Financial Aid Glossary

Preparing for college is stressful enough, but figuring out how to pay for it is even harder. Plus, from the first FAFSA through graduation, you're sure to be bombarded with financial aid acronyms and buzzwords. Here are some key terms you'll need to know.

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.

Cal Grant: A Cal Grant is money for college you don't have to pay back. To qualify, you must apply for through either the Free Application for Federal Student Aid (FAFSA) or the California Dream Act Application (CADAA) by the deadline and meet the eligibility criteria and financial requirements as well as any minimum GPA requirements. Cal Grants can be used at any University of California, California State University or California Community College as well as qualifying independent career colleges or technical schools in California. You can find information here:

Capitalized Interest: Unpaid interest that is added to the original amount of a loan. Capitalized interest increases the size of a loan, because the borrower is paying interest on their interest.

COA: Cost of Attendance. This is the total cost of attending a college or university, including tuition, food and housing, books, lab fees, transportation and basic living expenses.

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 called junior college or two-year college. Students can take classes, and then transfer to a four-year school, or they can earn certificates, diplomas or associate's degrees.

Credit Hour: Credit hours are units of value given to classes. Some classes may be worth two or three credits, while others are worth four credits. 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.

Deferment: A deferment is an approved postponement in repaying a student loan. For example, students may seek a deferment on undergraduate loan payments while in graduate school.

Department of Education: This government agency administers several federal student financial aid programs.

Direct Loan : The U.S. Department of Education's loan program.

EFC: Expected Family Contribution. Beginning with the 2024-2025 school year, this will be known as the Student Aid Index or SAI (see below)

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: Free Application for Federal Student Aid. Filling out a FAFSA form is the first step in the financial aid process. To be eligible to receive federal financial aid, a student must complete a FAFSA.

FAFSA Submission Summary: This report summarizes the information entered on your FAFSA form and shows the amount of your Student Aid Index. Replaces the Student Aid Report beginning with the 2024-2025 school year.

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.

FSEOG: Federal Supplemental Educational Opportunity Grant. This federal government program provides need-based grants to low-income college students with the most need, and is administered through the school's financial aid office. Not all schools participate.

Federal Work-Study Program: A federally-funded, need-based program administered by each school, this program allows students to work on campus in exchange for a portion of their tuition.

Grant: A grant is money given to students for their education. Often based on need, grants may come from federal or state programs, or sometimes from private charitable organizations. It does not have to be repaid.

GSL: Guaranteed Student Loan. Now called the Federal Family Education Loan Program (see FFEL, above).

Independent Student: Independent students are self-supporting students who are not financially dependent on their parents.

MPN: Master Promissory Note. This form promises repayment, and is signed by a student or parent when taking out a PLUS Loan.

National Merit Scholarship Program: Students who do well on the PSAT/NMSQT in their junior year may qualify for scholarships. A few students receive full scholarships.

Need-based: Need-based financial aid is for students who demonstrate financial need. A need-based grant might be awarded based on a student's low income.

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.

Pell Grant: Federal Pell Grants are a federal program that provides need-based educational grants for low-income students. Because they are grants, they do not have to be repaid.

PLUS: PLUS loans are federal loans that graduate or professional degree students and parents of dependent undergraduate students can use to help pay education expenses. The U.S. Department of Education makes Direct PLUS Loans to eligible borrowers through schools participating in the Direct Loan Program.

PSAT/NMSQT: The Preliminary SAT/National Merit Scholarship Qualifying Test. The PSAT/NMSQT is a practice test for the SAT. Students hoping to receive a National Merit Scholarship must take and pass this test in their junior year of high school.

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.

SAR: Student Aid Report. Beginning with the 2024-2025 school year, this will be called the FAFSA Submission Summary (see above)

Scholarships: These funds are given to, or earned by, students, and are to be used for tuition. There are numerous public and private sources for scholarships. Some are given based on need, some on merit or skill. Others have very specific stipulations on who can receive the scholarship.

Student Aid Index (SAI): Replacing the Expected Family Contribution (EFC) as of the 2024-2025 school year, this is the number that's used to determine your eligibility for federal student financial aid. This number results from the financial information you provide in your FAFSA, the application for federal student aid. Your SAI is reported to you on your FAFSA Submission Summary.

Title IV Institution Code: (See Federal School Code, above)

Work-Study: This program allows students to defray part of their tuition and school expenses by working part time on campus. It is designed for students with financial need.