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  • Margaret Daniel

College Terminology

IMPORTANT: Be sure to store this list somewhere where you can access it easily.

The cost for a student to graduate from college today approaches $100,000 on the low end of the scale. With such high tuition costs and resulting student debt, every family sending a child to college MUST understand how the system works and be familiar with the college terminology involved.

Here is just a shortlist of the college terminology used today, but it will be invaluable when you begin your college planning process. If you need a college funding game-plan for your family or have questions, please feel free to schedule a 20-minute free strategy call. We may be able to save your family considerable money on your college expenses.


American College Testing (ACT) – A need-analysis service located in Iowa responsible for processing the FAFSA form, commonly known as the Free Application for Federal Student Aid. ACT is also responsible for administering the ACT scholastic exam.

Academic Year (AY) – Officially, a fiscal year runs from July 1st through June 30th and consists of either semesters or quarters.

Accrued Interest – Interest that accumulates on loans and must be paid back at a later date; specifically relates to Federal PLUS loans and Federal Unsubsidized loans.

ADC or AFDC – Aid to Dependent Children or Aid to Families with Dependent Children; government benefit programs, similar to welfare programs.

Adjusted Gross Income (AGI) – The income figure which is taken from the IRS income tax forms and required on financial aid applications.

Allocation – The amount of money given to an institution by the Department of Education for the purpose of funding a campus-based program administered by that institution.

Asset Protection Allowance – An asset allowance used in the calculation of the Expected Family Contribution.

Award Letter – The official means of notifying financial aid applicants of the assistance being offered. The award letter shows the types and amounts of aid offered as well as specific program information, student responsibilities, and the conditions that govern the award. It also provides students the opportunity to accept or decline the aid offered.

Award Year – The student receives aid from July 1st through June 30th of the following year.

Base Year – The second calendar year preceding the academic year for which aid is being sought. 2017 will be the base income year for the 2019-2020 award year.

College Scholarship Service (CSS) – A need-analysis service located in Princeton, NJ, which distributes the Financial Aid PROFILE, a financial aid form used primarily by selective private colleges. CSS also administers the SAT scholastic exam.

College Work-Study (CWS) – A federally-funded program which provides college monies to students through employment in exchange for service to the university, state, or another agency.

Default – When a borrower fails to make payments on a loan or has failed to comply with other terms of the loan agreement.

Deferred Admissions – A student with financial, personal, or work-related concerns can defer or postpone their enrollment for up to one year.

Dependent Student – A student under the age of 24 who is at least partially dependent on his/her parents to provide support. The parents’ income and assets are assessed in determining the Expected Family Contribution.

Deferred – Contractually suspending the payment of a loan until a later period of time. However, interest will still accrue (build up) and be added to the total repayment.

Dislocated Worker – A person who has been laid-off from work or was self-employed (such as a farmer) and now unemployed due to poor economic conditions in the community or a natural disaster. The dislocated worker status is determined at the discretion of the financial aid officer.

Early Action – Students can apply to a college by an early deadline to guarantee their admission without obligating themselves to attend that college.

Early Decision – The student can apply to a college by an early deadline to guarantee his/her admission, but is obligated to attend that college under a binding contract.

Early Entrance – The student can be accepted, admitted, and enrolled prior to high school graduation. Many colleges use this guarantee to attract better students.

Expected Family Contribution (EFC) – Amount of money that a student (and spouse) or family is expected to pay toward college education; commonly referred to as the family’s “ability to pay.” This number will drive your financial aid strategy if you follow our money-saving program: the S.P.A.R.K. College Funding Plan.

Federal Direct Loan – Federal college loan program in which the lender is the federal government, and the college administers loans directly to the family.

Federal Family Educational Loan Program (FFELP) – Federal college loan program in which the lender and administrator are a bank, credit union, or other private lender.

Federal Methodology – Formula developed by Congress and defined by statute; used to assess both the parents’ and student’s income and assets to determine the Expected Family Contribution; does not consider the home or family farm as an asset.

Federal Work Study – A federally funded aid program that provides jobs for students. Eligibility is based on need.

Financial Aid Budget – A breakdown of how the college determines the total cost of attendance.

Financial Aid Profile (PROFILE) – An institutional information form distributed by CSS. Some colleges may require the PROFILE in addition to the FAFSA to help them determine the financial aid package.

Financial Aid Form Acknowledgement (FAFACK) – A letter informing the student that the CSS has processed his/her PROFILE. Mailed separately from the Student Aid Report (SAR), this acknowledgement gives the student a list of the colleges to whom the SAR was sent and which ones require additional information (such as 1040s, etc.) This form also allows the student to request that his/her financial information be sent to additional or different colleges.

Financial Aid Form Need Analysis Report (FAFNAR) – A report transferred electronically, directly to the college from CSS, which contains information from the PROFILE.

Financial Aid Officer (FAO) – The chief financial administrator at each college responsible for determining financial aid packages.

Financial Aid Package – The total amount and type of aid that a student will receive from one school. It can consist of a variety of programs, including federal- and state-funded grants and loans, college-based programs, and any additional aid programs the college may make available to the student.

Financial Aid Transcript – A form used by post-secondary institutions to collect data about a student’s prior attendance at other post-secondary institutions, as well as financial aid awards the student received at the institution providing the transcript and the statuses of certain eligibility criteria involving default and repayments owed. All transfer students applying for aid must have this form submitted by the school they attended.

Free Application for Federal Student Aid (FAFSA) – The only financial aid form used to calculate the Expected Family Contribution (EFC), which is used to determine the amount of federal and state funds the student is eligible to receive.

