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AGI (Adjusted Gross Income): All taxable income less IRS allowable adjustments to income. This figure is from U.S. IRS tax forms.

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 student must complete 24 semester hours. Academic years vary from school to school, and even from education program to education program at the same school.

Accrued Interest: Interest that accumulates on the unpaid principal balance of a loan.

Amortization: The process of gradually repaying a loan over an extended period of time through periodic installments of principal and interest.

Award Letter: An official document issued by a financial aid office listing all the financial aid awarded to the student. The award letter will include information about the cost of attendance and terms and conditions for the financial aid.

Borrower: The person who receives the loan.

Budget: The total cost of attending a post-secondary institution for one academic year. The student's budget usually includes tuition, fees, room, board, books, supplies, travel, and personal expenses. Each institution develops its own student budget.

Campus-Based Aid: Financial aid programs administered by the university. The government provides the university with a fixed annual allocation, which is awarded by the financial aid administrator to deserving students. The Perkins Loan Program, Supplemental Education Opportunity Grant (SEOG), and Federal Work-Study are examples of campus-based aid.

Capitalization of Interest: Addition of unpaid interest to the principal balance of a loan, which increases the total outstanding balance due.

Cooperative Work-Study Education: A program in which the student alternates between full-time college study and full-time paid employment related to the student's area of study. Under this plan, a bachelor's degree often requires five years to complete.

Cosigner: A person who signs the promissory note in addition to the borrower and is responsible for the obligation if the borrower does not pay.

Cost of Attendance: The total cost of attending a post-secondary institution for one academic year. The cost of attendance usually includes tuition, fees, room, board, supplies, transportation, and personal expenses.

Credit-Worthy: An individual with no negative credit history per the criteria established by the lender.

DHHS or HHS (US Department of Health and Human Services): Government agency that administers several health education loan programs, including the HEAL, HPSL, and NSL loan programs.

Deferment: A period during which a borrower, who meets certain criteria, may suspend loan payments. For some loans, the federal government pays the interest during a deferment. On others, the interest accrues and is capitalized, and the borrower is responsible for paying it.

Dependent Student: An undergraduate student whose parents provide more than half of their financial support. A dependent student is not married, is under 24 years of age, has no legal dependents, is not an orphan or ward of the court, nor a veteran of the U.S. Armed Forces. Parents of a dependent student must submit parental information on the FAFSA for their son or daughter to be considered for financial aid. Parents of dependent students are eligible for the PLUS Loan program. (See also Independent.)

Disbursement: The release of loan funds to the school for delivery to the borrower. Disbursements are usually made in equal multiple installments co-payable to the borrower and the school.

Disclosure Statement: Statement of the total cost and amount of a loan, including the interest rate and any additional finance charges.

ED, DOE, USED, or DE (US Department of Education): Government agency that administers several student financial aid programs, including the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loan, the FFELP, and the FDSLP.

EFC (Expected Family Contribution): The amount a family is expected to contribute to a student's education. EFC is calculated based on family earnings, net assets, savings, and size of family and number of family members in college.

Early Decision: An admission program with earlier deadlines and earlier notification dates than the regular admissions process. Students who apply through an early decision program commit to attending the school if admitted. (Thus, a student can apply early decision to only one school).

Eligible Non-Citizen: Someone who is not a US citizen but is nevertheless eligible for Federal student aid. Eligible non-citizens include US permanent residents who are holders of valid green cards, US nationals, holders of form I-94 who have been granted refugee or asylum status, and certain other non-citizens. Non-citizens who hold student visas or exchange visitor visas are not eligible for student aid.

Enrollment Status: An indication of whether you are a full-time or part-time student. Generally you must be enrolled at least half time in a degree or certificate program to qualify for financial aid.

Entitlement: Entitlement programs award funds to all qualified applicants. Federal student loans are an example of such a program.

FAA (Financial Aid Administrator): A college or university employee who is involved in the administration of financial aid. Some schools call FAAs "Financial Aid Advisors" or "Financial Aid Counselors."

FAFSA (Free Application for Federal Student Aid): The form that must be completed by students and parents applying for Federal Title IV student aid.

FAT (Financial Aid Transcript): A record of all financial aid received by students at each school attended.

FDSLP: The Federal Direct Student Loan Program. Stafford and PLUS loans are available directly from the government rather than through commercial lenders. Selected colleges and universities participate in this program.

FFELP: The Federal Family Education Loan Program. Stafford and PLUS loans are financed by private lenders and guaranteed by the government.

Federal Methodology: The need analysis formula mandated by law to determine a student's eligibility for student aid programs.

Federal Processor: The organization that processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and submits the results to students and colleges.

Fellowship: A form of aid given to graduate students to help support their education. Some fellowships include tuition grants or payments to universities in lieu of tuition. Most fellowships include a stipend to cover reasonable living expenses. Fellowships are a form of gift aid and do not have to be repaid.

Financial Aid: Financial assistance in the form of scholarships, grants, work-study, and loans for education.

