the Expected Family Contribution (EFC) amount.
Hope that you found this financial aid glossary helpful. For important financial aid information, pick up a copy of Financial Aid Sense.
Financial Aid Sense is a practical guide about financial aid and the college financing process! An important read for anyone needing money for college! Don’t miss out on financial aid opportunities!