Financial Aid Glossary & Terminology
Sometimes it can seem like the world of financial aid has its own vocabulary. To help you speak the language, here are some of the commonly used terms and acronyms.
More Terms - The Federal Department of Education has an extensive financial aid glossary which may be of use to students and families.
1040 Form, 1040A Form, 1040EZ Form
The Federal Income Tax Return. Every person who has received income during the previous year must file a form 1040 with the IRS by April 15.
Form used by business to report income paid to a non-employee. Banks use this form to report interest income. These are also used to show payments of retirement plans paid to individuals.
A popular type of retirement fund. It is legal to borrow money from your 401(k) to help pay for your children's education.
This is the amount of the academic work you must complete each year, and the time period in which you are expected to complete it, as defined by your school. For example, your school’s academic year may be made up of a fall and spring semester, during which a full-time undergraduate student is expected to complete at least 24 semester hours, usually called credits or credit hours, over the course of 30 weeks of instructional time. Academic years change from school to school and even from educational program to educational program at the same school.
Adjusted Gross Income (AGI)
Your or your family's wages, salaries, interest, dividends, etc., minus certain deductions from income as reported on a federal income tax return. Commonly referred to as AGI.
A formal request to have a financial aid administrator review your aid eligibility and possibly use Professional Judgment to adjust the figures. For example, if you believe the financial information on your financial aid application does not reflect your family's current ability to pay (e.g., because of death of a parent, unemployment or other unusual circumstances), you should definitely make an appeal. There are a variety of appeal forms available on our website, if these forms do not meet your circumstances you may considering coming in to speak with a financial aid representative.
An item of value, such as a family's home, business, and farm equity, real estate, stocks, bonds, mutual funds, cash, certificates of deposit (CDs), bank accounts, trust funds and other property and investments.
An offer from the college that states the type and amount of financial aid the school is willing to provide if you accept admission and register to take classes at that school. CSUF notifies student of their eligibility via the student’s Campus Email.
The academic year for which financial aid is requested (or received). The award year runs from July 1 to June 30.
The person who receives the loan.
A financial plan that helps you track your money, make informed spending decisions, and plan for your financial goals.
A cosigner on a loan is a coborrower and is obligated to repay the debt if the primary borrower defaults on the debt. Repayment activity is reported on both the borrower's and cosigner's credit histories. A cosigner is often required if the borrower's credit history is bad or marginal or thin.
Cost of Attendance (COA)
(Also known as the cost of education or "budget") The total amount it should cost the student to go to school, including tuition and fees, room and board, allowances for books and supplies, transportation, and personal and incidental expenses. Loan fees, if applicable, may also be included in the COA. Child care and expenses for disabilities may also be included at the discretion of the financial aid administrator. Schools establish different standard budget amounts for students living on-campus and off-campus, married and unmarried students and in-state and out-of-state students.
If a student's parents are divorced or separated, the custodial parent is the one with whom the student lived the most during the past 12 months. The student's need analysis is based on financial information supplied by the custodial parent.
A loan is in default when the borrower fails to pay several regular installments on time or otherwise fails to meet the terms and conditions of the loan. Defaulting on a government loan will make you ineligible for future federal financial aid, unless a satisfactory repayment schedule is arranged, and can affect your credit rating.
Determines to what degree a student has access to parent financial resources.
Disbursement is the release of funds from the school to the student or borrower. Funds are first credited to the student's account for payment of tuition, fees, room and board (if applicable). Any excess funds are then paid to the student by check or direct deposit.
Someone who is not a US citizen but is nevertheless eligible for Federal student aid. Eligible non-citizens include US permanent residents who are holders of valid green cards, US nationals, holders of form I-94 who have been granted refugee or asylum status and certain other non-citizens. Non-citizens who hold a student visa or an exchange visitor visa are not eligible for Federal student aid.
An indication of whether you are a full-time or part-time student. Generally you must be enrolled at least half-time (and in some cases full-time) to qualify for financial aid.
Expected Family Contribution (EFC)
The amount of money that the family is expected to be able to contribute to the student's education, as determined by the Federal Methodology need analysis formula approved by Congress. The EFC includes the parent contribution and the student contribution, and depends on the student's dependency status, family size, number of family members in school, taxable and nontaxable income and assets. The difference between the COA and the EFC is the student's financial need, and is used in determining the student's eligibility for need-based financial aid.
Federal Work-Study (FWS)
Program providing undergraduate and graduate students with part-time employment during the school year. The federal government pays a portion of the student's salary, making it cheaper for departments and businesses to hire the student. For this reason, work-study students often find it easier to get a part-time job. Eligibility for FWS is based on need. Money earned from a FWS job is not counted as income for the subsequent year's need analysis process.
Money provided to the student and the family to help them pay for the student's education or which is conditioned on the student's attendance at an educational institution. Major forms of financial aid include gift aid (grants and scholarships) and self-help aid (loans and work).
