Are you tired of TLA? (three letter acronyms) We are, too. This definition of terms helps you sort through the financial aid language.

Student Aid Definitions:

Accruing Interest (on a loan): The cost of the loan, represented by the interest rate, is adding up prior to the repayment period or prior to a payment installment.

ACT: A standardized achievement examination for college admissions in the United States. It measures high school students' general educational development and their capability to complete college-level work

Action Programs Deferment: A deferment in which the borrower is serving as a full-time paid volunteer with an organization participating in a program authorized under Title 1 of the Domestic Volunteer Act of 1973 (ACTION programs).

Adjusted Gross Income (AGI): All taxable income as reported on a U.S. income tax return.

Advanced Placement (AP): Credit and/or advanced standing in certain course sequences that postsecondary institutions may offer to high school students who have taken high-level courses and passed certain examinations.

Alternative Loan Repayment Schedule: CRepayment schedule composed of a fixed monthly schedule, a graduated schedule or an income-sensitive schedule. The minimum monthly payment will be $50.00, or the amount of interest due and payable--which ever is larger.
For this type of schedule, the maximum length of the repayment period ranges from 10 years to 30 years. Your Promissory Note´s Terms and Conditions will provide you with the maximum term allowed.

Annual Percentage Rate (APR): What you pay each year to use the money you were lent; the cost of obtaining a loan at a yearly rate.

Armed Forces / Public Health Service Deferment: Deferment in which the borrower is on active duty status in the United States Armed Forces or serving full time as an officer in the commissioned Corps of the Public Health Service.

Army College Fund: A program that provides Army enlistees educational benefits to attend college.

Army Reserve Student Loan Repayment Program: Student loan repayment program available to Army Reservists; amount of repayment is based on years of service and job specialty.

Assets: Cash on hand in checking and savings accounts; trusts, stocks, bonds, investments, other securities; real estate (excluding home), and income-producing property considered in determining Expected Family Contribution (EFC).

Associate's Degree: A degree given for successful completion of some courses of study at a two-year college.

Award Letter: A means of notifying successful financial aid applicants of the assistance being offered from a college. The award letter usually provides information on the types and amounts of aid offered, as well as specific program information, student responsibilities, and the conditions which govern the award. Generally provides students with the opportunity to accept or decline the aid offered. (See Financial Aid Notification)

Bachelor's Degree: The degree given for successful completion of the undergraduate curriculum at a four-year college or a university. Also called a baccalaureate degree.

BIA Grant: See Bureau of Indian Affairs Grant.

Borrower: Person to whom a loan is made and who contractually responsible to repay the loan.

Budget: See Cost of Attendance.

Bureau of Indian Affairs (BIA) Grant: A federal grant program administered by the Bureau of Indian Affairs for needy students who are members of an Indian, Eskimo, or Aleut tribe and enrolled in accredited institutions in pursuit of an undergraduate or graduate degree. Limited funding is available.

Business Assets: Property that is used in the operation of a trade or business, including real estate, inventories, buildings, machinery and other equipment, patents, franchise rights, and copyrights considered in determining an Expected Family Contribution (EFC) under the regular formula.

Byrd Scholarship: A federally sponsored, merit-based scholarship for outstanding high school students.

Campus-based Programs: The term commonly applied to those U.S. Department of Education federal student aid programs administered directly by institutions of postsecondary education. Includes: Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Work-Study (FWS) programs.

Capitalization (of interest): The arrangement between borrower and lender whereby interest payments are deferred as they come due and are added to the principal amount of the loan.

Central Processing System (CPS): The computer system to which the student's need analysis data is electronically transmitted by the FAFSA processor. The Central Processing System performs database matches, calculates the student's official Expected Family contribution (EFC), and sends out the Student Aid Report (SAR).

Certificate: The formal acknowledgment of successful completion of a particular program or course of study, particularly in a vocational school, trade school, or junior college.

CLEP: See College Level Examination Program.

COA: See Cost of Attendance.

College Level Examination Program (CLEP): A series of examinations demonstrating a student's proficiency in a subject area, for which some postsecondary institutions offer credit.

Commuter Student: A student who does not live on campus; typically, "commuter" refers to a student living at home with his or her parents, but can also mean any student who lives off-campus.

