Education Glossary


Academic Competitiveness Grant (ACG)

A need-based federal grant awarded to eligible first and second year students that pursued a rigorous high school program of study.

Alternative Education Loans

Also known as private education loans, these loans are provided through private lenders and can be used to pay the college expenses that remain after the financial aid has been applied to the bill.  Generally, the borrower of an alternative loan is the student and a co-signer is often required.

Award Letter

The official notification from the school listing the financial aid offered to the student.  The letter also states the terms and conditions of the aid offer as well as the additional steps required to complete the process. 


An agreement between the borrower and lender where interest payments are deferred as they come due and are added to the principal amount of the loan.  After the student goes into repayment, both principal and interest are repaid.

College Scholarship Service (CSS) Profile

A financial aid application required by some colleges, in addition to the FAFSA, to determine eligibility for non-governmental financial aid.

Cost of Attendance (COA)

The total cost of attending college for one year. This total includes tuition, books, fees, room and board, transportation and out-of-pocket expenses. Loan fees may also be included in the COA, if applicable.  Documented childcare and expenses for disabilities may also be included at the discretion of the financial aid advisor. The COA will vary from college to college.


A period of time during which payment of principal is not required, and for subsidized loans, interest does not accrue.

Dependent Student

An unmarried undergraduate student under the age of 24, who has no dependents, is not a Veteran of the U.S. Armed Forces or ward of the court.  For dependent students, parental income and asset information is used when calculating the EFC.

EFC (Expected Family Contribution)

The total amount a student and his or her family are expected to contribute toward college costs from their income and assets, as determined by the federal need analysis formula.  This is not the same as the amount of the student’s bill.  The original EFC is the same regardless of the school the student attends.

Entrance Interview

Loan repayment and debt management counseling session required by federal regulations and conducted by a college's financial aid office. The student must attend an entrance interview before he/she can receive the first disbursement of any federally guaranteed education loan.

Federal Direct Loan Programs

Federal loans included under this umbrella include the Federal Direct Subsidized and Direct Unsubsidized Stafford Loans and the Federal Direct PLUS Loan. The money lent through these programs comes from the federal government, who also administer the programs.

Federal Family Education Loan Programs (FFELP)

Federal loans included under this umbrella include the Federal Subsidized and Unsubsidized Stafford Loans and the Federal PLUS Loan Program. The money lent through these programs comes from banks, credit unions and other private lenders.

Federal Financial Need

Financial need is calculated by subtracting a family's Expected Family Contribution (EFC) from the Cost of Attendance. Financial need is used to determine a student’s eligibility for need-based financial aid.  Financial need will vary from college to college because the COA varies from college to college.

Federal Methodology

A formula established by Congress that calculates the Expected Family Contribution (EFC) so that eligibility for federal, state and sometimes institutional financial aid can be determined.  The information used in the formula is gathered from the FAFSA.

Federal Supplemental Educational Opportunity Grant (FSEOG)

A federal need-based grant for undergraduate students with exceptional need.

Federal Work-Study Program

A federal program that provides funds through part-time employment to undergraduate and graduate students who have financial need.

Financial Aid Package

The total financial aid award offered to the student, which may include grants, scholarships, loans, and work-study.


A period of time during which the lender allows the borrower to temporarily postpone repayment of loan principal. However, interest charges continue to accrue during this time, even on subsidized loans. Forbearances are granted at the lender's discretion, usually in cases of extreme financial hardship or when the borrower does not qualify for a deferment.

Free Application for Federal Student Aid (FAFSA)

The financial aid application form developed by the federal government that collects household and financial information.  The form is completed by the student, and the student’s parent(s), if applicable.  The application process is completely free and the FAFSA can be filed electronically using FAFSA on the Web at

Gift Aid

Financial aid, such as scholarships and grants, that does not need to be repaid.

Grace Period

The period of time that begins when the borrower is no longer enrolled at least half time and ends when the borrower enters repayment. Loan payments of principal do not need to be made during this time, nor do interest payments on subsidized Stafford or Perkins Loans.


A financial aid award that does not need to be repaid.

Guarantee Agency or Guarantor

A private, non-profit organization responsible for approving student loans and insuring them for lenders against default.

Independent Student

A student who is married, over the age of 24, has dependents, is a Veteran of the U.S. Armed Forces, a graduate or professional student or is a ward of the court.  A parent refusing to provide support is not sufficient for the child to be declared independent.

Institutional Methodology

A university or college formula used to determine eligibility for financial aid provided directly by the university's or college's own funds.


A type of financial aid that must be repaid with interest.

