Glossary of Financial Aid Terms

Academic Year is the period during which school is in session, usually at least 30 weeks. Most academic years run from August through the end of May.

Accrue means to accumulate.

Accrual Date is the date on which interest charges on your student loans begin to accrue.

Appeal is a formal request to have your financial aid status reviewed based on any changes in your current financial situation.

Asset Protection Allowance is a portion of your parents’ assets that are not included in the calculation of their college contribution for you.

Award Letter is the official notification issued by the institution’s financial aid office that lists all the financial assistance awarded to you.

Campus-Based Aid includes financial aid programs administered by the college or university.

Compounded Interest is interest that is paid on both the principal balance of the loan and any accrued interest.

Cosigner is someone who would assume responsibility for your loan if you fail to repay it.

Credit Rating is information used to determine if you can responsibly take out a loan and repay it. This is also known as a FICO score.

Default is when you fail to pay several regular installments on time or otherwise fail to meet the terms and conditions of the loan.

Deferment occurs when you are allowed to postpone paying the loan under specific circumstances.

Disbursement is the release of financial aid funds to the school for delivery to you as the student.

Disclosure Statement provides you with information about the actual cost of the loan.

Expected Family Contribution (EFC) is the amount of money a family is expected to pay for your college education as determined by the Federal Methodology need analysis formula.

Federal Direct Loans are loans made to undergraduate students through the federal government. There are two types, subsidized (need based) and unsubsidized (not based on financial need).

Federal Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students can use to help pay for college or career school.

FAFSA is the Free Application for Federal Student Aid found at fafsa.gov and is used to determine federal and state aid.

Federal Methodology is a needs-analysis formula used to determine the Expected Family Contribution (EFC). See definition above.

Federal Work-Study is a program providing college students with part-time employment during the school year.

Merit-Based is financial aid that is based on your academic achievement, not on financial need.

Need-Based relates to financial aid based on your financial situation. This is the primary criteria used to award financial aid.

Pell Grant is a federal grant that can provide funds based on your financial need.

Repayment Schedule discloses the monthly payment, interest rate, total repayment obligation, due dates and the term of loans. The form includes a Repayment Term that is the period during which you must make payments on your loan.

Student Aid Report (SAR) is a report that summarizes the information that you provided on the FAFSA and gives you basic information about your eligibility for federal student aid.

Last Updated: 9/14/22