Consolidation Loan: A loan made to enable a borrower with different types of loans to obtain a single loan with one interest rate and one repayment schedule. Federal Perkins, Federal Stafford (subsidized and unsubsidized), Direct Subsidized and Direct Unsubsidized, Health Education Assistance Loans (HEAL), Health Professions Student Loans, and Loans for Disadvantaged Students may be combined for purposes of consolidation, subject to certain eligibility requirements. A consolidation loan pays off the existing loans; the borrower then repays the consolidated loan.

Cooperative Education: A program through which a college student alternates periods of classroom instruction with periods of related employment.

Cost of Attendance (COA): Generally, this includes the tuition and fees normally assessed a student, together with the institution's estimate of the cost of room and board, transportation and commuting costs, books and supplies, and miscellaneous personal expenses. In addition, student loan fees, dependent care, reasonable costs for a study abroad or cooperative education program, and/or costs related to a disability may be included, when appropriate. Also referred to as "cost of education" or "budget."

Cosigner: Person who is contractually responsible to repay the loan in the event the borrower fails to do so.

CPS: See Central Processing System.

Credit (or Credit Hour): The unit of measurement some institutions give for fulfilling course requirements.

Custodial Parent: The parent with whom the dependent student lives, and whose financial information is used in the need analysis when parents are divorced or separated.

Default: Failure to pay your loan according to the terms disclosed on your promissory note. You’re in default on a FFELP loan if your payments are more than 270 days past due or if you fail to comply with any other terms of the loan. It’s the same with private loans. You are in default on a Private Loan held by SLFC if your payments are more than 180 days past due or if you fail to comply with any other terms of the loan.

Deferment (of loan): A condition during which payments of principal are not required, and, for Federal Perkins and subsidized Federal Stafford and Direct Subsidized Loans, interest does not accrue. The repayment period is extended by the length of the deferment period.

Delinquent: A loan is considered delinquent if a payment has not been received by the day after the payment due date. Delinquencies greater than 30 days are reported to national credit bureaus.

Department of Education, U.S. (ED): The federal government agency that administers assistance to students enrolled in postsecondary educational programs under the following programs: Federal Pell Grant, Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), Federal Family Education Loan (FFEL) Programs, and William D. Ford Federal Direct Loan (Direct Loan) Program.

Departmental Scholarship: An award of gift assistance that is specifically designated for a recipient in a particular academic department within the institution.

Dependent Student: A student whose parental income and asset information is used in calculating an Expected Family Contribution (see Independent Student).

Direct PLUS Loan: Long-term loans made available to parents of dependent students. Interest rates are linked to 52-week Treasury bill rates, but may not exceed 9%. May be used to replace EFC; amount borrowed is limited to the cost of attendance minus estimated financial assistance.

Direct Subsidized and Direct Unsubsidized Loans: Long term, low-interest loans administered by the Department of Education and institutions. Variable interest rate not to exceed 8.25%. Direct Unsubsidized Loans can be used to replace EFC.

Disbursement: When funds are released to the school for delivery to the borrower. Funds may be disbursed by individual check, master check, or electronic funds transfer (EFT). The disbursement is usually made in at least two equal installments.

Economic Hardship Deferment: Deferment in which the borrower must meet requirements set forth by the Federal Government based upon income guidelines and total federal education debt, or be receiving payment under a federal or state public assistance program, or serving as a Peace Corps volunteer and not eligible for the Peace Corps deferment.

Educational Benefits: Funds, primarily federal, awarded to certain categories of students (veterans, children of deceased veterans or other deceased wage earners, and students with physical disabilities) to help finance their postsecondary education regardless of their ability to demonstrate need in the traditional sense.

Educational Expenses: See Budget and Cost of Attendance.

EFC: See Expected Family Contribution.

Eligible Non-Citizen: A permanent resident of the United States who is able to present evidence from the Immigration and Naturalization Service that he or she is in the US for other than a temporary purpose with the intention of becoming a citizen or permanent resident.

Employment: With reference to financial aid, the opportunity for students to earn money to help pay for their education. Federal Work-Study is one program by which needy students can work to defray their educational expenses.

Expected Family Contribution (EFC): The amount a student and his or her family are expected to pay toward the student's cost of attendance as calculated by a Congressionally-mandated formula known as Federal Methodology. The EFC is used to determine a student's eligibility for the student financial assistance programs.

