Financial Aid Glossary


Academic probation: A period during which a student is subject to increased scrutiny of their academic achievements due to a previous history of academic difficulty. A student on academic probation is not eligible for any financial aid.

Academic year (AY): the period during which school is in session, consisting of  at least 30 weeks of instructional time during which a full-time student is expected to complete at least 36 quarter hours at a school measuring program length in credit hours; the student's enrollment period for which financial assistance/aid is awarded. The federal definition of academic year is July 1 through June 30.     

Accrued interest: amount of interest that accumulates on the unpaid balance of a student or parent loan.  Accrued interest adds to the amount you owe if you do not pay it when due.

Adjusted Gross Income (AGI): all taxable income as reported on a US income tax return used to perform the need analysis.

Aid Package: a combination of financial aid (scholarships, grants, loans, and/or work-study) offered by the financial aid office of a college or university.

Award letter: an official document issued by a school's financial aid office that lists the amount of financial assistance offered to a student through financial aid programs to pay for education costs. The award letter includes the terms and conditions for receiving  and  maintaining eligibility for financial aid.   The award letter gives students the opportunity to accept or decline the aid offered.

Award year: the academic year (the time period between July 1 of one year and June 30 of the following year) for which financial aid is requested or received.

Base year: the January - December tax year preceding the award year for which aid is requested (i.e., the 2013 tax year is the base year for the 2014-2015 award year).

Borrower: an individual who signed and agreed to the terms in the promissory note and is responsible for repaying a loan.

Borrower-based Academic Year (BBAY): is not a fixed period of calendar time like the Scheduled Academic Year (SAY). The BBAY's beginning and end dates depend on an individual student's enrollment and progress. A term-based credit-hour program that has new students beginning enrollment quarterly may opt to use a BBAY. It must include the same number of terms as the SAY the school would otherwise use. For instance, the fall, winter, and spring (3 terms/quarters) constitute the school’s Scheduled Academic Year.  If the student attends the summer term at the school, It can be the first term of a BBAY that includes the following fall and winter terms.

Borrower Status Types: Periods during the life cycle of a student loan that define the borrower's status relative to the loan obligation: In Grace: Out of school but not yet expected to make payments. In Repayment: Expected to make regular monthly payments.  In school: Attending an eligible institution at least half-time.

Campus-Based Programs: US Department of Education federal student aid programs administered by institutions of post-secondary education. Campus-based programs include: Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Work-Study (FWS).

Capitalized interest: interest that accrues on the unpaid balance of a student loan and is unpaid during the grace period or during periods of deferment or forbearance and is added to the principle balance of the loan. Adding accrued interest to the principle balance of the loan increases the outstanding principle due on the loan.  Interest that is capitalized accrues interest which adds an additional expense to the loan.

Central Processing Center (CPS): a company contracted by the Department of Education to process the FAFSA (Free Application for Federal Student Aid).

Collection Agency: a business organization that accepts, from schools and lenders, loan accounts that have become delinquent or are in default, and attempts to collect on those accounts. A fee is charged for the service.

College Work-Study: a federal or institutionally funded employment program that provides jobs, generally 10 - 20 hours per week, for students who are in need of earnings to meet a portion of their educational expenses.

Consolidation loan: consolidation loans enable a borrower to combine eligible education loans into one new loan with one monthly payment. Consolidation can result in lower monthly payments but higher total dollars being repaid due to a longer repayment period and more interest being paid over of the consolidation loan.

Cost of Attendance: an estimate of a student's education expenses during a given academic year; including tuition, fees, books, supplies, room, board, transportation and other required educational expenses.      

Credit: A summary of a person's financial strength, including his/her history of paying bills routinely used to assess a person's ability to repay future loans.

Credit Bureau: An organization that tracks and reports the manner in which borrowers repay their loans (not only student loans). Federal law requires credit rating agencies to provide consumers with one free report regarding their credit each year.

Credit Report: A collection of information about you and your credit history.

