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Financial Aid Glossary

Academic year - If your college is on a semester calendar, the academic year is divided into two terms (usually fall and spring). If your college is on a tri-mester calendar, the academic year is divided into three terms. The academic year is divided into four periods of about 12 weeks each if your college is on a quarter system. You will be offered financial aid based on your college's academic year and your enrollment status.

AGI - Adjusted Gross Income. Most financial aid forms require parents or students to state their taxable AGI based on income minus maximum allowable adjustments.

Alternative Loans - These private student loans from banks or other lending institutions are not federally supported or guaranteed. Students must be enrolled to apply for these loans.

Assets - Assets include cash on hand, in checking and savings accounts, trusts, stocks, bonds and other securities, real estate holdings (other than the family home), income-producing property, business equipment and business inventory. You will need to report your own and/or your parents' assets on the Free Application for Federal Student Aid (FAFSA). Assets are considered in determining your Expected Family Contribution (EFC).

Award Letter or Notice - See Financial Aid Award Letter.

Books & Supplies - Estimate of costs for books and supplies. Your actual cost may be different from the estimate based on the classes you take and whether you buy new or used books or even share them with a classmate to save money.

Borrower - The person who signs the promissory note to take out a loan. The borrower is the person responsible for repaying that loan.

Capitalization - When you borrow money through an unsubsidized loan and do not make interest payments while you are in school or during your grace period, the interest that accumulates during those periods is added to the principal balance of your loan. This is called capitalization. Capitalization increases the amount of your monthly payments and the total amount you will have to repay on that loan.

COA - See Cost of Attendance

Colorado Commission on Higher Education (CCHE) - The State of Colorado commission that administers state financial aid programs and establishes other criteria for public institutions of higher education.

Colorado Department of Higher Education (CDHE) - The mission of the Department of Higher Education is to improve the quality of, ensure the affordability of, and promote access to, post-secondary education for the people of Colorado. In pursuing its mission, the Department of Higher Education will act as an advocate for the students and institutions of post-secondary education and will coordinate and, as needed, regulate the activities of the state's post-secondary education institutions.

Collateral - An item of value (such as a house or a car) that is pledged as security for a loan. The lender can repossess the collateral if the loan is not repaid.

College Assist™ - The designated guarantor of student loans for the State of Colorado, College Assist™ is a division of the Colorado Department of Higher Education.

Consolidation - The action of combining several loans or liabilities into one loan. Put another way, debt consolidation is the process of taking out a new loan to pay off a number of other debts.

Contract or binding contract - A contract is a legally binding exchange of promises or agreement between parties that the legal system will enforce.

Cosigner - An individual or entity that signs a legal document on an equal basis with the signer. On a promissory note, all cosigners are individually and jointly liable for repayment of the full debt.

Cost of attendance (COA) - COA is an estimate of the amount it will cost you to attend college for one academic year. COA varies by college and/or by program within a college. Your COA may be different than a friend's COA even if you are both going to the same college. COA includes: Tuition & Fees + Room & Board + Books & Supplies + Miscellaneous Expenses = Cost of Attendance (COA). In addition, child care and costs related to a disability may be included when appropriate.

Credit bureau - A credit bureau is an organization that maintains information on your credit history. If you default on a student loan it will be reported to all credit bureaus and that default will appear on your credit report. Credit bureaus report your credit history to companies and organizations that wish to know about your financial history when making a decision whether to lend you money. For example, if you wish to obtain a loan to purchase an expensive item like a car or home or when you apply for a credit card, lenders will request your credit report. A poor credit rating will negatively affect your ability to borrow money.

CollegeInvest - Created by the State of Colorado in 1979 as a division of the Colorado Department of Higher Education, CollegeInvest is Colorado's leading education financing resource. CollegeInvest provides expert information, simple financial planning tools, scholarships and tax-advantaged college savings.

CSS Profile - The College Scholarship Service Profile is a financial aid form that many colleges and universities use to determine how much non-federal financial aid a student may be eligible for.

Community College - Sometimes also called two-year college, students can take classes to earn certificates, diplomas or associate's degrees and/or earn credits toward a degree at a four-year school. If a student intends to transfer to a four-year school, check with each school to find out which credits will transfer (be accepted) from the community college by the four-year school.

