We all know that the terminology present in scholarship application forms and documents is not easy to understand. It’s sometimes full of financial jargon and the support literature such as brochures and pamphlets don’t have that many clues. That’s why we’ve decided to come up with this list of the most common terms found in scholarships applications. Just look up and click in the term in the alphabetical order to uncover its definition. There are over 100 terms covered but if there’s something that we’ve missed just get in touch and we’ll add it to the list.
Academic Year
Accrual Date
Adjusted Available Income
Amortization
Assets
Asset Protection Allowance
Assistantship
Associate Degree
Award Letter
Bachelors Degree
Budget
Bursar’s Office
Campus-Based Aid
Cancellation
Central Processing System – (CPS)
Citizen/Eligible Non-citizen
Collateral
Commercial Lender
Commuting Student
Compounded Interest – (or Capitalization)
Consolidation Loan
Cooperative Education – (Co-op)
Co-signer
Cost of Attendance – (COA)
Credit Rating
Custodial Parent
Default
Deferment
Delinquent
Dependency Status
Dependent
Direct Loans
Disbursement
Eligible Program
Enrollment Status
Expected Family Contribution – (EFC)
FAFSA – (Free Application for Federal Student Aid)
Federal Family Education Loan Program – (FFELP)
Federal Direct Student Loan Program – (FDSLP)
Federal Loan
Federal Stafford Loan
Federal Supplemental Educational Opportunity Grant – (FSEOG)
Federal Work-Study
Fellowship
Financial Aid Administrator
Financial Aid Package
Financial Need
Fixed Interest
Forbearance
Free Application for Federal Student Aid – (FAFSA)
Grace Period
Graduated Repayment
Grant
Guarantee Fee
Guaranty Agency or Guarantor
Home Equity
Income Contingent Repayment
Institutional Methodology
Interest
Internships
Lender
Line of Credit
Loan
Maturity Date
Merit-based Aid
Need
Needs Analysis
Need-Based Aid
Need-Blind Admissions
Non-Portable Funding
Origination Fee
Parental Contribution
Pell Grant
Perkins Loan
PLUS Loans (Parent Loans for Undergraduate Students)
Portable Funding
Prepaid Tuition Plan
Prepayment
Principal
Professional Judgement
Promissory Note
Renewable Scholarships
Repayment Schedule
Research Assistantship
Satisfactory Academic Progress
Scholarships
Secondary Market
Secured Loan
Servicer
Simple Interest
State Student Incentive Grants
Student Aid Report (SAR)
Subsidized Loan
Teaching Assistantship (TA)
Term of a Loan
Title IV Programs
Undergraduate Student
Unmet Need
Unsecured Loan
Unsubsidized Loan
Variable Interest
Verification
A period of time schools use to measure a quantity of study. Academic years vary from school to school. However, the length of a school session usually runs September through May.
The date interest charges begin to accrue on a loan.
After taxes and basic living allowances have been subtracted, this is the remaining income.
Amortization refers to loan repayment over a period of time. Periodic payments are made on principal and interest.
The following are considered assets: bonds, checking and savings accounts, stocks, trusts, other securities, real estate (this does not include your home), income property, business equipment, and inventory. When calculating the expected family contribution (EFC), all assets are considered.
Parental assets not included in calculating a parent’s contribution.
Student employment, usually referring to research or student teaching.
Two-year college degree.
Students receive separate official notices from each college’s financial aid office providing an analysis of their financial need and the financial aid package awarded. Award letters include the amount and sources a student has been awarded in his financial aid package.
Four-year college degree.
The total estimated cost a student incurs while attending an institution. This includes books, fees, room and board, supplies, transportation, tuition, and other miscellaneous personal expenses.
The university office responsible for billing and collections.
This is based upon a set amount of money provided to the college from the government. Each college determines a student’s eligibility to receive the funding. Programs included in campus-based aid are the Federal Work-Study, Perkins Loan, and the Supplemental Education Opportunity Grant. Do not confuse campus-based loans with Direct Loans or FFELP Programs. In campus-based aid, colleges have a fixed amount they can loan from the government.
This deals with loans. A borrower’s circumstances such as death or permanent disability might lead to loan cancellation. Also some federal loan programs have cancellation provisions, such as becoming a teacher in a national shortage area.