FAFSA: See Free Application for Federal Student Aid.

Federal Family Education Loan (FFEL) Programs: The collective name for the Federal Stafford (subsidized and unsubsidized), Federal PLUS Loan, and Federal Consolidated Loan programs. Funds for these programs are provided by private lenders and the loans are guaranteed by the federal government.

Federal Need Analysis Methodology: A standardized method for determining a student's (and family's) ability to pay for postsecondary education expenses; also referred to as Federal Methodology (FM). The single formula for determining an Expected Family Contribution (EFC) for Pell Grants, campus-based programs, FFEL programs, and Direct Loan program; the formula is defined by law.

Federal Pell Grant: A federal grant program for needy postsecondary students who have not yet received a baccalaureate or first professional degree; administered by the U.S. Department of Education.

Federal Perkins Loan: One of the campus-based programs; a long term, low interest loan program for both undergraduate and graduate students with a fixed interest rate. May also be called the Carl D. Perkins National Direct Student Loan Program.

Federal PLUS Loan (FPLUS): Long-term loans made available to parents of dependent students. Interest rates are fixed. May be used to replace EFC; annual amount borrowed limited to the cost of attendance minus estimated financial assistance.

Federal Stafford Loan (subsidized and unsubsidized): Long term, low interest loans administered by the Department of Education through private guarantee agencies. Formerly known as Guaranteed Student Loans (GSLs). Interest rates are fixed. Unsubsidized Federal Stafford Loans may be used to replace EFC.

Federal Supplemental Educational Opportunity Grant (FSEOG): One of the campus-based programs; grants to undergraduate students of exceptional financial need who have not completed their first baccalaureate degree and who are financially in need of this grant to enable them to pursue their education. Priority for FSEOG awards must be given to Federal Pell Grant recipients with the lowest EFCs.

Federal Work-Study Program (FWS): One of the campus-based programs; a part-time employment program which provides jobs for undergraduate and graduate students who are in need of such earnings to meet a portion of their educational expenses.

FFELP: See Federal Family Education Loan Programs.

Financial Aid: General term that describes any source of student assistance outside the student or the student's family. Funds awarded to a student to help meet postsecondary educational expenses. These funds are generally awarded on the basis of financial need and include scholarships, grants, loans, and employment.

Financial Aid Administrator: An individual who is responsible for preparing and communicating information pertaining to student loans, grants or scholarships, and employment programs, and for advising, awarding, reporting, counseling, and supervising office functions related to student financial aid. Accountable to the various publics which are involved and is a manager or administrator who interprets and implements federal, state, and institutional policies and regulations, and is capable of analyzing student and employee needs and making changes where necessary.

Financial Aid Award: An offer of financial or in-kind assistance to a student attending a postsecondary educational institution. This award may be in the form of one or more of the following types of financial aid: repayable loan, a non-repayable grant and/or scholarship, and/or student employment.

Financial Aid Consultant: A person who, for a fee, provides a variety of services to students and parents, including preparing the FAFSA and other financial aid forms, estimating the Expected Family Contribution (EFC), and estimating financial need.

Financial Aid Notification: The letter from the postsecondary institution that lets the student know what aid has been awarded. The notification also describes the financial aid package. State agencies and private organizations may send students financial aid notifications separately from the postsecondary institution.

Financial Aid Package: A financial aid award to a student comprised of a combination of forms of financial aid (loans, grants and/or scholarships, employment).

Financial Need: The difference between the institution's cost of attendance and the family's ability to pay (i.e., Expected Family Contribution). Ability to pay is represented by the expected family contribution for federal need-based aid and for many state and institutional programs.

Financial Need Equation: Cost of attendance minus Expected Family Contribution equals financial need (COA - EFC = Need).

Forbearance: Permitting the temporary cessation of repayments of loans, allowing an extension of time for making loan payments, or accepting smaller loan payments than were previously scheduled.

Free Application for Federal Student Aid (FAFSA): The financial aid application document completed by the student, and the student's parents if applicable, that collects household and financial information. The FAFSA is the foundation document for all federal need analysis computations and database matches performed for a student.

FSEOG: See Federal Supplemental Educational Opportunity Grant.