Master Promissory Note (MPN)

A legally binding agreement the borrower signs which obligates the borrower to repay the loan with interest. The MPN also lists other terms and conditions which govern the loan, including deferments and forbearance provisions.  The MPN may be used as a multi-year note.  Under this scenario, the borrower signs the note the first time a loan is borrowed and then loans borrowed for future periods of enrollment are covered under the original MPN.

Merit-Based Aid

Financial aid that is awarded based on a student’s academic, artistic, athletic merit or talent or some other criteria.  Merit-based aid does not typically depend on the existence of financial need.

National Science and Mathematics Access to Retain Talent (SMART) Grant

A need-based federal grant awarded to eligible third and fourth year students that are pursuing an eligible academic program of study and who have a GPA of 3.0 or higher.

Need-Based Aid

Financial aid that is awarded based on the student’s financial situation. Most government sources of financial aid are need-based.

Pell Grant

A federal need-based grant awarded only to undergraduate students who have not earned a bachelor’s or professional degree.

Personal Identification Number (PIN)

A personal identifier that can be used to electronically sign the FAFSA.  Students and parents of dependent students should apply for their individual PINs at  In addition to serving as an electronic signature on the FAFSA each year, a PIN can be used to access other personal information, such as student financial aid history

PLUS Loans

There are two types of federal PLUS loans available to help finance a student's education: the Parent PLUS and the Grad PLUS. The borrower may request up to the full cost of the student's attendance, less the amount of any other financial aid received. A PLUS Loan can be used to replace the EFC.  PLUS loans require a credit check, so a good credit history is required.

  • Parent PLUS - The borrower is the parent of a dependent undergraduate student. If a parent's application for a PLUS loan is denied, the student may be eligible to borrow additional funds under the unsubsidized Stafford Loan Program.
  • Grad PLUS - The borrower is the student and must be enrolled in either a graduate or professional program.

Prepaid Tuition Plans

Plans that allow families to pay now to cover future tuition costs. The plans permit families to pay today's tuition prices for future tuition bills. However, there are significant drawbacks to the plans, such as restricted school choice, so they are not the right choice for every family.


A financial award that does not need to be repaid and which is usually awarded to students who meet some specified criteria.

Self-Help Aid

Student financial aid, such as loans and federal work-study jobs that require repayment or that a student be employed.


An organization the collects loan payments and performs other administrative tasks associated with managing loans. Loan servicers disburse loan funds, monitor borrower enrollment, collect payments, process deferment and forbearances and answer borrower and school questions.

Stafford Loans

Federal loans that come in two forms: subsidized and unsubsidized. Subsidized loans are based on financial need while unsubsidized loans are not and can be used to replace the EFC.  The interest on a subsidized Stafford Loan is paid by the federal government while the student is in school, during the six month grace period and during other periods of deferment.  Neither subsidized nor unsubsidized Stafford Loans require repayment of principal until six months after the student ceases enrollment on at least a half-time basis.

Student Aid Report (SAR)

A report sent to a student by the U.S. Department of Education as a result of the student filing a FAFSA.  The SAR summarizes the information provided on the FAFSA, and if all necessary information is provided correctly on the form, an EFC will be listed. 

Subsidized Loan

A loan for which the government pays the interest while the student is in school, during the six-month grace period and during any deferment periods. A student must have financial need to be eligible to receive a subsidized loan.

Teacher Education Assistance for College and Higher Education (TEACH) Grant

A federal grant awarded to eligible students who intend to teach in a public or private elementary or secondary school that serves students from low-income families. In exchange for receiving a TEACH Grant, recipients must teach in an eligible school for a specified period of time. If a recipient fails to complete the service obligation, all of the TEACH Grant will be converted to a Federal Direct Unsubsidized Stafford Loan.

Tuition Payment Plan

These plans are short-term (12 months or less) installment plans which split tuition owed after financial aid into equal payments.  Typically the plans are interest free, but many have a fee or finance charge.

Unsubsidized Loan

A loan for which the government does not pay the interest. The borrower is responsible for the interest on an unsubsidized loan from the date the loan is disbursed, even though the student is still in school. Students who do not wish to make interest payments while enrolled in school have the option of letting the interest accrue and capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need and can replace the EFC.

Untaxed Income

All of the income that is not reported to the IRS or is reported but is excluded from taxation. Some examples of untaxed income include Earned Income Credit, Temporary Assistance to Needy Families (TANF), untaxed Social Security Benefits, living allowances and pre-tax contributions to retirement plans.


A review process to determine the accuracy of the information on a student's FAFSA. If selected for verification, a student is required to submit documentation (such as federal tax returns and verification worksheets) to support the information provided on the FAFSA.  The federal government randomly selects approximately 1/3 of all financial aid applications for verification.  Some schools verify 100% of their financial aid recipients.

Verification Worksheet

If selected for verification, a student may need to complete this form and return it to the financial aid office for review.