Central Processing System – (CPS)
This is the computer system that matches and calculates the Expected Family Contribution (EFC) and delivers the Student Aid Report (SAR).
To receive federal aid you must be a U.S. citizen, a U.S. national, or a permanent resident who has an I-151, I-551 or I-551C.
Property or assets used to secure loans. Collateral can be seized by the lender if the borrower defaults on the loan.
Commercial lenders are banks, credit unions, mutual savings banks, savings and loan associations, stock savings banks, or trust companies.
Student who commutes to school while residing at home.
Compounded Interest – (or Capitalization)
Compounded interest is interest paid on the loan’s principal balance and on any unpaid interest. Compound interest (or Capitalization) increases the amount of money the borrower must repay and increases monthly payments.
Consolidation loans are when a borrower combines a number of small loans into one large loan. Borrowers typically consolidate loans to lower monthly payments. However, over a period of time, the borrower will typically pay more interest over the life of the consolidation loan.
Cooperative Education – (Co-op)
View this as a job opportunity. Colleges will pay students to work in professional settings while attending school. Students gain needed work experience while getting their degree.
Co-signers are just what the name implies. They co-sign a loan. If the first borrower on a loan defaults, the co-signer (in most cases) is responsible for repayment on that loan.
The COA is a student’s total cost of college. This includes books, fees, room and board, supplies, transportation, tuition, and other miscellaneous personal expenses. COA also depends on your marital and residency status. Also see “Budget.”
Credit bureaus and credit reporting agencies generate an individual’s credit rating, by viewing credit limits, balances, and personal information, and determine if someone has had prior credit problems. Typically, Federal Stafford Loans do not require a credit rating.
The parent with whom the student resided during the prior 12 months. This usually applies to situations of parental divorce or separation.
This refers to non-payment or late payment of loan installments or failure to meet the terms and conditions of the loan. Typically, payments are considered “past-due” after 180 days. Lenders are entitled to all legal means necessary for debt recovery. This can include wage withholding (garnishing wages), withholding tax refunds, and even confiscation of collateral if any is attached to the loan. Defaulting on a government loan, can eliminate future federal financial aid. Additionally, defaulting on a loan will result in a poor credit rating.
This occurs when the lender allows the borrower postponement on loan payments. The borrower must usually satisfy specific eligibility requirements for a loan deferment. Loan deferments are used by many college students who are enrolled at least half-time. If a loan is in default, the lender will not allow deferments.
Loan payments not made on time. When delinquency occurs, the lender can assess late fees to the loan payments.
For the purpose of federal aid, this determines whether or not the student is financially dependent on his or her parents. All students are considered parental dependents, unless the student is at least 24 years of age as of January 1, is married, is a graduate or professional student, has a legal dependent other than a spouse, is a Veteran of the U.S. Armed Forces, or is/was an orphan or ward of the court (or was a ward of the court until 18 years of age).
Someone who depends on another for more than half of their financial support.
Certain institutions are provided federal government funds to use as direct loans for students. This is referred to as “Direct Lending.” If a student attends a school that is a Direct Lender, the student does not apply to private lenders for federal loans.
Disbursement is when a student’s federal loan funds are sent to the school. Loan payments are made to both the student and the school (co-pay). These funds cover educational costs (tuition, fees, etc.) and related living expenses first. After that, the student receives any excess funds by cash or check, or it is applied to the student’s account.
A course of study that leads to a degree or certificate and meets the U.S. Department of Education’s requirements for an eligible program.
This indicates whether a student attends school full- , half-, or part-time. Full-time usually refers to at least 12 credit hours. Half-time usually refers to at least 6 credit hours or more. In most cases, a student must be enrolled at least half-time to qualify for financial aid.
Expected Family Contribution – (EFC)
The Expected Family Contribution (EFC) is the monetary amount that the government determines a student and his/her family is able to pay toward the student’s educational costs. EFC depends on dependency status, family size, other family members in school, taxable and nontaxable income, access to parents’ assets, and other factors.
FAFSA – (Free Application for Federal Student Aid)
FAFSA is an acronym for “Free Application for Federal Student Aid.” Also see “Free Application for Federal Student Aid.”
Federal Family Education Loan Program – (FFELP )
The FFELP includes Federal Stafford Loans (Subsidized and Unsubsidized) and Parent Loans for Undergraduate Students (PLUS). Since FFELP loans are guaranteed against default by the federal government, lower interest rates usually apply.
