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Common Financial Aid Terms

Adjusted Gross Income: All taxable income minus deductions
Assets: Savings and checking accounts, business value, stocks, bonds, real estate, trust funds. Cars are not considered assets, nor are retirement accounts or personal possessions such as stamp collections or musical instruments.
Benefit: Funds that students are entitled to under special conditions.
Cost of Attendance: The total amount it will cost a student to go to school. Typically included are such items as tuition and fees, room and board, and estimates of such expenses as books, transportation, medical, day care and dependents' allowances.
Co-Signer: This is a credit worthy individual, usually a parent or spouse, who has agreed to share the responsibility for repayment of a student loan with you.
Default: Being delinquent in repaying a student loan more than a predetermined number of days or failure to comply with any of the other terms of the promissory note.
Deferment: A postponement of the loan repayment. Conditions for deferment vary by loan program.
Delinquency: The act of missing a scheduled payment on a student loan. If delinquency persists, default will occur
Disbursement: This is the act of sending or handing a loan check to the student so that it can be cashed. A student loan could be disbursed in one, two, or three payments. Disbursements can be sent electronically to the student's school to credit his or her school account.
Exclusions from Gross Income: Benefits received by the tax filer that do not have to be included in their gross income for tax purposes. Examples are grants and scholarships, employer provided educational assistance, student loan debt forgiveness, and tuition reductions for post-secondary education employees and their families.
Expected Family Contribution (EFC): A calculation based on the need analysis of how much of a family's resources should be available to pay toward the cost of attendance. This calculation is received after completing the FAFSA.
Financial Aid Administrator: A professional employee at each post-secondary institution with special knowledge and background in student financial aid.
Financial Aid Package: Assembled by the financial aid office, the financial aid package contains an estimate of the total amount of financial aid a student is to receive. It may include grant, work, and loan funds from a variety of sources. This estimate is calculated using a mathematical formula set by federal law.
Financial Need: The difference between the cost of attending a post-secondary institution and the family's ability to pay for those costs.
Free Application for Federal Student Aid (FAFSA): The form that must be completed by all students and parents who apply for federal student aid. It is the only form that can be used to apply for Minnesota State Grant funds and, at most post-secondary institutions, for institutional funds.
Grant: An outright award to the student, usually based on financial need. The student does not have to repay this money.
Guarantee Fee: A fee that is deducted from the proceeds of the Stafford Student Loan and forwarded by the lender to a guarantor in return for its guaranteed coverage against default.
Half-time: At schools measuring progress by credit hours and academic terms, at least six semester hours or quarter hours per term; at schools measuring progress by clock hours, at least 12 hours per week; at schools measuring progress by credit hours, but not using academic terms, at least 12 semester hours or 18 quarter hours per year.
Interest: This is the fee charged to borrow money. Interest charges are in addition to the principal of the loan.
Subsidized Loan: Interest-free until the student leaves school. The payment of interest is paid by the U.S. Department of Education for student borrowers while they are in school.
Need Analysis: A procedure used to estimate a student applicant's need for financial assistance to help meet his or her educational expenses. It consists of two major components; arriving at an estimate of the applicant's and/or the family's ability to contribute to educational expenses, and arriving at an accurate estimate of the educational expenses themselves.
Origination Fee: A fee that is deducted from the amount of a Stafford Student Loan.
Parent's Contribution (PC): The amount a student's parents can be expected to contribute to their son or daughter's education; based on analysis of their income and assets.
Principle: This is the amount borrowed by the student before interest is charged.
Promissory Note: The legal document signed by the borrower prior to receiving a student loan. Besides containing a promise to repay the loan, it lists the conditions of the loan and terms for repayment.
Scholarship: An award to students based on academic achievement and usually on financial need. The student does not have to repay this money.
Student Budget: The amount of money the student will need to pay tuition and fees, books and supplies, room and board, personal expenses, and transportation. These figures will be determined by the financial aid administrator.
Student Aid Report (SAR): Report on the results of student's need analysis based on information supplied on the Free Application for Federal Student Aid. The report is used to make corrections.
Student Contribution (SC): The amount that a student/spouse can be expected to contribute to the cost of attendance based on need analysis of income and assets.
Tax Credit: As in the Federal Hope and Lifetime Learning Tax Credits, means a credit against a tax liability. The tax filer is able to subtract the amount of credit from tax liability. The tax filer must have tax liability to receive the Hope or Lifetime credit. (this is what is meant by a "non refundable" credit)
Tax Deduction: Tax deductions are subtractions from income. In the case of student loans, some tax filers may be able to deduct some interest from income. Some tax filers will do this when they "itemize" their tax deductions. However, tax filers who do not itemize will be able to deduct interest on student loans.
Work-Study Program: A programs offered to students to work 2 hours per day 5 days a week and earn a bi-monthly paycheck payable on the 15th and last day of the month.

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