Full time Student Deferment: Deferment in which the borrower, or the dependent student for whom the loan was borrowed, is enrolled as a full-time student at an eligible institution.

Gift Aid: Educational funds such as grants or scholarships that do not require repayment from present or future earnings. See Grant

Grace Period: The period of time that begins when a loan recipient ceases to be enrolled at least half-time and ends when the repayment period starts. Loan principal need not be paid and, generally, interest does not accrue during this period.

Graduate Fellowship Deferment: Deferment in which the borrower must be studying in an eligible graduate fellowship program.

Graduated Repayment Schedule: A repayment schedule under which the amount of the borrower's installment payment is scheduled to change (usually be increasing in two or more increments) during the course of the repayment period. The graduated repayment schedule cannot exceed 10 years, excluding school, grace, deferment, or forbearance periods.

Grant: A type of financial aid that does not have to be repaid; usually awarded on the basis of need, possibly combined with some skills or characteristics the student possesses. Also see Gift Aid.

Gross Income: Your income before taxes and deductions; what you actually get to keep.

Guarantor (or Guaranty Agency): A state or private nonprofit organization that has an agreement with the U.S. Secretary of Education to administer a loan guarantee program under the Higher Education Act.

Health and Human Services, U.S. Department of (HHS): The section of the federal government that provides assistance to future health care practitioners. The Nursing Student Loan, Health Profession Student Loan, and Health Education Assistance Loan are among some of the aid programs administered by HHS.

Half-Time Student Deferment: Deferment in which the borrower, or the dependent student for whom the loan was borrowed, is enrolled half-time at an eligible institution.

Health Professions Programs: Federal student assistance programs administered by the U.S. Department of Health and Human Services for students preparing for careers in the health sciences.

Income: Amount of money received from any or all of the following: wages, interest, dividends, sales or rental of property or services, business or farm profits, certain welfare programs, and subsistence allowances such as taxable and non-taxable social security benefits and child support.

Independent Student: A student who: (a) will be 24 years of age or who: (b) is an orphan or a ward of the court; (c) is a veteran; (d) is married or is a graduate or professional student; (e) is providing 50% or more of the support for legal dependents other than a spouse; or (f) presents documentation of other unusual circumstances demonstrating independence to the student financial aid administrator.

Internship/Residency Deferment: Deferment in which the borrower is serving in an internship program that is required to receive professional recognition in order to begin professional practice or service, OR serving in a medical internship or residency training program that leads to a degree or certificate awarded by an institution of higher education, hospital, or a health care facility that offers postgraduate training.

Investment Plans: Educational savings programs, usually sponsored by commercial banking institutions.

Interest: The charge made to a borrower for use of a lender's money. Interest is typically computed as an annual percentage of the principal amount outstanding.

Interim Period: The time during which a student is enrolled, at least on a half-time basis, at an eligible school--plus the applicable grace period.

In-School Period: Time during which a student is enrolled, at least on a half-time basis, at an eligible school.

Lender: A bank or company providing loan funds.

Loan: An advance of funds evidenced by a promissory note and requiring the recipient to repay the specified amount(s) under prescribed conditions.

Loan Repayment Program: A special program available to qualified students who have attended college on federally-funded student loans.

Merit-based Aid: Student assistance awarded because of a student's achievement or talent in a particular area, such as academics, athletics, music, etc.

Military Deferment: Deferment in which the borrower is serving under National Guard duty during war, other military operations, or national emergencies.

Military Scholarships: Reserve Officer Training Corps (ROTC) scholarships available for the Army, Navy, and Air Force at many colleges and universities throughout the United States. These scholarships cover tuition and fees, books and supplies, and include a subsistence allowance.

National Health Service Corps Scholarship (NHSC): Scholarship program for students who pursue full-time courses of study in certain health professions disciplines, and are willing to serve as primary care practitioners in underserved areas after completing their education.

National and Community Service: A program established through the National and Community Service Trust Act of  1993 designed to reward individuals who provide community service with educational benefits and/or loan forgiveness or cancellation.

National Oceanic Atmospheric Administration (NOAA):Deferment in which the borrower is on active duty in the NOAA.

Need: See Financial Need.