Federal Direct Student Loan Program – (FDSLP)
FDSLP is an acronym for Federal Direct Student Loan Program. Also see “Direct Loans.”
A guaranteed loan by the federal government.
Federal Stafford Loan
The Stafford Loan is a federal-guaranteed, low-interest rate loan for students. Stafford loans are subsidized (need-based) and unsubsidized (non-need-based). The government pays the interest on a subsidized loan for as long as a student is in school plus a six-month grace period after leaving school. Interest accrues on unsubsidized Stafford loans from the disbursement date. A student can receive a subsidized loan and an unsubsidized loan for the same enrollment period.
Federal Supplemental Educational Opportunity Grant – (FSEOG)
The FSEOG is for undergraduates with exceptional financial need, that is, students with the lowest EFC’s – and gives priority to students who receive Federal Pell Grants. FSEOG’s do not have to be repaid.
The Federal Work-Study Program provides jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay educational expenses. The Federal Work-Study encourages community service work and work related to a student’s course of study.
A fellowship is aid, awarded to graduate students, that does not require repayment. Fellowships usually cover full or partial tuition and reasonable living expenses. Usually, fellowship recipients display academic promise in their field of study.
The financial aid administrator is located on the college/university campus. This person is responsible for advising and counseling students, and overseeing their financial aid packages.
The total amount of financial aid (federal and non-federal) a student receives.
Financial need is the Cost of Attendance (or COA) minus the Expected Family Contribution.
Fixed interest loans have the same interest rate for the entire life of the loan.
Forbearance temporarily allows a borrower to postpone principal payments on a loan due to financial hardships. However, the borrower must still make regular interest payments on the loan.
Free Application for Federal Student Aid – (FAFSA)
Any student looking for college money needs to complete a FAFSA application. The completion of this form is required for virtually all forms of government financial aid. The FAFSA form is available from the U.S. Department of Education, a college or university’s financial aid office, or a high school.
The period of time between a student’s graduation (or termination) and the beginning of loan repayments. A grace period is usually six to nine months.
This refers to loan repayments. Graduated repayment is when the monthly loan payments are small at first and then increase with time. Graduated repayment schedules are not allowed for PLUS loans.
Need-based financial aid that does not have to be repaid.
This fee is usually 1 percent of the loan amount, and it is paid to the guarantee agency to insure against loan default.
These are the agencies that approve and insure federal loans against default.
Your mortgage’s unpaid principal subtracted from your home’s current market value.
Under this plan, monthly loan payments increase as income levels increase. PLUS loans are not eligible for this payment option.
The formula certain schools use in determining a student’s financial need for non-portable financial aid.
Interest is the amount of money charged for borrowing from a lender. Interest charges are usually included in each month’s payments.
Internships offer students part- and/or full-time professional work opportunities. Interns are usually paid or gain college credits.
Any institution that loans money. This can include banks, credit unions, savings and loans associations, and schools (under the Federal Direct Loan Program).
This is a pre-set limit of credit. Once qualified, the lender allows the borrower to borrow up to that pre-set limit. Lines of credit are usually activated when the borrower writes a check against his/her line of credit. Lines of credit must be re-paid and serve as a loan.
Temporary use of money, by the borrower from the lender, that must be repaid.
The date when a loan reaches its maximum payment period and must be paid in full.
Any financial aid not based on need but usually based on special talent or ability. Contests, competitions, and scholarships are a few examples of merit-based aid.
The U.S. Department of Education defines “need” as the following: your expected family contribution subtracted from the cost of attendance equals the financial need. See also “Financial Need.”
You and your family’s financial resources reported on the FAFSA form will be used by the college to produce the need analysis. It determines how much you or your family can afford to pay towards your college education.
Need-based aid is the cost of education compared to you or your family’s ability to meet those costs.
Most schools have a need-blind admissions policy. This means a school, for admissions purposes, will not consider your ability or inability to pay college costs when determining admittance.
This is college funding that cannot be transferred to another college or university. For example, many colleges have scholarship funds that are specific to that particular college. If you leave or transfer, that money remains at that school.
A fee for loans paid by the borrower to the lender to cover set-up and administrative fees for that loan.
An estimate of a parent’s ability to contribute to their student’s educational expenses.
