Financial Aid Terms

The following resource highlights common financial aid and loan-related terms and provides helpful definitions to explain their meanings.

General Terms

• Award Letter
  Document listing financial aid offered to student.
• Cost of Attendance
  Estimated tuition, fees, room, board, transportation, and miscellaneous expenses as allowed by the government to be used in calculating a student's financial aid package.
• EFC
  Expected Family Contribution -result of the FAFSA process -determines how much need-based aid a student receives.
• FAFSA
  Form submitted to the federal government that determines the student's eligibility for all federal and state financial aid programs.
• Federal Work Study
  Federal program to assist students and the university in job placement - need-based after gift aid.
• Gift Aid
  Grants, scholarship (aid that does not require repayment).
• Grants
  Gift aid from the federal government, state government or institution.
• Pell Grant
  Grant from the federal government. Amount of Pell is determined by the EFC.
• SAR
  Student Aid Report - notification of FAFSA results; contains the student's EFC.
• Scholarships
  Gift aid provided by community groups, churches, schools and private corporations.
• SEOG
  Grant from the federal government for students with highest need. Funds are limited.
• Verification
  Random selection by the Department of Education to ensure accuracy. Taxes must be provided to the Financial Aid Office for the verification process.

Loan-related Terms

• Accrued Interest
  Interest that accumulates on the unpaid balance of a loan.
• Aggregate Limit
  Maximum amount of outstanding federal loan principal a student can have.
• Borrower
  The person who borrows funds and signs a promissory note.
• Capitalized Interest
  Accrued interest that is added to the principal amount that was borrowed. Interest is subsequently charged on the new amount.
• Default
  Failure to repay your loan according to the terms of the promissory note. This can lead to legal action by the guarantor or the federal government to recover the money.
• Deferment
  Temporary postponement of student loan repayment authorized by the lender servicer or guarantor.
• Delinquent
  Loan payments are not made on time.
• Disbursement
  Release of loan funds to the school or student.
• Disclosure Statement
  Statement from the lender to the borrower detailing loan amount, interest rate, disbursement amounts and disbursement dates.
• EFT
  Electronic Funds Transfer - transfer of funds from the lender to the school by electronic means rather than by paper check.
• Entrance Interview
  Federal government requirement explaining rights and responsibilities of the borrower.
• Exit Interview
  Federal government at graduation or withdrawal from school. Reminds student of the terms and obligations of student loans.
• Grace Period
  Period of time after a student graduates, leaves school or drops below half-time status before repayment begins.
• Guaranty Agency/ Guarantor
  Non-profit agency that insures the student loans made by the lenders.
• Lender
  Bank or loan company who makes the loan to the borrower.
• Master Promissory Note (MPN)
  Official loan document required by the student promising to pay back the funds borrowed. The MPN is valid for up to ten years.
• Origination Fee
  Fee charged by the government to offset the cost of processing the loan. The fee is deducted at the time of disbursement to the school.
• Principal
  Amount borrowed upon which interest is charged.
• Servicer
  Party who tracks and collects loans on behalf of the lender.
• Subsidized Loan
  Loan for which the government pays the interest for the student while in school at least half time and during grace periods and authorized deferments.
• Unsubsidized Loan
  Loan for which the student is responsible for the interest that accrues while in school, during grace periods, and during deferments.