ASPIRE - Financial Aid Glossary

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

Award Letter: An official document listing all the financial aid awarded to the student. It generally shows the cost of tuition 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 budget usually includes tuition, fees, room, board, books, supplies, travel and personal expenses.

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

Cosigner: The person who signs with you on a loan and is held responsible if you fail to repay the loan.

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; the borrower is responsible for paying it.

Dependent student: A 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, or is not an orphan or ward of the court.

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.

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.

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

Expected Family Contribution: The amount of money 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.


FAFSA - Free Application for Federal Student Aid: The form that students must complete to apply for federal and state financial aid.

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

Financial Aid Package: A combination of financial aid awarded by the financial aid office of a college or university.

Financial Need: The difference between 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.

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

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, or is an orphan or ward of the court.

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

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.

Need: The difference between the cost of education and the Expected Family Contribution is the student’s financial need.

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

Parent Contribution: Amount parents can be expected to contribute each year to the cost of their student’s education.

Principal: The sum of money owed as debt, upon which interest is calculated.

Scholarships: Financial aid awards that do not have to be repaid. Scholarships are awarded based upon criteria established by the donor.

Student Aid Report: An SAR is sent to you from the company processing your FAFSA. The report is a summary of the information you submitted on your FAFSA. Students and family should review their SAR to verify that all information is correct.

Student Contribution: Amount the student can be expected to contribute each year to the cost of his/her education.

Subsidized Stafford Loans: Need-based loans. For those who qualify, the federal government pays the interest owed on the loan while the student is attending school, during a six-month grace period after the student leaves school and during any period of authorized deferment.

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. The borrower is charged interest from the time the loan is disbursed until it is paid in full. While in school, the borrower can pay the interest as it accrues (builds up) or request that the interest be capitalized at repayment. Repayment begins after a 6-month grace period.

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

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

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