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Financial Aid Glossary

Accrual Date – The date interest charges on an educational loan begins accruing interest.

Amortization – Process of paying off your loans in regular installments over time.

Annual Taxable Income – Amount of income used to determine how much tax you owe each year. This can include wages, salaries, bonuses, tips, investment income and unearned income.

APR – Annual cost of borrowing money

Aid Year – Twelve-month period that begins July 1 and ends June 30 the following year.

Borrower – Person that applies for the loan and receives the funds.

Capitalization – Addition of unpaid accrued interest to the principal balance of a loan.

Cost of Attendance (COA) – Total amount of funds that it would cost a student to attend college for an academic year, which includes direct charges and indirect costs. COA typically is comprised of tuition and fees, housing, food, transportation, and personal expenses.

Cosigner – Creditworthy applicant who agrees to share repayment responsibilities for a loan with the primary borrower.

Credit – Ability of a person to obtain goods or services before payment, based on the trust that payment will be made in the future.

Credit Report – Detailed report of an individual’s credit history.

Curtailment – Additional payment made to reduce the principle of a loan.

Default – Failure to make payments on a loan according to the loan terms.

Deferment – Postponement of a payment on a loan for a specific amount of time.

Delinquency – Time after one payment is missed, until the payments are up to date.

Direct Charges – Expenses paid directly to the university.

Direct Loan – Loan that is backed by the federal government.

Disbursement - When the lender sends the loans funds to the institution.

Endorser – Someone who agrees to repay the loan if the borrower does not.

Entrance Counseling – Required online counseling that explains the rights and obligations you agree to meet as a condition of accepting a Federal Direct Student Loan.

Exit Counseling – Required online counseling that provides important information to prepare you to repay a Federal Direct Student Loan.

Free Application for Federal Student Aid (FAFSA) – Federal Student Aid online application for federal, and often state, financial aid resources. This is the only application 91̽»¨ students need to apply for all forms of financial aid.

Federal Work-Study – Federal Employment program offered and administered by the institution that provides opportunity for part-time employment to students with financial need to help pay their educational expenses.

Financial Aid – Assistance in the form of grants, scholarships, work-study, and/or loans.

Gift Aid – Financial aid that does not require a student to repay funds, typically includes scholarships and grants.

Grace Period – Timeframe between your last day of classes and your first loan payment due date. Grace periods for Federal Student Loans begin when a student graduates or drops below half-time enrollment in a term other than summer semester. Grant Aid – Gift aid typically based on financial need.

Gross Income – Total income before tax and other deductions.

Indirect Costs – Expenses incurred as a result of attendance that are not paid directly to a university.

Interest – Costs to borrow money.

Lender – Organization or entity that holds a loan.

Loan – Money borrowed from the federal government or a private source that must be paid back with interest.

Merit-Based Aid – Gift aid that is based on academic merit, typically high school or university grad point average (GPA) and/or standardized test scores.

Master Promissory Note (MPN) – Legal document that contractually requires the borrower to repay a loan.

Origination Fee – A fee charged and deducted from the loan amount before funds apply to an account balance.

Principal – Total amount of money that you agree to borrow.

Private Loan – Loan acquired through a private, third-party lender. Many private lenders offer loans to student and parent borrowers.

Satisfactory Academic Progress (SAP) – Federally-mandated process required of universities to monitor and review a student’s progression toward degree completion.

Scholarship Aid – Gift Aid that is based on merit or financial need.

Self-Help Aid – Financial aid in the form of Federal Work-Study employment or loans.

Service Obligation – Contractual obligation requiring the recipient to practice their profession in a qualified program.

Servicer – Company sending billing notification, collecting payments, and providing customer service for a loan.

Subsidized Loan – Federal Direct Student Loan, available to undergraduate students that accrues no interest while a student is enrolled at least half-time, in a grace period, or during deferment.

Treasury Offset – Payment to an individual from the U.S. Department of Treasury that is reduced or canceled and used to pay on a delinquent debt.

Tuition – Charges for enrollment at a university.

Unsubsidized Loan – Federal Direct Student Loan, available to undergraduate and graduate students that accrues interest while a student is enrolled, in a grace period, and during deferment.

Verification – Federally-mandated process required of universities to review to verify accuracy of the information submitted on a FAFSA.