Credit Hour - Credit hours are units of value given to classes, with a specified total of credits required to attain a degree or other credential. Classes are usually worth two or three credits each. Credits vary by class and by school. Many schools base tuition costs on the number of credit hours taken. Some charge a specific dollar amount per credit hour.

Default - If you fail to repay the money you borrowed as promised when you signed a promissory note or Master Promissory Note (MPN), your loans will go into default. Student loan default has serious consequences.

  • Default will be reported to credit bureaus which will damage your credit rating
  • You will lose any options to defer future monthly payments
  • Your federal and state tax refunds can be seized
  • You can be sued by
  • Your wages can be garnished
  • You will not be eligible for other federal and state student aid until you make arrangements to repay your loans

Deferment - A period of time that you can suspend (defer) the monthly payments on your loan. To do this, you must first contact your lender and be approved for the deferment. For subsidized loans the federal government will pay the interest during a period of deferment. However, on unsubsidized loans the interest will continue to accrue and will be added (capitalized) to your principal loan amount. The repayment period for the loan will be extended by the length of the deferment period.

Delinquent - Loans go into a delinquent status if you fail to make a payment when it is due.

Determining Your Dependency Status


Dependent student - In general, if you are an undergraduate student under the age of 24, you are considered a dependent student for financial aid purposes. See the definition of Independent Student for exceptions to this rule.

Direct Loan - A low-interest federal loan for both undergraduate and graduate students. Federal Direct Loans can be subsidized or unsubsidized. The amount you can borrow each year is determined by your grade level, dependency status and total amount borrowed to date. If you have a subsidized Federal Direct Loan, the federal government will pay the interest while you're in school at least half-time and during a grace period. If you have an unsubsidized loan, you are responsible for interest payments while you are in college and during your grace period. You must fill out the FAFSA to determine eligibility.

EFA - Estimated Financial Aid. This is the amount of financial aid for which a student is likely eligible. The figure is calculated based on all required financial aid forms.

EFC - See Expected Family Contribution

Eligible Non-citizen - You are an eligible non-citizen for federal financial aid purposes if you are:

  • A permanent U.S. resident who has a Permanent Resident Card (I-151);
  • A conditional permanent resident (I-551C); or
  • The holder of an Arrival-Departure Record (I-94) from the Department of Homeland Security showing one of the following designations:
    • Refugee
    • Asylum granted
    • Parolee (paroled for a minimum of one year and your status has not expired)
    • Conditional entrant (valid only if issued before April 1, 1980)
    • Cuban-Haitian entrant

Entrance Counseling Session - A session you must attend, either in person or online, if you borrow through a Federal Stafford Loan. You will learn your rights and responsibilities as a borrower, how to manage your loans while you are in college as well as after you graduate and begin repayment. Your loan proceeds will not be disbursed until you complete this counseling session. You will be advised by your financial aid office how to fulfill this requirement.

Equity - In real estate, equity is the difference between the fair market value of a property and the amount of any mortgage debt or liens against the property that are still outstanding. In business, equity is the excess of a firm's assets over its liabilities. The term is also used to refer to the ownership interest of stockholders in a company and to the value of the investments raised by the stock offerings.

Estimate of Your Total School Charges, Books & Supplies and Living Expenses for Going to College - The total estimated amount of school charges, books & supplies and living expenses that are allowed as part of the Cost of Attendance (COA) calculation. Your actual expenses may be different.

Exit Counseling Session - A session you must attend, either in person or online, when you graduate from college if you borrowed through a Federal Stafford. You will be reminded of your rights and responsibilities as a borrower and will receive information on how to manage repayment of your loans after college. You will be advised by your financial aid office how to fulfill this requirement.

Expected Family Contribution (EFC) - An EFC is the amount a student and his or her family may reasonably be expected to contribute toward the student's postsecondary education costs for purposes of determining financial aid eligibility. No matter what college you attend, your EFC is the same. Colleges often offer students an unsubsidized loan and parents a Parent Loan for Undergraduate Students (PLUS) loan to replace the EFC.

