Glossary of Financial Aid Terms

When determining financial need, anything that is owned, such as cash, real estate, investments or savings accounts.

Letter sent to students outlining the financial aid package offered; the student needs to sign and return this letter to accept the aid.

One of the services on which the government and colleges rely when figuring out a family's expected contribution (see Estimated Family Contribution [EFC]).

Standard formula developed by Congress under the Higher Education Amendment of 1986, which is used to evaluate parents' income and assets, taking into consideration the number of college-aged children and associated, anticipated college costs. This evaluation helps determine the Estimated Family Contribution (EFC) and the student's eligibility for financial aid.

Payment option for students with multiple loan debts that allows borrowers to combine the principals and pay back loans in monthly installments for up to 25 years.

Postponement of a loan's repayment, offered by many federal loan programs.

Student who relies on his or her parents for financial support.

A payment from scholarships, grants or other sources.

Degree to which a student qualifies for financial aid.

Amount of money a student's family can contribute to the cost of college, determined with a standard formula called the Congressional Methodology and used in determining a student's eligibility for financial aid.

Program through which students work part time and earn money to help pay for college.

Total aid given to a student, from all sources. The financial aid package is explained in the award letter.

Difference between a college's total cost of attendance and a family's EFC.

Commercial services that supplement federally and state-funded loans.

Federal form used to apply for state and federal aid.

Financial gift that does not need to be paid back.

Student who does not rely on his or her parents for financial support.

The charge for money that is borrowed; usually a percentage of the principal amount.

Money that is borrowed from the government, a bank, credit union or other lender that must be paid back.

Loans given by the same financial institutions that give Stafford Loans.

Need-based federal financial aid that does not need to be paid back; only available to undergraduate students.

Low-interest, need-based loan awarded by individual colleges. Students begin paying back Perkins Loans nine months after graduation or leaving school.

Amount of money borrowed, not including interest charges.

Money awarded that does not need to be paid back; criteria might include academic excellence, talent, race, religion, group affiliations, state of residence or need.

Loan given by banks, credit unions, loan associations or individual colleges; sometimes called Guaranteed Student Loan, or GSL.

Loan that does not accrue interest until the student leaves school.

Used in determining a student's eligibility for financial aid, the total amount estimated for all college costs; includes tuition, fees, books, supplies, housing, meal plan, personal expenses and travel expenses.

Loan that accrues interest while a student is still in school.