Need-based financial aid awarded to undergraduate students who have not completed their bachelor’s degree (4-year degree). No repayment is required.
These are low-interest federal loans for students demonstrating extreme financial need. To apply for the Perkins Loan, a student must have already applied for the federal Pell Grant. Perkins Loans are available to both undergraduate and graduate level students.
PLUS Loans (Parent Loans for Undergraduate Students)
These are federal loans made available to parents of dependent undergraduate students. The monetary amounts for PLUS loans are given based upon the educational costs minus the student’s financial aid package to cover any additional educational expenses.
This is college funding that can be used at any college or university regardless if you transfer or remain at your original school.
Various schools and states offer these types of programs. This is a savings plan that guarantees the same rate of increase on your savings as college costs increase. Regardless if college costs increase at a faster rate, it is guaranteed that your invested money will be sufficient for college costs when your student enters college.
This is early loan repayment. Prepayment means paying less interest in a shorter period of time.
The unpaid or original dollar amount on a loan.
This occurs when a financial aid administrator adjusts the EFC, COA, or dependency status of a student or family. This can be done when extreme changes in the student or family situation occur – such as death, unemployment, disability, etc.
This is the legal binding contract the borrower signs. It states the terms, details, and obligations of the borrower to repay the lender.
These are scholarships awarded for more than one year. Some renewable scholarships are automatically renewed, which means you need not re-submit paperwork. For others you must re-submit paperwork. If you are in receipt of a renewable scholarship, make sure any or all necessary paperwork is filed each year.
This is the designated term and payment amounts for a loan. It includes interest rates, monthly payments, and payment due dates. This is set forth in the promissory note.
A research assistantship is a form of college funding. Typically, research assistantships are students performing research duties for their supervisors or professors. In exchange, there is usually relief in tuition costs. These positions are usually reserved for graduate level students and are administered by the college.
Satisfactory Academic Progress
Most federal aid requires satisfactory academic progress. It is based on maintaining a specific grade point average set forth by the institution. If the student does not show satisfactory academic progress, federal aid can be denied.
These are forms of college aid based on merit. Many corporations, organizations, foundations, etc., will award scholarships to students based on grades, community involvement, extracurricular activities, athletics, arts, etc. This form of funding does not require repayment.
There are times when the original lender sells your loan to another lender. The purchaser of your loan from the original lender is in the secondary market. The terms of your loan will not change in the secondary market.
Secured loans are loans for which the borrower uses collateral such as a house, car, or other assets to secure loan funds. If the borrower defaults on the loan, the lender has the option of selling or confiscating the collateral used in acquiring the loan.
This is the organization, paid by the lender, to oversee the status of your loan, distribute funds, collect payments, and handle deferments, forbearances, and other related issues.
This is interest charged only on the principal balance, not on interest that has added up over time.
State Student Incentive Grants
Federal government provides matching funds to states to help state residents with financial aid.
This is your official financial summary of your FAFSA. When you receive your SAR, check it carefully for accuracy. If it is incorrect, correct it.
A need-based loan that borrowers are not required to pay interest on until their grace period ends, or the borrower is no longer in school.
This is similar to research assistantships. A teaching assistantship is a form of college funding that provides a partial/full tuition waiver and a small stipend to supplement the cost of graduate student living. Teaching assistantships are usually reserved for graduate level students.
The length of time to repay a loan.
These are all programs created by the Title IV of the Higher Education Act of 1965 (amended in 1992). They include: Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, Federal Work Study, Federal Perkins Loans, Federal Stafford Loans, Federal PLUS Loans, Direct Loans, and Direct PLUS Loans.
A student who has not received a four-year (baccalaureate degree).
The remaining monies needed for a student’s total cost of attendance, including financial aid.
A loan where no collateral is offered from the borrower to the lender. Typically, unsecured loans carry a higher interest rate and sometimes require a co-signer.
An unsubsidized loan is one on which the government does not pay the interest while the student is attending school. Students must pay all interest while attending school.
This type of interest on a loan fluctuates. If the borrower chooses a variable interest loan, the interest rates on that loan can go up or down. Most variable interest loans have an annual cap or maximum cap. This means that interest rates cannot exceed a specified amount within a specified period of time.
This is when the financial aid officer requests proper documentation to verify financial aid application accuracy on a financial aid applicant.