FAA - Financial Aid Administrator. An FAA is a college or university employee involved in the administration of financial aid. Also known as financial aid advisors, officers or counselors.

FAFSA - See Free Application for Federal Student Aid

FAFSA ID - See FSA ID

FAT - Financial Aid Transcript. This transcript logs all financial aid a student has received.

Federal Direct Loan (was Federal Stafford Loan) - These student financial aid loans are obtained through banks, lending institutions or colleges. To qualify, students must be enrolled in a college degree program at least part-time. The loans may be subsidized (need-based, typically for low-income students), or unsubsidized (not need-based so any student can apply). Students apply by filling out the FAFSA. Formerly called the Guaranteed Student Loan.

Federal Parent Loan for Undergraduate Student (PLUS) Loan - See PLUS Loan

Federal Pell Grant - See Pell Grant

Federal Stafford Loan - See Federal Direct Loan

Federal Supplemental Educational Opportunity Grant (FSEOG) - A federal grant for undergraduate students with exceptional financial need who have not completed their first baccalaureate degree. If you receive a Pell Grant, you will be given priority to receive a FSEOG. Awards must be given to Pell Grant recipients. Eligibility is determined by the college from the information on your FAFSA and how much funding is available.

FDL Program - Prior to July 2010, there were two programs that offer federal loans to students and parents. Federal Direct Loan Program (FDL Program) and Federal Family Education Loan (FFEL) Program. Due to federal legislation, only the FDL continues to offer federal Stafford Loans to undergraduate students, PLUS loans to parents of undergraduate students and Graduate PLUS loans to graduate students. Under the FDL Program loans are borrowed directly from the federal government. When you borrow a federal loan under the FDL Program you will repay the federal government through the U.S. Department of Education's loan servicer.

Federal School Code (also, Title IV Institution Code) - Each college, campus or program has a six-character institution code. You must include the code related to each of your college applications when filling out a FAFSA. These codes are available by contacting the school or checking an online listing.

FFEL Program - Discontinued. Prior to July 2010, there were two programs that offer federal loans to students and parents. Federal Direct Loan Program (FDL Program) and Federal Family Education Loan (FFEL) Program. Due to federal legislation, only the FDL continues to offer federal Stafford Loans to undergraduate students, PLUS loans to parents of undergraduate students and Graduate PLUS loans to graduate students.

Financial aid - Money awarded to you from a college based on financial need, or other criteria. Types of financial aid are scholarships, grants, work-study programs and student and parent loans. You are offered financial aid based on the information you submit on the FAFSA, your COA and EFC, applications submitted and your enrollment status.

Financial Aid Award Letter - Notification from the financial aid office of a college regarding the amount and types of financial aid you have been offered to allow you to attend a particular college for an academic year. The financial aid award letter you receive from your college may not include scholarships you have been awarded from an outside organization. Your financial aid award (sometimes called a financial aid package) is based on the information you submitted on the FAFSA, your EFC and COA and your enrollment status.

Financial Aid Office - The best source for financial aid information at the college you plan to attend. The financial aid office at your college is available to answer your financial aid questions and can make adjustments to your financial aid award if you have unusual circumstances.

Financial need - The difference between your cost of attendance (COA) at a college and your expected family contribution (EFC). In other words: COA - EFC = Financial Need.

Fixed (interest rate) - An interest rate that will remain at a predetermined rate for the entire term of the loan.

Forbearance - If you are unable to make monthly payments on a student loan after you graduate, you may be granted a forbearance. During the forbearance period, you may not have to make any principal or interest payments on your loan; however, the interest will continue to accrue and will be added (capitalized) to your loan balance. To request a forbearance, you must contact your lender in writing.

Free Application for Federal Student Aid (FAFSA) - This is the application you must complete to be considered for federal student aid including student loans, state funding and most institutional awards. Most colleges require students to complete the FAFSA. The financial aid office at your college will use the information in the FAFSA to determine the types of financial aid for which you are eligible.

FSA ID (FAFSA ID) - The username and password that is used by students, parents and loan borrowers to access their federal student aid information. The FSA ID replaces the formerly used PIN process.

