Terms & Definitions
Academic Grade Level
Designation of the student as first‐year (freshman), second‐year (sophomore), etc., Used to determine annual loan limits.
Adjusted Gross Income (AGI)
An income figure taken from the federal income tax form that has been filed in compliance with the IRS regulations and guidelines.
Assets
Cash on hand in checking and savings accounts, trusts, stocks, bonds, other securities, real estate, home equity, income‐producing property, business equipment, and business inventory. Considered in determining expected family contribution.
Award Letter
A means of notifying financial aid applicants of the assistance being offered. The award letter usually provides information on the types and amounts of aid offered.
Award
A specific amount of financial assistance offered to a student to pay for educational costs, such as scholarships.
Default
The failure of a borrower to make and installment payment when due, or to meet other terms of the promissory note or when it can be concluded that the borrower no longer intends to honor the obligation to repay.
Disclosure Statement
A statement set to the borrow by the lender, as well as at, or prior to, the beginning of the repayment period.
Electronic Funds Transfer (EFT)
Commonly called EFT, is a method by which funds are electronically transferred from one person or organization to another.
Expected Family Contribution (EFC)
The figure that indicates how much of a family’s financial resources should be available to help pay the expenses of post‐secondary education. This figure is determined according to statutory formulas with data from the FAFSA.
Financial Aid Transcript (FAT)
A form used by post‐secondary institutions to collect data about any financial aid awards that a student received at other educational institutions.
Financial Need
The difference between the institution’s cost of attendance and the family’s ability to pay (the expected family contribution).
Free Application for Federal Student Aid (FAFSA)
A free financial aid application, provided by the Department of Education, which gathers data to determine both Pell Grant eligibility and expected family contribution using the Federal Methodology.
GPA
Grade Point Average
Grant Program
Gift aid programs that require neither repayment nor that work be performed.
INS
US Immigration and Naturalization Service
ISIR
Institutional Student Information Record
Lender
A commercial bank, savings and loan association credit union, stock savings bank, trust company, or mutual savings bank.
LOA
Leave of Absence
Loan
An advance of funds that is evidenced by a promissory note requiring the recipient to repay the specified amount(s) under prescribed conditions.
Nontaxable 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, welfare payments, untaxed capital gains, interest on tax‐free bonds, dividend exclusion, and military and other subsistence allowances.
Principal and Interest
Principal refers to the loan amount borrowed; interest refers to the amount charged for the use of the money over a period of years. Interest is usually stated as a percent.
Professional Judgment
This gives the Department of Financial Aid authority to adjust data elements, on a case‐by‐case basis.
Promissory Note
The legal documents the borrower signs when obtaining a loan. It lists the conditions under which the loan is made and the terms under which the borrower agrees to pay back the loan.
SAR
Student Aid Report
Satisfactory Academic Progress
Satisfactory academic progress is a term used to describe a satisfactory rate of course completion. Regulations require that a student be making satisfactory academic progress to receive Title IV aid.
Scholarship
A form of financial assistance that does not require repayment or employment. A “merit‐based” scholarship may be made to a student who demonstrates or shows potential for distinction, usually in academic performance, at the institution. The term is also frequently used to refer to need‐based state grant(“state scholarship”) programs. Scholarships may require both academic proficiency and demonstrated financial need.
SSN
Social Security Number
Untaxed Income
Income received that is not subject to income tax. Examples of such income are some Social Security benefits, welfare benefits, interest on tax‐free bonds, military and other subsistence allowances.
VA
Veterans Administration
Variable Rate
This refers to a loan whose interest rate varies over the repayment term of the loan.