Financial Aid Package
The complete collection of grants, scholarships, loans and work-study employment from all sources (federal, state, institutional and private) offered to a student to enable them to attend the college or university. Note that unsubsidized Stafford loans and PLUS loans are not considered part of the financial aid package, since these financing options are available to the family to help them meet the EFC.
A type of financial aid based on financial need that the student does not have to repay.
Income before taxes, deductions and allowances have been subtracted.
The amount of money received from employment (salary, wages, tips), profit from financial instruments (interest, dividends, capital gains), or other sources (welfare, disability, child support, Social Security and pensions).
Individual Retirement Account (IRA)
One of several popular types of retirement funds. It is not legal to borrow money from your IRA to help pay for your children's education.
The interest on a loan is a fee charged periodically in exchange for the use of a lender's money. It is paid in addition to repaying the amount borrowed. Interest is usually calculated as a percentage of the outstanding principal balance of the loan. The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan. Except for consolidation loans, federal education loans issued from October 1992 to June 2006 used variable interest rates that are pegged to the cost of US Treasury Bills. Since July 1, 2006 all federal education loans have involved fixed interest rates.
Internal Revenue Service (IRS)
Federal agency responsible for enforcing US tax laws and collecting taxes.
A bank, credit union, savings & loan association, or other financial institution that provides funds to the student or parent for an educational loan. Note: Some schools now participate in the Federal Direct Loan program and no longer use a private lender, since loan funds are provided by the US Government.
A type of financial aid which must be repaid, with interest. The federal student loan programs (FFELP and FDSLP) are a good method of financing the costs of your college education. These loans are better than most consumer loans because they have lower interest rates and do not require a credit check or collateral. The Stafford Loans and Perkins Loans also provide a variety of deferment options and extended repayment terms. See
The difference between the COA and the EFC is the student's financial need -- the gap between the cost of attending the school and the student's resources. The financial aid package is based on the amount of financial need. The process of determining a student's need is known as need analysis.
- Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Need
Financial aid that is need-based depends on your financial situation. Most government sources of financial aid are need-based.
Out-of-Pocket cost is the difference between the cost of attendance and just the grants and scholarships and other gift aid in the need-based financial aid package. It reflects the bottom line cost to the family, the amount the family will need to pay out of current and future resources, such as savings, income and loans. See Net Cost for a related definition. While net cost does not vary by much from college to college, out-of-pocket cost can vary significantly, based on how much of need is met with grants instead of loans. Some of the elite non-profit colleges that have adopted no loans financial aid policies have lower out-of-pocket costs than many public colleges. Generally, families should evaluate college financial aid award letters using out-of-pocket cost, not net cost.
A student who receives federal support may not receive awards totaling more than $400 in excess of his or her financial need.
Also known as Alternative Loans, these educational loan programs established by private lenders to supplement the student and parent education loan programs available from federal and state governments.
Satisfactory Academic Progress (SAP)
A student must make this in order to continue receiving federal aid. If a student fails to maintain an academic standing consistent with the school's SAP policy, they are unlikely to meet the school's graduation requirements.
Registration for the military draft. Male students who are US citizens and have reached the age of 18 and were born after December 31, 1959 must be registered with Selective Service to be eligible for federal financial aid. If the student did not register and is past the age of doing so (18-25), and the school determines that the failure to register was knowing and willful, the student is ineligible for all federal student financial aid programs. The school's decision as to whether the failure to register was willful is not subject to appeal. Students needing help resolving problems concerning their Selective Service registration should call 1-847-688-6888.
Student Aid Report (SAR)
Report that summarizes the information included in the FAFSA and must be provided to your school's FAO. The SAR will also indicate the amount of Pell Grant eligibility, if any, and the Expected Family Contribution (EFC). You should receive a copy of your SAR four to six weeks after you file your FAFSA. Review your SAR and correct any errors on part 2 of the SAR. Keep a photocopy of the SAR for your records. To request a duplicate copy of your SAR, call 1-319-337-5665.
An IRS Tax Transcript shows the final summary of your individual tax return for the year including any changes either you or the IRS made to your tax return after you filed it.
Interest income, dividend income and capital gains.
In an ideal world, the FAO would be able to provide each student with the full difference between their ability to pay and the cost of education. Due to budget constraints the FAO may provide the student with less than the student's need (as determined by the FAO). This gap is known as the unmet need.
Contributions to IRAs, Keoghs, tax-sheltered annuities and 401k plans, as well as worker's compensation and welfare benefits.
The process your school uses to confirm that the data reported on your application is accurate. Your school has the authority to contact you for documentation that supports income and other information that you reported.
The form listing an employee's wages and tax withheld. Employers are required by the IRS to issue a W2 form for each employee before February 28.