FSEOG - See Federal Supplemental Educational Opportunity Grant

Full-Time Enrollment (or Attendance) - In general, full-time enrollment means taking a minimum of 12 semester or quarter hours per academic term at a traditional college or 24 clock hours per week at colleges that use clock hours to measure progress.

Garnish wages - When wages are garnished, money to make payments on defaulted loans is automatically taken from your paycheck every time you are paid.

Gift aid - Grants and scholarships are types of financial aid that are considered gift aid because they do not have to be paid back.

Grace period - When you graduate or if you drop below half-time enrollment at your college, you have a period of time called the grace period, before you must begin making monthly payments on federal loans money you borrowed. If you borrowed through a Federal Direct loan, the grace period is 6 months.

Graduate or professional student - A graduate or professional student is someone working on a degree beyond a Bachelor's degree, for example, a Master's, Law or Doctorate degree.

Grant -- A type of financial aid that is considered gift aid because it does not have to be repaid. Grants are also considered need-based because they are awarded to students who do not have the financial means to attend college. Your eligibility for a grant is determined by your EFC (calculated from the information provided on your FAFSA) and the amount of funding available at your college.

GSL -- Guaranteed Student Loan. See the Federal Direct Loan (was Federal Stafford Loan).

Half-time Enrollment (or Attendance) - In general, this means attending at least six, but less than 12, semester or quarter hours per academic term at a traditional school and 12 clock hours per week for institutions that use clock hours to measure progress.

Independent Student - You are considered an independent student for financial aid purposes if you will be 24 years old by December 31 of the financial aid award year for which you wish to receive funding or you are not yet 24 but meet at least one of the following criteria:

  • Married
  • A graduate or professional student
  • A veteran
  • Have legal dependents
  • You are an orphan or ward of the court
  • Have unusual circumstances that can be documented to a financial aid counselor

Interest or interest payments - When you borrow a loan you are charged an amount for use of that money. The percentage of interest you are charged and when interest begins to accrue on your federal loan is determined by the type of loan you use.

Junior College - Typically a two-year college, junior colleges offer certificates, associates degrees and other programs. Unlike community colleges, junior colleges usually have on-campus student housing and resident-related facilities and activities.

Loan - Borrowed money. This type of financial aid is considered self-help because loans must be repaid under the terms and conditions of the promissory note you sign when you request the loan.

Master Promissory Note (MPN) - The promissory note you sign when you borrow money through a Federal Stafford. The MPN is a legal document by which you promise to pay back loans as dictated by its terms and conditions. A MPN simplifies the borrowing process because you may be able to receive additional loans without signing a new promissory note each academic year.

Merit-Based Aid - Financial Aid for which you may be eligible based on a particular skill, achievement, talent or characteristic. Merit aid is usually given in the form of scholarships. The most common scholarships are based upon academic or athletic achievement. You must apply for most scholarships by completing an application and often writing an essay about yourself.

National Merit Scholarship Program - Students who do well on the PSAT/NMSQT may qualify for scholarships under this program. A few students receive full scholarships.

Need-Based Aid - This type of financial aid is based upon financial need. You will be offered need-based financial aid if you cannot afford to go to college using only your own or your family's financial resources. Financial need is determined by subtracting your expected family contribution (EFC) from your cost of attendance (COA) at a college. The most common forms of need-based financial aid are grants, work-study, subsidized Federal Stafford loans.

Non-need-based aid - You are offered non-need based financial aid when: (1) your EFC is equal to or greater than your COA; or (2) when you have been offered as much need-based financial aid as the college can offer (based on your EFC and its funding levels), but there is still a gap between your COA and the amount of need-based financial aid you have been offered. Non-need based aid is almost always an unsubsidized Federal Stafford loan and/or a PLUS Loan.

NSLDS - National Student Loan Data System. This U.S. Department of Education database allows students to access their Title IV student loan and grant information.

Parent Contribution - This is the amount of money parents are expected to be able to contribute to their child's education.

Parent Loan for Undergraduate Student (PLUS) Loan - A loan available to parents of dependent undergraduate students. This loan is need-based and it may be used to replace your expected family contribution. Parents must be credit-worthy to receive money through this loan.