Need Analysis: A formula by which a student applicant's ability to pay for educational expenses is evaluated and calculated. Need analysis is determination of an estimate of the applicant's and/or family's ability to contribute to educational expenses.

Need-based Aid: Student assistance awarded because a student's financial circumstances would not permit him or her to afford the cost of a postsecondary education.

Non Need-based Aid: Aid based on criteria other than need, such as academic, musical, or athletic ability. Also, refers to federal student aid programs where the expected family contribution (EFC) is not part of the need equation.

Origination Fee: Fee paid to the lender to compensate them for the cost of administering the loan.

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

Parent Contribution: A quantitative estimate of the parents' ability to contribute to postsecondary educational expenses.

Parent Loan: See Federal PLUS Loan.

Parental Leave Deferment: Deferment in which the borrowers are pregnant or caring for their newborn or newly adopted child and currently not working full-time or attending school. Borrowers must also have attended school at least half-time during the 6 months before the deferment begins.

Peace Corps Deferment: Deferment in which the borrower is serving as a full-time volunteer under the Peace Corps Act.
Principal (of a loan): The amount of money borrowed through a loan; does not include interest or other charges, unless they are capitalized.

Prime Rate: Prime Current Index is the Prime Rate as published in the Wall Street Journal under the "Money Rates" section on the first published date in the last month of each preceding calendar quarter. The interest rates for some private education loans are tied to the Prime Rate.

Private Loans: Education loans not authorized by the Federal Family Education Loan Program (FFELP). These loans are used to cover the cost of education in addition to FFELP loans.

Professional Judgment (PJ): Aid administrator discretion, based on special circumstances of the student, to change data elements used in determining eligibility for federal student aid.

Promissory Note: The legal document which binds a borrower to the repayment obligations and other terms and conditions which govern a loan program.

PSAT Reasoning Test: Most reference this as Preliminary SAT which allow high school sophomore and junior students to take this test and their scores are used to determine eligibility for the National Merit Scholarship Program.

Rehabilitation Training Deferment: Deferment in which the borrower, or the dependent student for whom the loan was borrowed, must be receiving, or scheduled to receive, rehabilitation training services under a licensed or certified program preventing the borrower, or dependent, from engaging in at least 30 hours of work per week.

Renewal FAFSA: One type of FAFSA which resembles a SAR and has the same questions as the FAFSA. The Renewal FAFSA has the student's prior year responses to certain data items which are likely to remain constant from year to year.

Repayment Period:The period during which payments of both principal and interest are required. The repayment period follows any applicable school or grace period.

Repayment Schedule: A plan that is provided to the borrower at the time he or she ceases at least half-time study. The plan should set forth the principal and interest due on each installment and the number of payments required to pay the loan in full. Additionally, it should include the interest rate, the due date of the first payment, and the frequency of payments.

Reserve Officer Training Corps Scholarship Program: See ROTC Scholarship Program.

ROTC Scholarship Program: Competitive scholarship that pays for tuition, fees, books and a monthly living stipend and other benefits in exchange for participating in drills and classes during the academic year, military camp during the summer, and, upon graduation, full-time active duty in the military for at least four years.

SAR: See Student Aid Report.

SAT Reasoning Test: Most reference this as SAT which purpose is a standardized test for college admissions in the United States. It measures critical thinking skills that are needed for academic success in college.

Scholarship: A form of financial assistance that does not require repayment or employment and is usually made to students who demonstrate or show potential for distinction, usually in academic performance.

Scholarship Search Services: Organizations that claim to help students find little-known and unused financial aid funds. Families who are interested is using such a service should carefully investigate the company first.

Service Academy: The five postsecondary institutions administered by branches of the military [U.S. Military Academy, U.S. Air Force Academy, U.S. Naval Academy, U.S. Coast Guard Academy, U.S. Merchant Marine Academy].

Simplified Needs Test: An alternate method of calculating the expected family contribution for families with adjusted gross incomes of less than $50,000, who have filed, or are eligible to file, an IRS Form 1040A or 1040EZ, or are not required to file an income tax return. Excludes all assets from consideration.

Standard Repayment Schedule:Repayment schedule under which the borrower pays the same amount monthly for the entire repayment period. The standard repayment schedule cannot exceed 10 years, excluding school, grace, deferment, or forbearance periods.