CGPA: Cumulative Grade Point Average.

Data Release Number (ORN): Your DRN is a four-digit number assigned to your application by Federal Student Aid. It appears near the top right-hand corner on the first page of your paper or electronic Student Aid Report (SAR). If you contact the Federal Student Aid Information Center, you will need the DRN to make corrections to make corrections to your mailing address or to the school(s) on your FAFSA.

Default: failure of a borrower to make a scheduled payment for 240 (Perkins loan)/270 (Federal Direct/FFEL Stafford loan) consecutive days or to meet other terms of the signed promissory note or written repayment agreement.  See Loan Rehabilitation.

Default/Guarantee fee: an up-front fee on federally guaranteed student loans that is charged to the borrower and paid to the guarantee agency to insure the lender against loss due to the death, disability, or default of the borrower. 

Deferment: a period of time during repayment in which the borrower may postpone payment of principal (and sometimes interest) for a specific time period when the borrower meets certain eligibility requirements.      

Delinquency: failure to make a loan payment by the due date.

Dependent Student: a student (requiring parent financial information) that does not meet one or more of the following criteria: is at least 24 years old by December 31 of the school year, is a graduate or professional student, is married or separated but NOT divorced as of the day you apply, has legal dependents other than a spouse, is a veteran of the US Armed Forces, is an orphan or ward of the court.

Direct Loan Program: A federal program through which the U.S. Department of Education offers four types of student loans; subsidized Federal Stafford Loans, unsubsidized Federal Stafford Loans, Federal Parent Loans for Undergraduate Students (PLUS), and Federal Consolidation Loans.                       

Direct PLUS Loan:  A federal loan for parents, stepparents, or legal guardians of dependent undergraduate students.

Direct Subsidized Loan Limitation: This limitation (150% of the published length of the student’s program) restricts Direct Subsidized Loan eligibility for undergraduate borrowers. For example, a 2-year Associate's Degree program has a maximum eligibility period of 3.00 years. Only first-time borrowers (a borrower who has no outstanding principal or interest balance on a Direct Loan or Federal Family Education Loan) as of July 1, 2013 are impacted by this limitation.

Disbursement: the release of loan funds to the school for delivery to the borrower.

Disclosure Statement: a statement lenders are required to provide the borrower that discloses the actual cost of a student loan, including the interest rate, loan fees, and any other finance charges.

Dislocated Worker: In general, a person is considered a dislocated worker if he or she meets one of the following conditions: he/she has lost a job, he/she has been laid off or received a layoff notice from a job, he/she is receiving unemployment benefits due to being laid off or losing a job and is unlikely to return to a previous occupation, or he/she is self-employed but is unemployed due to economic conditions or natural disaster.

Due Date (Payment Due Date): The date during the month when your monthly payment must be received.      

ED: U.S. Department of Education.

Educational Cost/Financial Summary: A debt management tool used by Mountain State College that itemizes the student’s costs (tuition, fees, books, etc.) the amount of financial aid received (grants, loans, etc...) and, if applicable, the amount of funding received by the student for living and non-educational purposes.           

Electronic Funds Transfer (EFT): the electronic transfer of Federal Direct or PLUS loan proceeds from the lender to the school.

Eligible Borrower: a borrower or potential borrower who meets federal eligibility criteria for a Federal Direct loan or Federal PLUS loan (in the case of a parent borrower).

Enrollment Period: the first day to the last day of the semester, trimester or quarter used to determine the loan amount.

Enrollment Status: the designation of a student as being full-time, three-quarter time, half­ time, or less than half-time by the institution. Full-time is usually 12 credit hours or more; three­ quarter time, nine or more but less than 12 credit hours; half-time, six or more but less than nine credit hours. Enrollment status can affect a student's eligibility for financial aid.

Entrance Counseling: counseling sessions about loans that students are required by federal regulation to complete before a school delivers federal student loan proceeds; part of the process of educating student borrowers about student loan debt and their rights and responsibilities as a borrower.

