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Financial Aid Glossery

Academic Year

The year in which school is in session – usually September through May.

Accrual Date

The date on which interest charges on an educational loan begin to accrue.

Adjusted Available Income

The remaining income after taxes and basic living expenses have been subtracted.


This is considered in determining expected family contribution (EFC). It includes cash in checking and savings accounts, trusts, securities, real estate, income-producing property, business equipment and business inventory.  Assets are calculated differently with Institutional Methodology (IM) and Federal Methodology (FM).

Asset Protection Allowance

The portion of the parents’ assets that are not included in the calculation of the parent contribution.  This number is based on age and is used in the Federal Methodology.

Award Letter

The official letter from the college financial aid office that lists all financial assistance awarded to the student.

Bursar’s Office

The office at the college responsible for the billing and collection of university charges.

Campus-Based Programs

U.S. Department of Education federal student aid programs administered by colleges and universities.  This includes Federal Perkins Loan, Supplemental Educational Opportunity Grant (SEOG) and Federal Work Study (FWS).

Central Processing System

The computer system that receives the need analysis data from the FAFSA, calculates the official expected family contribution (EFC) and sends out the Student Aid Report.

Commercial Lender

A commercial bank, savings and loan association, credit union, trust company or mutual savings bank.  Also known as third party lender.

Cost of Attendance

The total budget for college.  This includes tuition and fees, room and board, allowances for book and supplies, transportation and personal expenses.

CSS Profile

Financial aid application put out by the College Board.  Hundreds of schools (mostly private) which are members of the College Board will require this form.  The CSS PROFILE is a more in depth form than the FAFSA and will take many other factors into account while calculating the family’s need.  The EFC may be different than that calculated using the Federal Methodology as the PROFILE uses the Institutional Methodology to calculate need.

Custodial Parent

In cases where the student’s parents are divorced or separated, the custodial parent is with whom the student lived most with during the past 12 months.

Data Release Number (DRN)

This is the number given to the student once the FAFSA has been submitted.  It is located on the Student Aid Report (SAR) and this is the number used to reference the student when calling FAFSA.

Dependency Status

This determines the degree to which the student has access to parent financial resources.  An independent student is at least 24 years old by December 31 of the award year, married, a graduate student, has a legal dependent other than a spouse, is a U.S. Armed Forces veteran or is/was a ward of the court.

Direct Loans

A new federal program where loan funds are provided by the federal government but the school becomes the lending agency and manages the loan funds directly. There are two types: subsidized (need-based) and unsubsidized (non-need-based).  Both allow deferment of payments until the student leaves school.

Early Action-Early Decision

Early action programs have earlier application deadlines and notification dates than the regular admissions process.  If accepted, students are not bound to that college.  An early decision program has earlier application deadlines and notification dates than the regular admission process and students who apply to an early decision program may be bound to that college if admitted.  Each school may have a different policy regarding different types of admission.  Each school may have different deadlines for admission and financial aid applications as well.

Expected Family Contribution (EFC)

The EFC is calculated based on a student’s responses to questions in the FAFSA if the FAFSA was completed without significant errors. Some colleges and universities may use the CSS PROFILE to calculate EFC (or have their own form). A major difference between the FAFSA and the CSS PROFILE is that the CSS PROFILE takes home equity (value of your house) into account when determining ability to pay, while the FAFSA does not.


This is the Free Application for Federal Student Aid.  This is the application that all students applying for financial aid will need to complete.  The data that is collected on the FAFSA will be used to calculate the EFC utilizing the federal methodology. This form can be accessed at www.fafsa.ed.gov.

Federal Methodology

The Federal Methodology (FM) is the formula used by the federal government to determine your Expected Family Contribution (EFC) for a Federal Pell Grant, campus-based programs, and Federal Subsidized Stafford and Direct Subsidized Loan Programs. For non-need-based Federal Unsubsidized Direct Loans, your EFC is not a factor.

Federal Work Study (FWS)

This program provides college students with part-time employment during the school year. The student’s salary is partially subsidized by the federal government and is paid directly to the student. Eligibility for this program is determined by information given on the FAFSA and is based on financial need.

Financial Aid Package

The total amount of financial aid a student receives including gift aid (grants and scholarships) and self-help aid (loans and federal work study).

Financial Need

The difference between the cost of attendance (COA) and the expected family contribution (EFC).

Gift Aid

Grants and scholarships that do not need to be repaid.


Financial aid that does not need to be repaid. This is usually based on financial need.

Institutional Methodology

 Institutional Methodology (IM) is the College Board’s (CSS PROFILE) need-analysis system. Developed by financial aid practitioners and economists, IM provides a comprehensive evaluation of a family’s ability to pay for the costs of higher education.  IM is more comprehensive than Federal Methodology and assumes that more assets can be used for college expenses. For example, in most cases, Institutional Methodology considers home equity as an asset that can be used to help finance a college education; Federal Methodology does not.  Over 600 institutions (mostly private schools) use the CSS PROFILE to determine financial need in order to target their need-based funds equitably to the most deserving students.

Merit-Based Aid

Financial aid based on academic, artistic or athletic achievements.


The school decides whether to offer admission to a student without taking financial need into consideration.  Most schools are need-blind.


These schools may examine the financial need of students. At most schools, the majority of students are selected regardless of their financial need. Using this approach, a school will accept most of its freshmen class without any regard to its financial bottom line.  For the last 10% or 20% of slots, however, a school may start looking at the financial ability of applicants, which will favor wealthier students. With this admission approach, the students who are marginal applicants AND financially needy can be rejected. Wealthy students who are marginal applicants can be accepted.

Pell Grant

Federal grant program for undergraduate students from low income families.

Perkins Loan

Low-interest, subsidized federal loan for students with exceptional financial need.

PLUS Loans (Parent Loans for Undergraduate Students)

Federal loans available to parents of undergraduate students to help finance their child’s education.  Parents may borrow up to the difference between education costs and financial aid received.

Promissory Note

A legally binding contract a student signs before receiving loan funds.  This details the terms of the loan and obligates the borrower to repay.


Gift aid that does not require repayment.  This is usually offered to students who show potential for distinction.

Student Aid Report (SAR)

The official notification sent to students after submitting the FAFSA.  This form should be kept as it may be a required document for a college financial aid office. The SAR also includes the student’s data release number (DRN).

Subsidized Loan

A loan, such as the Subsidized Direct Loan, offered to students demonstrating need, will be interest free until the student is finished with their education.  Interest will only start accruing after a 6-9 month grace period upon the completion of school.

Supplemental Education Opportunity Grant (SEOG)

Federal grant program for undergraduate students with exceptional financial need.

Unsubsidized Loan

The interest on an unsubsidized loan starts accruing the day the loan is initiated.  There is no interest free period. The student, however, may defer payment of the loan until after he leaves schools.

Unmet Need

The difference between a student’s total cost of attendance at a specific college and the student’s total available resources, including awarded financial aid

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