Accruing Interest (on a loan): The cost of the loan, represented by the interest rate, is adding up prior to the repayment period or prior to a payment installment.

Adjusted Available Income: The portion of family income remaining after deducting federal, state, and local taxes, a living allowance, and other factors used in the Federal Need Analysis Methodology.

Adjusted Gross Income (AGI): All taxable income as reported on a U.S. income tax return.

Advanced Opportunity Program Grant (AOP): These grants are available to qualified ethnic minority graduate students.

Advanced Placement (AP): Credit and/or advanced standing in certain course sequences that post-secondary institutions may offer to high school students who have taken high-level courses and passed certain examinations.

Army Reserve Student Loan Repayment Program: Student loan repayment program available to Army Reservists; amount of repayment is based on years of service and job specialty.

Assets: Cash on hand in checking and savings accounts; trusts, stocks, bonds, other securities; real estate (excluding home), income-producing property, business equipment, and business inventory. Considered in determining Expected Family Contribution (EFC).

Associate's Degree: A degree given for successful completion of some courses of study at a two-year college.

Award Letter: A means of notifying successful financial aid applicants of the assistance being offered. The award letter usually provides information on the types and amounts of aid offered, as well as specific program information, student responsibilities, and the conditions which govern the award. Generally provides students with the opportunity to accept or decline the aid offered. (See Financial Aid Notification). Does not necessarily mean that a paper letter was mailed.

Bachelor's Degree: The degree given for successful completion of the undergraduate curriculum at a four-year college or a university. Also called a baccalaureate degree.

Budget: See Cost of Attendance.

Bureau of Indian Affairs (BIA) Grant: A federal grant program administered by the Bureau of Indian Affairs for needy students who are members of an Indian, Eskimo, or Aleut tribe and enrolled in accredited institutions in pursuit of an undergraduate or graduate degree.

Business Assets: Property that is used in the operation of a trade or business, including real estate, inventories, buildings, machinery and other equipment, patents, franchise rights, and copyrights. Considered in determining an Expected Family Contribution (EFC) under the regular formula.

Campus-based Programs: The term commonly applied to those U.S. Department of Education federal student aid programs administered directly by institutions of post-secondary education. Includes: Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Work-Study (FWS) programs.

Capitalization (of interest): The arrangement between borrower and lender whereby interest payments are deferred as they come due and are added to the principal amount of the loan.

Central Processing System (CPS): The computer system to which the student's need analysis data is electronically transmitted by the FAFSA processor. The Central Processing System performs database matches, calculates the student's official Expected Family contribution (EFC), and prints out the Student Aid Report (SAR).

COA: See Cost of Attendance.

Commuter Student: A student who does not live on campus; typically, "commuter" refers to a student living at home with his or her parents, but can also mean any student who lives off-campus.

Consolidation Loan: A loan made to enable a borrower with different types of loans to obtain a single loan with one interest rate and one repayment schedule. Federal Perkins, Federal Stafford (subsidized and unsubsidized), Direct Subsidized and Direct Unsubsidized, Health Education Assistance Loans (HEAL), Health Professions Student Loans, and Loans for Disadvantaged Students may be combined for purposes of consolidation, subject to certain eligibility requirements. A consolidation loan pays off the existing loans; the borrower then repays the consolidated loan.

Cost of Attendance (COA): Generally, this includes the tuition and fees normally assessed a student, together with the institution's estimate of the cost of room and board, transportation and commuting costs, books and supplies, and miscellaneous personal expenses. In addition, student loan fees, dependent care, reasonable costs for a study abroad or cooperative education program, and/or costs related to a disability may be included, when appropriate. Also referred to as "cost of education" or "budget."

Credit (or Credit Hour): The unit of measurement some institutions give for fulfilling course requirements.

Custodial Parent: The parent with whom the dependent student lives, and whose financial information is used in the need analysis when parents are divorced or separated.

Deferment (of loan): A condition during which payments of principal are not required, and, for Federal Perkins and subsidized Federal Stafford and Direct Subsidized Loans, interest does not accrue. The repayment period is extended by the length of the deferment period.

Department of Education, U.S. (ED): The federal government agency that administers assistance to students enrolled in post-secondary educational programs under the following programs: Federal Direct Subsidized Loans, Federal Direct Unsubsidized Loans, Federal Direct Graduate PLUS Loans, Federal Direct Parent PLUS Loans, Federal Pell Grant, Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Federal Family Education Loan (FFEL) Programs.

Dependent Student: A student who does not qualify as an independent student and whose parental income and asset information is used in calculating an Expected Family Contribution (see Independent Student).

EFC: See Expected Family Contribution.

Employment: With reference to financial aid, the opportunity for students to earn money to help pay for their education. Federal Work-Study is one program by which needy students can work to defray their educational expenses.

Employment Allowance: An allowance to meet expenses related to employment when both parents (or a married independent student and spouse) are employed or when one parent (or independent student) qualifies as a surviving spouse or as head of a household. Used in need analysis formula for parents and student, if eligible.

Entrance Loan Counseling (ELC): A federal requirement that must be completed by a student before a Federal Stafford Loan can be disbursed.

Exit Loan Counseling (XLC): A federal requirement that must be completed by a student each time they leave school, graduate or drop below half-time.

Expected Family Contribution (EFC): The amount a student and his or her family are expected to pay toward the student's cost of attendance as calculated by a Congressionally-mandated formula known as Federal Methodology. The EFC is used to determine a student's eligibility for the student financial assistance programs.

FAFSA: See Free Application for Federal Student Aid.

Federal Direct Graduate PLUS Loan: Long-term loans made available to graduate students. Interest rate changes from year to year. May be used to replace EFC; annual amount borrowed limited to the cost of attendance minus estimated financial assistance.

