Adjusted Available Income:Â The portion of family income remaining after deducting federal, state, and local taxes, a living allowance, and other factors used in the Federal Need Analysis Methodology.
Adjusted Gross Income (AGI): All taxable income as reported on a U.S. income tax return.
Assets:Â Cash on hand in checking and savings accounts; trusts, stocks, bonds, other securities; real estate (excluding home), income-producing property, business equipment, and business inventory. Considered in determining Expected Family Contribution (EFC).
Award Letter:Â A means of notifying successful financial aid applicants of the assistance being offered. 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)
Budget:Â See Cost of Attendance.
Business Assets:Â 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.
Capitalization (of interest):Â 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.
COA:Â See Cost of Attendance.
Consolidation Loan:Â 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.
Cost of Attendance (COA):Â 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.”
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.
Deferment (of loan):Â 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.
Dependent Student:Â A student who does not qualify as an independent student and whose parental income and asset information is used in calculating an Expected Family Contribution (see Independent Student).
Educational Benefits:Â 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:Â See Budget and Cost of Attendance.
EFC:Â See Expected Family Contribution.
Exit Counseling:Â Students who have received federal loans will receive loan exit counseling if they are graduating, leave school, or enroll less than half time. The exit process provides information about loan repayment and the rights and responsibility of a borrower.
Expected Family Contribution (EFC):Â 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:Â See Free Application for Federal Student Aid.
Federal Family Education Loan (FFEL) Programs:Â 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:Â 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:Â 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 PLUS Loan (FPLUS):Â Long-term loans made available to parents of dependent students. Interest rates but may not exceed 9%. 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):Â Long term, low interest loans administered by the Department of Education through private guarantee agencies. Formerly known as Guaranteed Student Loans (GSLs). Variable interest rate, not to exceed 8.25%. Unsubsidized Federal Stafford Loans may be used to replace EFC.
Federal Supplemental Educational Opportunity Grant (FSEOG):Â 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):Â 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.
Financial Aid:Â 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 Award:Â 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 Package:Â A financial aid award to a student comprised of a combination of forms of financial aid (loans, grants and/or scholarships, employment).
Financial Need:Â 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:Â Cost of attendance minus Expected Family Contribution equals financial need (COA – EFC = Need).
Forbearance:Â 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):Â 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.
Gift Aid:Â Educational funds such as grants or scholarships that do not require
repayment from present or future earnings. See Grant
Grant:Â 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.
Income:Â 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.
Income Protection Allowance: An allowance against income for the basic costs of maintaining family members in the home. The allowance is based upon consumption and other cost estimates of the Bureau of Labor Statistics for a family at the low standard of living.
Independent Student:Â A student who: (a) will be 24 years of age by December 31, 2007, 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) has legal dependents other than a spouse; or (f) presents mitigating circumstances case for independence
Legal Dependent (of Applicant):Â A biological or adopted child, or a person for whom the applicant has been appointed legal guardian, and for whom the applicant provides more than half support. In addition, a person who lives with and receives at least half support from the applicant and will continue to receive that support during the award year. For purposes of determining dependency status, a spouse is not considered a legal dependent.
Merit-based Aid:Â Student assistance awarded because of a student’s achievement or talent in a particular area, such as academics, athletics, music, etc.
Need Analysis: A system by which a student applicant’s ability to pay for educational expenses is evaluated and calculated. Need analysis consists of two primary components:
(a) determination of an estimate of the applicant’s and/or family’s ability to contribute to educational expenses; and (b) determination of an accurate estimate of the educational expenses themselves.
Need Analysis Formula:Â Defines the data elements used to calculate the expected family contribution (EFC); there are two distinct formulas: regular and simplified. The formula determines the EFC under the Federal Need Analysis Methodology.
Need-based Aid:Â 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:Â 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.
Packaging:Â 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:Â A quantitative estimate of the parents’ ability to contribute to postsecondary educational expenses.
Parent Loan:Â See Federal PLUS Loan.
Pennsylvania State Grant (PHEAA): This grant is available to Pennsylvania residents who have not yet earned a bachelor’s or professional degree, are enrolled for at least six credits in a degree-seeking program, who demonstrate financial need according to the PHEAA needs analysis formula, and meet PHEAA’s academic progress (for the last academic year during which the student received state grant aid, the student completed the required minimum total number of credits for the terms to which grant aid was applied).
PLUS Loan:Â PLUS loans (need to be repaid) are loans parents can obtain to help pay the cost of education for their dependent undergraduate children.
Principal (of a loan):Â The amount of money borrowed through a loan; does not include interest or other charges, unless they are capitalized.
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.
Renewal FAFSA:Â One type of FAFSA which resembles a SAR and has the same questions as the FAFSA. The Renewal FAFSA is preprinted with the student’s prior year responses to certain data items which are likely to remain constant from year to year.
Repayment Schedule:Â 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.
SAR:Â See Student Aid Report.
SAR Information Acknowledgment:Â A non-correctable one-page Student Aid Report. Students who file electronic applications or who make electronic corrections to applicant information through a school receive this acknowledgment.
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.
Student Aid Report (SAR):Â 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.
Subsidy: The money the federal government uses to help underwrite student aid programs; primarily refers to government payments to lenders of the in-school interest on Federal Stafford Loans.
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.
Title IV Programs:Â Those federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended. Includes: the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, Federal Perkins Loan, Federal Stafford Loan, Federal PLUS Loan, Direct Loan, Direct PLUS Loan, and SSIG.
Unmet Need:Â The difference between a student’s total cost attendance at a specific institution and the student’s total available resources.
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 quarter allowances.
Veterans Educational Benefits: Assistance programs for eligible veterans and/or their dependents for education or training.
Vocational Rehabilitation:Â 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.