Estimated Financial Assistance/Aid (EFA): the institution's estimation of the amount of financial assistance/aid a student is eligible to receive for an enrollment period.

Exit Counseling: part of the loan counseling process of educating student borrowers about their obligation to repay their student loans. All students with educational loans are required by federal regulation to complete an Exit interview before they graduate or otherwise leave school. During the exit interview the FAA reviews the repayment terms of the loan and when repayment begins with the student.

Expected Family Contribution (EFC): the amount a family can reasonably be expected to pay for a student's education, calculated by the Central Processing System based on the information contained on the FAFSA (Free Application for Federal Student Aid) and a federal need-analysis formula used for all students who apply for federal financial aid for the purpose of determining eligibility for financial assistance.   

Expected Graduation Date: the day on which a student would expect to complete their program.

FAA: Financial Aid Administrator.

Federal Direct Loan Program (FDLP): see Direct Loan Program.

Federal Direct Student Loans: loans, both subsidized (need based) and unsubsidized (non- need based), guaranteed by the federal government and available to students to fund higher education.                              

Federal Family Education Loan Program (FFELP): a loan program offering Federal Stafford (both subsidized and unsubsidized) and PLUS loans financed by lenders (banks, savings and loans, credit unions, etc.) and guaranteed by the federal government. Note: As of July 1, 2010, no new loans were made under the FFEL Program.

Federal Financial Aid: financial assistance provided to the student and the family to help them pay for the student's education in the form of grants, work-study and education loans. Federal aid helps to supplement the student/family contribution; the student and family, not the government, are primarily responsible for paying college costs.

Federal Methodology:   formula used to determine an expected family contribution (EFC) for Pell Grants, campus-based programs, and Direct Loan programs.

Federal Pell Grant Program: the largest federal grant program for undergraduates who demonstrate financial need: and have not yet received a bachelor’s degree. The college based on established federal guidelines determines grant eligibility and award amounts.

Federal Perkins Loan:  a low interest loan funded by the federal government and awarded by the school to students with exceptional need.  The school is the lender.

Federal PLUS Loan:  a loan that is not need-based and designed for creditworthy parents/step­-parents or legal guardians of undergraduate students to fund the student's education.

Federal Supplemental  Educational Opportunity Grant Program (FSEOG): a  Campus­-Based  Program that  provides grant assistance to needy undergraduate students. Priority in awarding (FSEOG) funds is given to students who are Federal Pell Grant recipients and have exceptional financial need.

Federal Work-Study (FWS): a Campus-Based, federally funded employment program  that provides paid jobs for students with financial need.

FERPA:  Family Education Rights and Privacy Act of 1974.

Financial Aid:  See Federal Financial Aid.

Financial Aid Administrator (FAA): an individual responsible for preparing and communicating information pertaining to student loans, grants or scholarships and for advising, awarding, counseling, and supervising office functions related to student financial aid.

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.

Financial Aid Probation: The status assigned by the institution to a student who fails to make “SAP” (satisfactory academic progress) and who has appealed to (appeal is required) and has had eligibility for the Title VI aid reinstated.

Financial Aid Warning:  The status assigned to  a  student who  fails to  make "satisfactory academic progress" (SAP) at an institution that evaluates SAP at the end of each payment period.  The student may continue to receive Title IV aid for one payment period. No appeal is necessary.

Financial Need: the  difference  between total  college costs and the Expected  Family Contribution (EFC).

Fixed Interest: Interest rates that do not change for the life of the loan.

Forbearance: a period of time during which the borrower is permitted to temporarily  cease making payments or reduce the amount of the payments.  Some forbearances are entitlements for eligible borrowers others are completely at the discretion of the loan holder/servicer. The borrower is liable for the interest that accrues on the loan during the forbearance period.

Free Application For Federal Student Aid (FAFSA): the form that  must  be completed  by students and parents applying for federal student aid.  This form must be completed each year that a student attends college.