Pell Grant - A federal grant awarded if you have high financial need (determined by completing the FAFSA). If you qualify for the Pell Grant the federal government ensures you will receive it when you attend an institution of higher education.

Personal Expenses - Estimate of costs for clothing, hair cuts, entertainment and other miscellaneous expenses. What you actually spend on these types of items may be higher or lower depending on your own lifestyle.

PIN (or FAFSA PIN) - See FSA ID

PLUS Loan - See Parent Loan for Undergraduate Student Loan

Principal or principal balance - The amount of money you borrow under a loan is called the principal. When you begin making payments on this loan, you will repay the principal balance of the loan plus interest.

Promissory Note - The legal document a borrower signs before receiving money from a loan. The promissory note is called the Master Promissory Note (MPN) if you are borrowing money through a Federal Stafford loan or if your parent is borrowing through a PLUS loan. The promissory note is a legal document in which you promise to pay back the money received through loan according to its terms and conditions.

PSAT/NMSQT - The Preliminary SAT/National Merit Scholarship Qualifying Test. Students hoping to receive a National Merit Scholarship must take and pass this test.

Refinance - Replacing an older loan with a new loan offering better terms or when a business or person revises their payment schedule for repaying a debt.

Repayment Terms - The criteria that you must follow regarding how your educational loan will be paid back. Terms include the amount of payments (normally paid on a monthly basis), interest rate and number of years to repay. There are various repayment plans available to help manage your loans. Contact your lender if you are having problems making monthly payments.

Required Fees - Estimate of the mandatory fees you will pay to the college such as student government, health and laboratory fees.

Room & Board - Estimate of the room and board (dining) charges you will pay to the college if you live on campus or an estimate of these expenses if you live off campus or with your parents.

ROTC - Reserve Officers Training Corps. In this program, the military pays a student's tuition or other expenses. The student takes part in summer training while in college, and commits to military service after college.

Scholarship - A type of financial aid for which the money received does not have to be paid back. Scholarships are considered merit-based aid because they are awarded to students who are eligible based on certain criteria. The most common scholarships are academic and athletic scholarships. You must apply for each scholarship separately by completing an application (supplied by the scholarship donor) and in many cases, by writing an essay about yourself. Scholarships come from a variety of sources including federal and state governments, the college you are attending, churches, professional organizations and businesses.

Self-help financial aid - A type of financial aid that may or may not be need-based. Self-help financial aid includes work-study (you work for the money received) and loans (money which you borrow and must pay back).

Student Aid Report (SAR) - Your copy of the information you submitted on the FAFSA. If you complete a paper FAFSA, the SAR will be mailed to you. If you complete the FAFSA on-line, you will receive an electronic copy of your SAR.

Subsidized Stafford Loan - See Direct Loan

Terms (or Loan Terms) - see Repayment Terms

Title IV Institution Code - See Federal School Code

Transportation - Estimate of costs for local bus or train passes or gas and maintenance for a car. What you actually spend on transportation may be different. There are no allowances included for making car payments or paying car insurance.

Tuition - Estimate of the charge you will pay to the college for classes. (Note: depending on where you see tuition listed, it may not reflect the College Opportunity Fund stipend deduction for eligible Colorado students. The stipend pays a portion of total in-state tuition at Colorado public institutions or participating private institutions.

Unsubsidized Direct Loan - See Direct Loan

Variable (interest) Rate - Any interest rate or dividend that changes on a periodic basis. Variable rates are often used for convertibles, mortgages, and certain other kinds of loans.

Verification - The process a college financial aid office will use to verify the information you submitted on the FAFSA. If your FAFSA is selected for verification, the financial aid office must verify that all information is correct before awarding financial aid. Thirty percent of FAFSAs submitted each year are randomly selected for this process, but note that some colleges verify every FAFSA from applicants.

Work-Study - A part-time employment program that provides jobs for undergraduate and graduate students to assist them to meet a portion of their education expenses. Work-study funding comes from federal and state governments as well as from the college. The results of your FAFSA and funding at your college determine your eligibility.