Financial Aid Package: A combination of financial aid (scholarships, grants, loans, and/or work-study) awarded by the financial aid office of a college or university.

Financial Need: The difference between the cost of attendance at a college and the Expected Family Contribution.

Fixed Interest: On a fixed interest loan, the interest rate remains the same for the life of the loan.

Gift Aid: Financial aid, such as grants and scholarships, which does not need to be repaid.

Grants: Financial aid awards that do not have to be repaid. Grants are available through the government, state agencies and colleges.

Holder: The institution that owns a loan.

Independent Student: A student who is either married, 24 years of age or older, enrolled in a graduate or professional education program, has legal dependents other than a spouse, is an orphan or ward of the court, or a veteran of the U.S. Armed Forces.

Interest: An amount calculated as a percent of the principal loan amount, that is charged for borrowed money.

Internship: A part-time job during the academic year or the summer months, in which a student receives supervised practical training in their field of study.

Loan: A type of financial aid that is available to students and their parents. Education loan programs have varying interest rates and repayment provisions. An education loan must be repaid.

Loan Interview: Students with educational loans are required to complete a loan counseling session before they receive their first loan disbursement and again before they graduate or otherwise leave school. During these counseling sessions, called entrance and exit interviews, the FAA reviews the repayment terms of the loan and the repayment schedule with the student

National Service Trust: President Clinton's national community service program. If you participate in this program before attending school, the funds may be used to pay your educational expenses. If you participate after graduating, the funds may be used to repay your student loans. Eligible types of community service include education, human services, the environment, and public safety.

Need: The difference between the cost of education and the Expected Family Contribution (EFC) is the student's financial need.

Need Analysis: Calculation used to determine a student's need for financial assistance for college expenses. The analysis determines the family's ability to contribute to costs compared to the student's cost of attendance.

Need-Based: A means of determining eligibility for certain types of financial aid using financial need as the determining factor.

Origination: The process whereby the lender, or a servicing agent on behalf of the lender, handles the initial application processing and disbursement of loan proceeds.

Origination Fee: Fee, payable by the borrower and deducted from the principal of a loan prior to disbursement to the borrower. For federally backed loans, the origination fee is paid to the government to offset the cost of the interest subsidy to borrowers. For private loan programs, the origination fee is generally paid to the originator to cover the cost of administering and insuring the program.

Overaward: The amount of financial aid proceeds that, when added to other student financial assistance, exceeds the borrower's educational need.

PC (Parent's Contribution): Amount parents can be expected to contribute each year to the cost of their student's education as determined by the Federal Methodology.

PLUS (Parent Loans for Undergraduate Students): Federally insured loans for parents of dependent students.

Pell Grant Program: The largest grant program. Eligibility and award amounts are determined by the college based on established guidelines.

Perkins Loans: Federally insured loans funded by the government and awarded by the school. The loans feature a low interest rate and are repayable over an extended period.

Post-Secondary: This term means "after high school" and refers to all programs for high school graduates, including programs at two and four-year colleges, and vocational & technical schools.

Prepaid Tuition Plan: A college savings plan that is guaranteed to rise in value at the same rate as college tuition. For example, if a family purchases shares that are worth half a year's tuition at a state college, they will always be worth half a year's tuition, even 10 years later when tuition rates will have doubled.

PROFILE: (CSS/Financial Aid PROFILETM): A customized financial aid application form required by certain colleges and scholarship programs, which collects additional financial information to determine eligibility for institutional aid.

Promissory Note: Contract between a borrower and a lender that includes all the terms and conditions under which the borrower promises to repay the loan.

SAR (Student Aid Report): An output document sent to a student by the application processor. The SAR contains financial and other information reported by the student on the FAFSA. The student's Expected Family Contribution (EFC) is printed on the front of the SAR and is the figure used by colleges to determine eligibility for aid.

Scholarships: Funds used to pay for higher education that do not have to be repaid. Scholarships may be awarded based on any number of criteria, such as academics, achievements, talents, and affiliations with various groups, or career aspirations. Scholarships do not have to be repaid.

Self-Help Aid: Financial aid in the form of loans or student employment.

SEOG: Supplemental Educational Opportunity Grant Program; grant funds made available through some schools to a limited number of undergraduate students with financial need.

Statement of Educational Purpose: A legal document in which the student agrees to use the financial aid for educational expenses only.

Subsidized Stafford Loans: Need-based loans.

Transcript: A list of all the courses that a student has taken at a particular high school or college with the grades that the student earned in each course.

Tuition: The amount of money colleges charge for classroom and other instruction, and use of some facilities such as libraries.

Unsubsidized Stafford Loans: Non-need-based loans.

Variable Interest: With a variable interest loan, the interest rate changes periodically. For example, the interest rate might be pegged to the cost of US Treasury plus additional percentage rate and be updated monthly, quarterly, semi-annually, or annually.

Verification Worksheet: A form sent by the college to students who are selected for verification by the Department of Education's Central Processing System.

Work Study: A program, awarded by the college, through which students work part-time to help fund their education.

This glossary was produced by Sallie Mae.