Financial Aid Glossary

The world of financial aid has a language all its own. Financing your college education can be challenging enough without having to decipher acronyms or trying to figure out exactly what a term means. This glossary should help you as you begin your search for scholarships, grants and other forms of financial aid.

Academic Year
A period of time schools use to measure a quantity of study. For example, a school’s academic year may consist of a fall and spring semester during which a full-time undergraduate student must complete 24 semester hours. Academic years can vary from school to school, and even from educational program to educational program at the same school.

The school must have accreditation from an accrediting body recognized by the U.S. Department of Education to be eligible to participate in the administration of federal student aid programs. Accreditation means that the school meets certain minimum academic standards, as defined by the accrediting body.

Acceptance Form
The written acknowledgement by the student of receipt of an award letter. The form usually provides for acceptance or rejection of offered aid.

Cash on hand in checking and savings accounts; trusts, stocks, bonds, other securities (excluding retirement accounts and primary residence); real estate, income-producing property, business equipment, and business inventory. Considered in determining Expected Family Contribution (EFC) under the regular formula or an institutional eligibility test.

Award Letter
A means of notifying successful financial aid applicants of the assistance being offered. The award letter usually provides information on the types and amounts of aid offered, as well as specific program information, student responsibilities, and the conditions that govern the award. It generally provides students with the opportunity to accept or decline the aid offered.

An alternate term for the cost of attendance.

Campus-based Programs
The term commonly applied to those U.S. Department of Education federal student aid programs administered by institutions of post-secondary education. Includes: Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG) and Federal Work-Study (FWS).

Cost of Attendance
Costs associated with attending college. Can include: tuition and fees, room and board, allowances for books, supplies, transportation, personal expenses, child care and costs related to a disability.

Departmental Scholarship
An award of gift assistance that is specifically designated for a recipient in a particular academic department within the institution.

Dependent Student
A student who does not qualify as an independent student and whose parental income and asset information is used in calculating Expected Family Contribution.

Expected Family Contribution (EFC)
The amount a student and his/her family are expected to pay toward the cost of attending college. This amount is determined by a formula established by Congress. The formula includes factors such as taxable and non-taxable income, assets, family size, number in college, etc.

Federal Direct Plus (Parent Loan) 
Long-term loan made available to parents of dependent students. The federal government provides the loan capital; selected educational institutions serve as the administrators. Interest rates are linked to 52-week Treasury bill rates, but may not exceed nine percent. May be used to replace Expected Family Contribution.

Federal Direct Stafford Loan Program (Subsidized and Unsubsidized)
Long-term, low interest student loan administered by selected educational institutions. The federal government provides the loan capital; the school serves as the administrator. Variable interest rate not to exceed eight and one-quarter percent. Unsubsidized Direct Stafford Loans can be used to replace the EFC.

Federal Methodology
The formula used to determine a family’s eligibility for federal aid.

Federal Pell Grant
A grant program for low-income undergraduate students who have not yet completed a first bachelor’s degree.

Federal Perkins Loan
One of the campus-based programs; a long-term, low interest loan program for both undergraduate and graduate students.   

Federal Plus Loan (Parent Loan) 
Long-term loan made available to parents of dependent students. Private lending institutions provide the loan capital, and the federal government administers the program. Interest rates are linked to 52-week Treasury bill rates, but may not exceed nine percent. May be used to replace the EFC.

Federal Stafford Loan Program (Subsidized and Unsubsidized)
Long-term, low interest student loan administered by the federal government. Private lending institutions provide the loan capital. Formerly known as Guaranteed Student Loan. Variable interest rate, not to exceed eight and one-quarter percent. Unsubsidized Federal Stafford Loans may be used to replace EFC.

Federal Student Aid (FSA) ID
A username and password that is used each year by students and parents to electronically "sign" the Free Application for Federal Student Aid (see FAFSA entry below) and gain access to federal aid information. Get your FSA ID here.

Federal Supplemental Educational Opportunity Grant (FSEOG)
One of the campus-based programs; grants to undergraduate students of exceptional financial need who have not completed their first bachelor’s degree and who are financially in need of this grant to enable them to pursue their education. Priority for FSEOG awards must be given to Federal Pell Grant recipients with the lowest EFCs.

Federal Teacher Education Assistance for College and Higher Education Grant (TEACH)
Grant available to undergraduate, post-baccalaureate or graduate students planning to become elementary or secondary teachers. Requires a teaching service commitment.

Federal Work-study Programs (FWS)
One of the campus-based programs; a part-time employment program that provides jobs for undergraduate and graduate students who are in need of such earnings to meet a portion of their educational expenses. Note: Students not offered FWS may be given the opportunity for on-campus employment through a work program sponsored by the institution.

Financial Aid Award
An offer of financial assistance to a student attending a post-secondary educational institution. This award may be in the form of one or more of the following types of financial aid: repayable loan, a non-repayable grant and/or scholarship, and/or student employment.

Financial Aid Package
The total financial aid award a student receives. The aid may come from federal, state, institutional, or private sources and may include loans, grants, scholarships, and/or employment.

Financial Need
The difference between the institution’s cost of attendance and the EFC.

