As a Career Coach, I am often asked what a financial term means. As you complete forms for aid, you may find yourself having to learn a whole new language. I have compiled this glossary of terms to help you along the way.

Academic Year: The time during which school is in session, typically from September through May.

Accreditation: Accreditation ensures a college or school meets certain minimum quality academic standards, as defined by an accrediting body recognized by the US Department of Education. Only accredited schools can participate in federal student aid programs.

Assets: Assets, when referenced in the FAFSA, refer to income, checking and savings accounts, stocks, bonds, trusts, material goods, and investment or vacation real estate. Do not include your primary residence or retirement accounts, such as IRAs and 401Ks, under FAFSA assets.

Award Letter: An official notice from a school’s financial aid office that details all the aid awarded to the student. If you decide to attend that school, you must return a signed copy of the letter indicating whether you accept or decline each type of aid.

Award Year: The school year for which the financial aid is requested or awarded.

Base Year: The tax year prior to the award year for which you’re requesting financial aid.

Cost of Attendance (COA): The total cost of attending a particular school, including tuition, fees, room and board, books and supplies, transportation, loan fees, childcare, and personal expenses. COA for a specific school may differ depending on whether the student lives on- or off-campus, is married or unmarried, or from in- or out-of-state. The COA allows students to budget college expenses accurately.

CSS Profile: Some private colleges and universities use the College Scholarship Service (CSS) Profile to determine whether a student is eligible for non-federal loans.

Department of Education (DOE): The federal agency that establishes financial aid programs and processes the FAFSA form.

Deferment: A temporary period, common in federal loan programs, when a borrower is not required to make loan payments. In the case of deferred student loans, such as Stafford and Perkins loans, the student begins loan payments at a point in time after graduation.

Custodial Parent: When parents are divorced or separated, the parent with whom the student lived the most time in the past year is considered the custodial parent and the parent who fills out the FAFSA.

Dependent: A student is considered a dependent if he lives with his parents and depends on them for more than half of his living expenses.

Direct Loan: A federal, low-interest loan administered by the college or university.

Disbursement: The time when loan funds are released to the college and/or the student.

Expected Family Contribution (EFC): The contribution the student and/or family are expected to make toward education expenses. It’s a calculation based on the information filed in the FAFSA. Schools use the EFC to calculate a student’s eligibility for financial aid from that institution.

FAFSA (Free Application for Federal Student Aid): A free form you submit to the office of Federal Student Aid (FSA) at the Department of Education. It collects information about student and family finances, which the FSA uses to determine a student’s eligibility for financial aid.

Federal Pell Grant: Federal grants awarded to students with significant financial need, and which do not repayment.

Federal Student Aid Office (FSA): The entity within the Department of Education that processes the FAFSA.

Financial Aid Offer: The total amount of aid a school offers you. Sometimes called “Financial Aid Package.”

Financial Aid Office: The office at a college or university responsible for making financial aid award decisions and communicating with and assisting students and families.

Financial Aid Package: The total amount of aid a school offers each student. Sometimes called “Financial Aid Award.”

Financial Need: The difference between a school’s cost of attendance and the family’s expected contribution. It’s how much each student needs in financial aid dollars to be able to afford a specific school.

Financial Aid: Money awarded to help a student pay for the cost of higher education. Financial aid comes in many forms, including loans, grants, scholarships, and work-study.

Financial Aid Administrator (FAA): Also called Financial Aid Officers, Financial Aid Advisors, and Financial Aid Counselors, these are the college or university employees who work with families to award and administer financial aid.

Fixed Interest Rate: A loan interest rate that remains the same throughout the life of the loan.

Gift Aid: Financial aid, such as grants and scholarships, which the student does not need to repay.

Grace Period: The time period, usually six to nine months, between a student’s graduation and when he or she must begin repaying student loans.

Grant: A type of financial aid award that does not have to be repaid.

Independent Student: A student who meets any of the following criteria:

• 24 years or older
• A graduate or professional student
• Married
• Has legal dependents
• A veteran of the U.S. Armed Forces
• An orphan or ward of the court

Institutional Methodology (IM): A formula colleges use to determine how to allocate the school’s own financial aid funds (versus federal funds), based on need.

Interest Rate: The cost of borrowing money. Student loan interest rates are generally lower than standard loan rates.

Lender: The bank or lending institution from which you take out a loan.

Loan: A type of financial aid that the student must promise to repay with interest.

Merit-Based Financial Aid: Financial aid, usually scholarships, that is not calculated based on need, but rather on academic, athletic, or artistic merit.

Need Analysis: The process of determining a student’s financial need, which typically begins when the FAFSA is filed.

Need-Based Financial Aid: Aid, such as most federal aid, that is awarded based on financial need.

Need-Blind Admissions: An admissions process used by most schools that does not consider the student’s ability to pay. The objective is to eliminate admissions decisions based on whether a student needs financial aid or not.

Net Cost: The difference between a school’s cost of attendance and the financial aid package. The net cost includes all financial aid, such as loans, versus the out-of-pocket cost, which includes only need-based aid. Families should evaluate financial aid awards using the out-of-pocket cost, not net cost, of attending that institution.

Parent Contribution (PC): Unless you’re an independent student, the federal government expects your family to contribute to the cost of your education. The PC is an estimate based on parental income, assets, and other criteria.

Out-of-Pocket Cost: The difference between a school’s cost of attendance and the need-based financial aid package. It indicates the amount the family will need to pay out of savings, income, and loans. Out-of-pocket costs can vary greatly between colleges, depending on how much need is met with grants versus loans. Families should evaluate financial aid awards using the out-of-pocket cost of attending each institution

Parent PLUS Loan: A federally guaranteed loan program that lends credit-worthy parents funds to pay for educational expenses. These loans have a fixed, 7.9% interest rate.

Pell Grant: A form of federal financial aid available mostly to undergraduate students, which does not have to be repaid. Grant amounts depend on student need, school costs, and other criteria, up to a maximum of $5,500 per academic year.

Selective Service Registration: Males ages 18 to 25 must register for the military draft in order to qualify for federal financial aid.

Scholarship: A form of financial aid that does not have to be repaid. Scholarships are often restricted to students in specific courses of study or with academic, athletic, or artistic talent. Schools, non-profit organizations and private entities award them.

Stafford Loan: A federal loan available to undergraduate and graduate students attending college at least half-time. These fixed rate loans, are the most common and one of the lowest-cost ways of paying for school.

Student Aid Report (SAR): The official summary of your FAFSA information, indicating your eligibility for financial aid. The FSA sends the SAR via email a few days after you complete the FAFSA, or by mail within 10 days of filing.

Student Contribution: The amount of money the federal government expects the student to contribute to the cost of education. This amount is included in the EFC and may include a portion of student savings and student work earnings.

Unmet Need: Schools can’t always provide each student with the difference between their ability to pay and the cost of attending the institution. When schools award less financial aid than the student needs, the gap is called “unmet need.”

Variable Interest Rate: A loan rate that can fluctuate during the life of the loan, but usually only up to a set amount within a certain period of time.

Work Study: A federal program that provides part-time jobs for students, allowing them to earn money to pay education expenses.