Full-Time – A student that is enrolled for at least 12 credit hours during a quarter or semester.

GPA – Grade Point Average.

Guaranteed Student Loan (GSL) – Now known as the “Stafford Loan.”

Gift Aid – Financial aid that does not require repayment or work to be performed (i.e. grants & scholarships).

Grace Period – The length of time that begins when a loan recipient graduates or ceases to be enrolled on at least a half-time basis and ends when the repayment period starts; or, in some loan programs, the period of time when a deferment ends and loan payments are scheduled to resume. Loan principal need not be paid and interest does not accrue during this period.

Graduate and Professional School Financial Aid Service (GAPSFAS) – A need-analysis service which deals strictly with graduate or professional students.

Guaranty Agency – A state or private institution or organization which administers student loan, insurance, or governmental guarantor programs for the federal government.

Half-Time – A student that is enrolled for at least 6 credit hours during a quarter or semester.

Housing Index Multiplier Table – A verification formula used by the FAO to determine the value of a home based on a national average. The formula uses the year the home was purchased and the purchase price to establish a current value, referred to in government terms as the “Implicit Price Deflator.”

Independent Student – A student NOT dependent upon his/her parents for support and fits one of the following profiles exactly: 1) at least 24 years of age by December 31st of their upcoming college academic year; 2) has a legal dependent other than a spouse; 3) is a ward of the court or both parents are deceased; 4) is a veteran of the U.S. Armed Forces; 5) is married; 6) is a graduate or professional student; or 7) is judged independent by the Financial Aid Officer due to unusual circumstances.

Institutional Methodology – An alternative method of need-analysis used mostly by private colleges to take a more detailed look at a family’s income and assets prior to disbursing its grants and scholarships; considers the home and family farm to be assets.

Merit-Based Aid – Financial aid that is awarded to a student based primarily on special talents that the student might have (i.e. academics, athletics); may also be referred to as “non-need-based aid.”

Need – The difference between the total cost of college and the family’s Expected Family Contribution.

Needs Analysis Form – A form completed by an applicant and family for a need-analysis service. These forms collect data for need-analysis computations; the most common applications are the FAFSA and PROFILE.

Need-Based Aid – Financial aid that is awarded based solely on the financial needs of the student and his/her family.

Off-Campus Student – A student who lives in a house or apartment during the academic year as opposed to living on-campus; used as a budget classification.

On-Campus Student – A student who lives in institutional housing during the academic year; used as a budget classification.

Origination Fee – A processing fee charged to the student and deducted from the loan proceeds prior to disbursing the balance to the college.

Parent Contribution (PC) – Based on the parents’ income and assets, this is one of two factors used to determine the Expected Family Contribution (PC + SC = EFC); the PC is calculated from information on the FAFSA.

Pell Grant – A grant program funded by the federal government; the maximum award is set annually and limits change from year to year. The Pell Grant Award is figured by subtracting the Expected Family Contribution from the maximum Pell Grant award.

Perkins Loan – A need-based, 5% loan subsidized by the federal government; repayment begins six months after the student graduates or leaves school.

PLUS Loan – This parent loan is not a subsidized loan. The principal and interest must be repaid immediately or can be deferred (but will accrue interest) until graduation, and full payments must begin afterward.

Professional Judgment – A rule that allows the Financial Aid Officer to make a personal decision to adjust the Expected Family Contribution based on unique or special circumstances to allow a more accurate assessment of a family’s financial condition.

Regular Admissions – The student applies for admissions under normal deadlines.

Rolling Admissions – The student can apply for admissions at various times during the year and is under no deadlines.

Satisfactory Academic Progress – Progress required of a financial aid recipient in acceptable studies or other activities to fulfill a specified educational objective.

Self-Help – Aid that must be repaid either through financial obligation or service to the university or state (i.e. loans, work-study).

Simplified Need Test – A formula that is an exception to the Federal Methodology. Parents and students who earn under $50,000 of Adjusted Gross Income per year and file a 1040EZ or 1040A tax form can use the Simplified Need Test, which does not include the parents’ or student’s assets when determining the EFC.

Student Aid Report (SAR) – The official results from processing the student’s Free Application for Federal Student Aid (FAFSA), including the official Expected Family Contribution (EFC). It must be submitted to the financial aid office at the institution the student chooses to attend in order to receive payment under the Pell Program or other types of need-based aid.

Student Contribution (SC) – Based on the student’s income and assets, this is one of two factors that determines the Expected Family Contribution (PC + SC = EFC); the SC is calculated from information on the FAFSA.

Subsidized Stafford Loan – A need-based, low-interest loan that is subsidized by the federal government. Interest and payments on the loan do not begin until after the student graduates or leaves school.

Supplemental Educational Opportunity Grant (SEOG) – A grant for extra-needy undergraduate students. SEOGs are granted in the $100-to-$4000 range and the college determines how these funds are distributed.

Supplemental Loan for Independent Students (SLS) – A loan available to both graduate and undergraduate independent students to help finance college costs; includes the total amount a student will need for one year of college – tuition, room and board, transportation and commuting costs, books and supplies, and miscellaneous personal expenses.

Unmet Need – When the student’s total financial aid award does not equal 100% of the official calculated need.

Unsubsidized Stafford Loan – A loan available to students regardless of need; however, the interest will not be subsidized by the government and begins to accrue immediately.

Verification – The process of checking the accuracy of the information supplied by students when they apply for federal student aid. Colleges are required by the federal government to verify 30% of their aid applications.

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