Free Application for Federal Student Aid (FAFSA)
The form used to apply for federal and state student aid, processed at no cost to the applicant. It is used to determine a student’s eligibility for federal grant, loan, and work-study funds and most other need-based awards. The FAFSA is to be completed by the student and the student’s parents, if applicable, and can be done electronically at The FAFSA must be filed by March 1.

Full-time Student
Generally, an undergraduate who is taking a minimum of 12 credits per semester or academic term at an institution with standard academic terms.

Gift Aid
Financial aid, such as a scholarship or grant, that does not require repayment or require that work be performed.

A type of financial aid that does not have to be repaid; usually awarded on the basis of need. Often referred to as gift aid.

Independent Student
A student who has attained age 24, or who has not attained age 24, but is an orphan; is, or has been through age 18, a ward of the court; is a veteran; is married; is a graduate or professional student; has legal dependents other than a spouse; or presents documentation of other unusual circumstances demonstrating independence to the student financial aid administrator at the post-secondary institution. 

Institutional Aid
Aid that educational institutions make available from their own funds to their students.

Kalamazoo Promise
Scholarship program that provides each Kalamazoo Public Schools graduate with the opportunity to attend post-secondary education with a tuition scholarship of up to 100 percent. All students who graduate from KPS, are residing in the KPS school district and have been KPS students for four or more years are eligible (enrollment and residency must be continuous). Student must be admitted to and enrolled at a public State of Michigan university or community college. For more information, visit

An advance of funds that is evidenced by a promissory note requiring the recipient to repay the specified amount(s) under prescribed conditions.

Merit-Based Awards
Awards to students who excel in areas such as academics, sports, leadership, music, art or dance, and meet sponsor-selected program requirements through audition, academic record or recommendation. Financial conditions are not considered.

Michigan Competitive Scholarship
Michigan High School seniors who have taken the ACT, achieved a qualifying score of 90 on the exam and demonstrate financial need through the FAFSA are eligible for this scholarship. It may be used at any two-year or four-year Michigan public college or university. 

Michigan Education and Training Voucher Program (ETV)
Part of the Foster Care Independence Act. Federal and state money to help current or former foster youths attend an accredited college, university or training program at least half time. Applications are available at or by calling 1-877-660-6388.

Michigan Educational Opportunity Grant
This grant program is available for undergraduate students who demonstrate financial need and enroll on at least a half-time basis at public Michigan colleges or universities. It provides up to $1,000 per academic year.

Michigan Tuition Grant
A grant available to Michigan students who demonstrate financial need and are attending a private Michigan college. Completion of the FAFSA is required.

Military Scholarships
Reserve Officer Training Corps (ROTC) scholarships are available for the Army, Navy and Air Force at many colleges and universities throughout the U.S. These scholarships cover tuition and fees, books and supplies, and include a subsistence allowance. For more information, contact a local recruiter or campus ROTC office.

Need Analysis
A system used to estimate a student applicant’s need for financial assistance to help meet his/her educational expenses. Need analysis consists of two primary components: determination of an estimate of the applicant’s and/or family’s ability to contribute to educational expenses, and determination of an accurate estimate of the educational expenses themselves.

Need-based Awards
Awards to students who demonstrate they and their family cannot pay for all of the cost of post-secondary education on their own. Academic merit may or may not be considered.

Nonrenewable Award
An award that is given only once.

Part-time Student
Generally one who is taking less than 12 credits per semester or quarter per academic term at an institution with standard academic terms. Some aid programs will determine eligibility by the number of hours for which a student is registered.

Renewable Award
An award that can be earned for more than one year providing conditions set by the distributing institution are met by the recipient.

A type of financial assistance that does not require repayment or employment; may be based on merit, need, or merit plus need.

Self-help Assistance
Funds provided through the work and effort of the student, including savings from past earnings, income from present earnings or a loan to be repaid from earnings during or after college.

Statement of Selective Service Registration
A document students must sign for federal and state need-based assistance in which male students indicate that they have, if required to do so, registered with the Selective Service. Students may register at their high school or at the post office and should do so on or shortly after their 18th birthday.

Student Aid Report (SAR)
The report provided to the student after filing the FAFSA. This document summarizes applicant information, the EFC for the student, and other messages related to the student’s application. 

Student Contribution
An estimate of the student’s ability to contribute to post-secondary expenses. This is a part of the EFC.

Subsidized Loan
A loan on which the government pays the interest until repayment begins. This type of loan may not be used to assist with the Expected Family Contribution and is awarded only to students who demonstrate financial need. 

Title IV Programs
Federally funded programs that include the Federal Perkins Loan, Federal SEOG, Federal Work Study, Federal Stafford and Federal Direct Stafford Loan, Federal PLUS and Federal Direct PLUS Loan, and the Federal Pell Grant.

Unmet Need
The difference between a student’s total cost of attendance at a specific institution and the student’s total available resources.

Unsubsidized Loan
A loan on which the student pays the interest beginning at the time of loan disbursement. Arrangements may be made to capitalize the interest. This type of a loan may be used to assist with the Expected Family Contribution. Financial need is not a factor, but the student must complete the FAFSA process.

The process of confirming information submitted on student aid applications through the comparison of specified documents to the data on the Student Aid Report (SAR) or other applications for student aid. This often requires submission of a copy of federal income tax forms.

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