Student Aid Report (SAR): The official notification sent to a student as a result of the Central Processing System (CPS) receiving an applicant record (via FAFSA) for the student. The SAR summarizes applicant information, an Expected Family Contribution for the student, and displays other special messages related to the student's application.  In some instances the SAR may need to be submitted to the financial aid office at the school the student plans to attend, but only if the school requests it.

Student Contribution: A quantitative estimate of the student's ability to contribute to postsecondary expenses for a given year.

Supplementary Loan for Students (SLS): Federal loans for financially independent students. This program was eliminated in 1994 with the creation of the Unsubsidized Stafford Loan program.

Taxable Income: Income earned from wages, salaries, and tips, as well as interest income, dividend income, business or farm profits, and rental or property income.

Teacher Shortage Deferment: Deferment in which the borrower is teaching full-time in a public or non-profit private elementary or secondary school in a teacher shortage area defined by the U.S. Department of Education.

Temporary Total Disability Deferment: Deferment in which the borrower is temporarily totally disabled for a period of at least 60 days or unable to secure or continue employment because the borrower is caring for a dependent or spouse who is temporarily totally disabled for a period of at least 90 days.

Treasury Bill Rate: Refers to the auction rates determined for Treasury Bills by the public auction held by the United States Treasury Department. The interest rates for some education loans are tied to the auction rates held at certain times of the year.

Tuition Payment Plans: A strategy by which payment for present costs of postsecondary education is extended into a future period of time.

Unmet Need: The difference between a student's total cost attendance at a specific institution and the student's total available resources.

Unemployment Deferment: Deferment in which the borrower is conscientiously seeking, but unable to find, full-time employment in the United States in any field or at any salary or responsibility level.

Untaxed Income: All income received that is not reported to the Internal Revenue Service or is reported but excluded from taxation. Such income would include but not be limited to any untaxed portion of Social Security benefits, Earned Income Credit, welfare payments, untaxed capital gains, interest on tax-free bonds, dividend exclusion, and military and other subsistence and quarters allowances.

Variable Interest Rate: Interest rates that change periodically (quarterly, annually, etc.). The type of interest rate, as well as the frequency a variable rate is adjusted, is specified in the promissory note or on notice of guarantee for FFELP loans.
The interest rates for variable rate FFELP loans are set by the government each year and change annually on the first of July. The interest rates for private loans serviced and owned by SLFC change quarterly on the first day of January, April, July and October.

Veterans Educational Benefits: Assistance programs for eligible veterans and/or their dependents for education or training.

Vocational Rehabilitation: Programs administered by state departments of vocational rehabilitation services to assist individuals who have a physical or mental disability which is a substantial handicap to employment.

Volunteer Service Deferment: Deferment in which the borrower must be serving as a full-time volunteer in a tax-exempt organization for at least one year.

William D. Ford Federal Direct Loan (Direct Loan) Program: The collective name for the Direct Subsidized, Direct Unsubsidized, Direct PLUS Loan, and Direct Consolidation Loan Programs. Loan funds for these programs are provided by the federal government to students and parents through postsecondary institutions that participate in the program. With the exception of certain repayment options, the terms and conditions of loans made under the Direct Loan Program are identical to those made under the FFEL program.

Working Mother Deferment: The borrower is the mother of a preschool age child, entered or re-entering the work force, and receiving wages of no more than $1.00 per hour more than the minimum wage.

Abbreviations Commonly Used in Financial Aid Administration

ACT: American College Testing Program

AGI: Adjusted Gross Income

BA: Bachelor's Degree

BIA: Bureau of Indian Affairs

CLEP: College-Level Examination Program

COA: Cost of Attendance

CPS: Central Processing System

ED: Education Department, U.S.

EFC: Expected Family Contribution

FAFSA: Free Application for Federal Student Aid

FFELP: Federal Family Education Loan Program

FPLUS: Federal PLUS (Parent) Loan

FSEOG: Federal Supplemental Educational Opportunity Grant

FWS: Federal Work-Study

GPA: Grade Point Average

HHS: Department of Health and Human Services

IRS: Internal Revenue Service

PC: Parental Contribution

ROTC: Reserve Officer Training Corps

SAR: Student Aid Report

SC: Student Contribution