 Garnishment: the practice of withholding a portion of a defaulted borrower's wages to repay his/her student loan, without their consent.

Gift Aid: the types of financial aid that do not require repayment or work to be performed.

Grace Period: a period of time that begins when a student graduates or drops below half-time status, ends the day before the repayment period begins, and during which payments are not required.                    

GPA: Grade Point Average.

Grants: type of financial aid awarded on the basis of need that does not have to be repaid.

Guarantee Agency or Guarantor (FFELP):  a state or private non-profit agency responsible for approving student loans and insuring them against default. A guaranty agency serves a key function in the life of a student loan. Guaranty protects lenders from loss in the event of the borrower's death, disability, or default. The FFEL Program ended July 1, 2010.

Holder: the lender, institution or agency that holds legal title to a loan. The holder may be the bank that issued the loan, a secondary market that purchased the loan from the bank, or a guarantee agency (if the borrower defaulted on the loan).

Independent Student: a student who meets one or more of the criteria listed on the Free Application for Federal Student Aid (FAFSA) that classifies a student as independent for Title IV purposes. A student also may be classified as independent if a financial aid administrator determines and documents that the student is independent based on his or her professional judgment of the student's unusual circumstances.

Institutional Student Information Report (ISIR):  a record  produced  by  the  Central Processing System and sent to the institution indicating the student's calculated Expected Family Contribution (EFC).

Interest: a percentage of the principal loan amount that is charged as a fee for borrowing money. The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan.          

Interest Only Payment: a payment that covers only accrued interest owed on a loan and none of the principal.  Borrowers are not prohibited from making additional or larger payments at anytime.           

Interest Rate: the current rate at which interest is calculated on your student loan(s).

Legal Dependent: any child of the student who receives more than half of their support from the student (the child does not have to live with the student), including a biological or adopted child. Also, any person, other than a spouse, who lives with the student and receives more than half of his or her support from the student now and will continue to receive more than half of his or her support from the student through (for the 2013-2014 award year) June 30, 2014.

Lender (Originator): the financial institution (a bank, credit union, savings and loan association, or the U.S. Department of Education) that makes loans to students.

Loan: a type of financial assistance that must be repaid with interest.

Loan (Origination) Fee: a fee payable by the borrower that is deducted proportionately from each loan disbursement and paid to the federal government to partially offset the cost of the loan.  

Loan Period: the student’s enrollment period for which the student loan is approved to pay educational expenses.

Loan Principal: the amount of money owed on which interest accrues.

Loan Rehabilitation: The process of bringing a loan out of default and removing the default notation on a borrower's credit report.

Loan Servicer:  See Servicer.

Master Promissory Note (MPN): a legally binding agreement the borrower signs to obtain a loan under the Federal Direct, Graduate/Professional PLUS and PLUS (parent/stepparent or legal guardian) Loan Program, in which the borrower promises to repay the loan with interest in periodic installments. The agreement also includes information about any grace period, deferment, or cancellation provisions and the student's rights and responsibilities with respect to the loan.        

Maximum Eligibility Period: 150% of the published length of the educational program in which a borrower is currently enrolled and eligible for a Direct Subsidized loan (applies only to new borrowers on or after July 1, 2013).

Merit-Based Assistance: any form of financial aid awarded based on accomplishments, such as academic performance, and not on demonstrated financial need.

National Student Loan Data System (NSLDS): the U.S. Department of Education's database for federal student financial aid where schools and students can get information on federal loan and Pell Grant amounts, outstanding balances, the status of your loans and disbursements made. Borrowers can access their own information online using their Department of ED PIN at                        

Need-Based Financial Aid:  aid awarded based on the student's or family's financial situation.

Need Analysis: a set of financial criteria and standards established by the U.S. Department of Education and approved by Congress that is used to determine a student's financial need for need-based programs.

Non-Traditional Student:  A student over the age of 24 attending a post-secondary institution for the first time or returning to school after several years.

Origination Fee:  see Loan Fee.

