Preparing for college is stressful enough, but figuring out how
to pay for it is even harder. Plus, from the first FAFSA through graduation,
you're sure to be bombarded with financial aid acronyms and buzzwords. Here
are some key terms you'll need to know.
AGI: Adjusted Gross Income.
Most financial aid forms require parents or students to state their taxable
AGI based on income minus maximum allowable adjustments.
Loans: These private student loans from banks or other lending institutions
are not federally supported or guaranteed. Students must be enrolled to apply
for these loans.
Capitalized Interest: Unpaid interest that is
added to the original amount of a loan. Capitalized interest increases the
size of a loan, because the borrower is paying interest on their interest.
Cost of Attendance. This is the total cost of attending a college or university,
including tuition, room and board, books, lab fees, transportation and basic
CSS Profile: The College Scholarship Service
Profile is a financial aid form that many colleges and universities use to
determine how much non-federal financial aid a student may be eligible for.
College: Sometimes called junior college or two-year college. Students
can take classes, and then transfer to a four-year school, or they can earn
certificates, diplomas or associate's degrees.
Credit Hour: Credit
hours are units of value given to classes. Some classes may be worth two or
three credits, while others are worth four credits. Credits vary by class
and by school. Many schools base tuition costs on the number of credit hours
taken. Some charge a specific dollar amount per credit hour.
A deferment is an approved postponement in repaying a student loan. For example,
students may seek a deferment on undergraduate loan payments while in graduate
Department of Education: This government agency administers
several federal student financial aid programs.
Direct Loan :
The U.S. Department of Education's loan program.
Family Contribution. This is the number that's used to determine your eligibility
for federal student financial aid. This number results from the financial
information you provide in your FAFSA, the application for federal student
aid. Your EFC is reported to you on your Student Aid Report (SAR).
Financial Aid Administrator. An FAA is a college or university employee involved
in the administration of financial aid. Also known as financial aid advisors,
officers or counselors.
FAFSA: Free Application for Federal Student
Aid. Filling out a FAFSA form is the first step in the financial aid process.
To be eligible to receive federal financial aid, a student must complete a
Federal School Code (also, Title IV Institution Code):
Each college, campus or program has a six-character institution code. You
must include the code related to each of your college applications when filling
out a FAFSA. These codes are available by contacting the school or checking
an online listing.
FFEL Program:The Federal Family Education
FSEOG: Federal Supplemental Educational Opportunity
Grant. This federal government program provides need-based grants to low-income
college students with the most need, and is administered through the school's
financial aid office. Not all schools participate.
Program: A federally-funded, need-based program administered by each school,
this program allows students to work on campus in exchange for a portion of
Grant: A grant is money given to students for
their education. Often based on need, grants may come from federal or state
programs, or sometimes from private charitable organizations. It does not
have to be repaid.
GSL: Guaranteed Student Loan. Now called the
Federal Family Education Loan Program (see FFEL, above).
Student: Independent students are self-supporting students who are not
financially dependent on their parents.
MPN: Master Promissory
Note. This form promises repayment, and is signed by a student or parent when
taking out a PLUS Loan.
National Merit Scholarship Program:
Students who do well on the PSAT/NMSQT in their junior year may qualify for
scholarships. A few students receive full scholarships.
Need-based financial aid is for students who demonstrate financial need.
A need-based grant might be awarded based on a student's low income.
National Student Loan Data System. This U.S. Department of Education database
allows students to access their Title IV student loan and grant information.
Grant: Federal Pell Grants are a federal program that provides need-based
educational grants for low-income students. Because they are grants, they
do not have to be repaid.
PLUS: PLUS loans are federal loans
that graduate or professional degree students and parents of dependent undergraduate
students can use to help pay education expenses. The U.S. Department of Education
makes Direct PLUS Loans to eligible borrowers through schools participating
in the Direct Loan Program.
PSAT/NMSQT: The Preliminary SAT/National
Merit Scholarship Qualifying Test. The PSAT/NMSQT is a practice test for the
SAT. Students hoping to receive a National Merit Scholarship must take and
pass this test in their junior year of high school.
Officers Training Corps. In this program, the military pays a student's tuition
or other expenses. The student takes part in summer training while in college,
and commits to military service after college.
SAR: Student Aid
Report. This report summarizes the information entered on your FAFSA form,
and shows the amount of your Expected Family Contribution.
These funds are given to, or earned by, students, and are to be used for tuition.
There are numerous public and private sources for scholarships. Some are given
based on need, some on merit or skill. Others have very specific stipulations
on who can receive the scholarship.
Title IV Institution Code:
(See Federal School Code, above)
Work-Study: This program allows
students to defray part of their tuition and school expenses by working part
time on campus. It is designed for students with financial need.