Outside Resource: aid or benefits available because a student is in school and is counted after need is determined (i.e., prepaid tuition plans and VA educational benefits).

Overpayment: any amount paid to a student that is in excess of the amount she/he was entitled or eligible to receive. 

Packaging: the process of combining various types of student aid (grants, loans, scholarships, and employment) to attempt to meet a student's need.

Past Due (also called the Delinquent Amount): The amount you were scheduled to pay in a previous month/months but did not. Past due amounts are due immediately.

Payment Due Date: The date during the month when payment of your current due amount must be received.  Monthly payments must be received by the payment due date.

Payment Period: period defining when the school delivers Title IV funds to students.

Period of Enrollment:  the academic period for which a student loan is intended.

PIN (Personal Information Number): The U.S. Department of Education universal identifier that acts as your digital signature to electronically sign  your  FAFSA  and  Master  Promissory Note online and allows you access to personal information in various Dept. of ED (i.e., NSLDS) systems.  If you do not have a PIN, you can request on online at

PLUS Loan:  see Federal PLUS loan.

Prepayment: a payment received when the borrower is not required to make either principal or interest payments or when the borrower makes payment that is greater than the amount of the borrower's regular installment or the amount due. There is never a penalty for prepaying your student loan(s).

Principal:  the amount of money borrowed or remaining unpaid on a loan.  Interest is charged as a percentage of the principal. Default and origination fees may be deducted from this amount before disbursement.

Probation:  see Academic Probation.

Professional Judgment: for need-based federal aid programs, the financial aid administrator can adjust the EFC (expected family contribution), adjust the COA (cost  of  attendance),  or change the student's dependency status (with documentation) when extenuating circumstances exist.

Promissory Note:  the legal and binding contract a borrower signs promising to repay a loan.

Rehabilitation: see Loan Rehabilitation.

Remaining Eligibility Period: The difference between the Maximum Eligibility Period (150% of the published length of the educational program the borrower is currently enrolled) and the Subsidized Usage Periods (periods of time for 'which the borrower received Direct Subsidized loans).

Renewal Application:  a FAFSA application that is used after the initial FAFSA has been filed to apply for subsequent years of financial assistance.

Repayment Period: the period during which payments of principal and interest are required. The repayment period follows any applicable in-school or grace period and excludes any period of authorized deferment or forbearance.

Repayment Plan: An agreed schedule (i.e., standard, graduated, etc.)  between a  borrower and a servicer on repayment of a loan.

Repayment Schedule:  the repayment schedule is a plan that indicates the total principal and interest due, the amount and number of installments required to pay the loan in full, the interest rate for the loan(s) included on the schedule, and the frequency and due date of installments.

Repayment Terms: The number of months it will take to repay your federal student loan(s) under a specific repayment plan.

Satisfactory Academic Progress (SAP): a satisfactory rate of student completion and an eligibility requirement to continue to receive federal student aid determined using qualitative and quantitative measurements. Each school establishes its own satisfactory progress standards. To remain eligible for most types of financial aid students must maintain SAP as defined by the postsecondary institution.

Scheduled Academic Year (SAY): a fixed period of time that generally begins and ends at the same time each calendar year (i.e., beginning on the first day of the fall semester and ending on the last day of the spring semester).

Scholarship: a form of gift aid that does not have to be repaid. To search for scholarships on the Web try,, or

Secondary Market: a state or private agency that purchases Stafford and PLUS loans from originating lenders. If your loan is sold, you will be notified in writing. Your obligation to the loan agreement does not change; you must direct future correspondence to the new holder.

Self-Help Assistance: funds provided through the work and effort of the student, including savings, income from present earnings, or a loan to be repaid.

Self-Help Expectation:   the assumption that a student has an obligation to help pay for a portion of his/her education: 

Separation Date: The date a borrower graduates or stops attending school at least half-time, which triggers the start of the grace period.    

Servicer: an outside organization that administers student loans. A servicer performs tasks (i.e., processing loan applications, answering customer service phone calls, processing loan payments, and collecting delinquent accounts) on behalf of the lender. If your lender transfers your loan to a servicer, you will be informed by mail. Your responsibilities and obligations to repay do not change. You make your loan payment to the servicer, not your lender, and you must keep the servicer informed of your current name, address (physical and/or e-mail), phone number, etc.

State Aid: Financial assistance/aid programs funded and administered by the state.

Statement of Educational Purpose: a statement signed by the student financial aid recipient indicating his/her agreement to use all of the financial assistance funds awarded for education or educationally-related purposes only.            

Student Aid Report (SA): the official notification/report sent to the student that has your FAFSA results and details all the information you provided on your FAFSA.

Student Expense Budget: (called "cost of attendance" in Title IV of the Higher Education Act) is an estimated amount of what it will cost a student to attend a specific school for an academic year that is used to calculate a student's need for federal financial aid.

Subsidized Loans: loans: based on financial need. The government pays a subsidy (a sum granted to pay the interest on a subsidized loan) for borrowers while they are in school, during grace and deferment periods.

Subsidized Usage Period: Period of time for which a borrower received Direct Subsidized loans. A new Direct loan borrower on or after July 1, 2013 may not receive Direct Subsidized loans for more than 150%: of the published length of the educational program in which the borrower is enrolled. For example: The "maximum eligibility period" for a 2-year Associate's Degree is 3 years.

Term:  Division of the school year during which classes are in session (i.e., the fall term, spring term, etc.). Term may be used as a synonym for quarter, semester, or trimester.

Title IV: federal financial aid programs for students attending postsecondary educational institutions, authorized under Title IV of the Higher Education Act of 1965, as amended (HEA). Title IV programs consist of: grants, work-study and loans.

Title IV Loans: education loan programs created by Title IV of the Higher Education Act of 1965 collectively referred to as the Federal Family Education Loan Program (FFELP) including: the Federal Direct (William D Ford) and FFEL (Stafford) Loans (subsidized and unsubsidized), Federal PLUS Loans (for parents, step-parents, legal guardian(s) of dependent students) and Federal Consolidation Loans.

Total Amount Repaid:  the total amount (principal and interest) you would be expected to pay over the life of your loan(s) .

Unmet Need: the gap between the Cost of Attendance (COA) and the student's available resources.

Undergraduate Student:  a degree-seeking student at a college or university who has not earned a first bachelor's degree.

Unsubsidized Loans: non-need based loans available to borrowers. Unsubsidized loan borrowers are responsible for paying interest during in-school, grace, deferment periods, and repayment.

US Department of Education (ED or USDE): the government agency that administers federal student financial aid programs, including the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loan, the FFEL (Stafford) and Federal Direct (Wm D Ford) Loans and the Federal PLUS Loans.

VA: Veterans Administration, now the Department of Veterans Affairs (DVA).

Variable-fixed Interest: an interest rate that changes each year based on the market; but once a loan is made at a given interest rate, it is locked in for the life of the loan.

Variable Interest:  the rate of interest charged on a loan that changes annually and fluctuates with a stated index. Rates on variable-rate federal education loans are adjusted annually on July 1.                    

Verification: a review process of confirming information submitted on student aid applications thorough the comparison of specified documents to the data on the Student Aid Report.

Verification Worksheet:  a form provided by the college to students who are selected for FAFSA data verification by the Department of Education's Central Processing System or the school.

Veteran: a student who (1) has engaged in active service in the U.S. Armed Forces (Army, Navy, Air Force, Marines, .or Coast Guard), or. has been a member of the National Guard or Reserves who was called -to active duty for purposes other than training, or was a cadet or midshipman at one of the service academies, or attended a U.S. military academy preparatory school, and (2) was released under a condition other than dishonorable. A veteran is also a student who does not meet this condition now but will by June 30, 2014.

Withdrawal: The termination of a student's attendance in a class or in all classes before the end of the term or upon the failure of the student to return from a leave of absence.