Federal Direct Loan (Subsidized and Unsubsidized): Long term, low interest loans administered by the Department of Education. Interest rate changes from year to year. Unsubsidized Federal Stafford Loans may be used to replace EFC. Government pays interest on the Federal Direct Subsidized Loans while the student is in school or in their grace period.

Federal Direct Parent PLUS Loan (Direct Parent PLUS): Long-term loans made available to parents of dependent students. Interest rate changes from year to year. May be used to replace EFC; annual amount borrowed limited to the cost of attendance minus estimated financial assistance.

Federal Need Analysis Methodology: A standardized method for determining a student's (and family's) ability to pay for post-secondary education expenses; also referred to as Federal Methodology (FM). The single formula for determining an Expected Family Contribution (EFC) for Pell Grants, campus-based programs, FFEL programs, and Direct Loan program; the formula is defined by law.

Federal Pell Grant: A federal grant program for needy post-secondary students who have not yet received a baccalaureate or first professional degree; administered by the U.S. Department of Education.

Federal Perkins Loan: One of the campus-based programs; a long term, low interest loan program for both undergraduate and graduate students at a current interest rate of 5%.

Federal Supplemental Educational Opportunity Grant (FSEOG): One of the campus-based programs; grants to undergraduate students of exceptional financial need who have not completed their first baccalaureate degree and who are financially in need of this grant to enable them to pursue their education. Priority for FSEOG awards must be given to Federal Pell Grant recipients with the lowest EFCs.

Federal Work-Study Program (FWS): One of the campus-based programs; a part-time employment program which provides jobs for undergraduate and graduate students who are in need of such earnings to meet a portion of their educational expenses.

Financial Aid: General term that describes any source of student assistance outside the student or the student's family. Funds awarded to a student to help meet post-secondary educational expenses. These funds are generally awarded on the basis of financial need and include scholarships, grants, loans, and employment.

Financial Aid Administrator: An individual who is responsible for preparing and communicating information pertaining to student loans, grants or scholarships, and employment programs, and for advising, awarding, reporting, counseling, and supervising office functions related to student financial aid. Accountable to the various publics which are involved and is a manager or administrator who interprets and implements federal, state, and institutional policies and regulations, and is capable of analyzing student and employee needs and making changes where necessary.

Financial Aid Award: An offer of financial or in-kind assistance to a student attending a post-secondary educational institution. This award may be in the form of one or more of the following types of financial aid: repayable loan, a non-repayable grant and/or scholarship, and/or student employment.

Financial Aid Notification: The letter from the post-secondary institution that lets the student know whether or not aid has been awarded. If the student will be receiving assistance, the notification also describes the financial aid package. State agencies and private organizations may send students financial aid notifications separately from the post-secondary institution. Also see Award Letter.

Financial Aid Package: A financial aid award to a student comprised of a combination of forms of financial aid (loans, grants and/or scholarships, employment).

Financial Need: The difference between the institution's cost of attendance and the family's ability to pay (i.e., Expected Family Contribution). Ability to pay is represented by the expected family contribution for federal need-based aid and for many state and institutional programs.

Financial Need Equation: Cost of attendance minus Expected Family Contribution equals financial need (COA - EFC = Need).

Forbearance: Permitting the temporary cessation of repayments of loans, allowing an extension of time for making loan payments, or accepting smaller loan payments than were previously scheduled.

Free Application for Federal Student Aid (FAFSA): The financial aid application document completed by the student, and the student's parents if applicable, that collects household and financial information. The FAFSA is the foundation document for all federal need analysis computations and database matches performed for a student.

Fund for Wisconsin Scholars: For recent graduates of Wisconsin public high schools. Must be Wisconsin resident undergraduates. Need based. Must maintain full-time enrollment and satisfactory academic progress. Number of awards limited to amount of allocation given to UWL by the Fund.

Gift Aid: Educational funds such as grants or scholarships that do not require repayment from present or future earnings. See Grant

Grace Period: The period of time that begins when a loan recipient ceases to be enrolled at least half-time and ends when the repayment period starts. Loan principal need not be paid and, generally, interest does not accrue during this period.

Grant: A type of financial aid that does not have to be repaid; usually awarded on the basis of need, possibly combined with some skills or characteristics the student possesses.

Income: Amount of money received from any or all of the following: wages, interest, dividends, sales or rental of property or services, business or farm profits, certain welfare programs, and subsistence allowances such as taxable and non-taxable social security benefits and child support.

Income Protection Allowance: An allowance against income for the basic costs of maintaining family members in the home. The allowance is based upon consumption and other cost estimates of the Bureau of Labor Statistics for a family at the low standard of living.

Independent Student: A student who:

(a) who is 24 years of age, or who:
(b) is an orphan or a ward of the court;
(c) is a veteran;
(d) is married or is a graduate or professional student;
(e) has legal dependents other than a spouse; or
(f) presents documentation of other unusual circumstances demonstrating independence to the student financial aid administrator.

Investment Plans: Educational savings programs, usually sponsored by commercial banking institutions.

Lawton Undergraduate Minority Retention Grant: These grants are available to statutorily defined ethnic minority sophomores, juniors and seniors who are in good standing academically and are residents of Wisconsin or Minnesota.

Legal Dependent (of Applicant): A biological or adopted child, or a person for whom the applicant has been appointed legal guardian, and for whom the applicant provides more than half support. In addition, a person who lives with and receives at least half support from the applicant and will continue to receive that support during the award year. For purposes of determining dependency status, a spouse is not considered a legal dependent.

Loan: An advance of funds evidenced by a promissory note and requiring the recipient to repay the specified amount(s) under prescribed conditions.

Merit-based Aid: Student assistance awarded because of a student's achievement or talent in a particular area, such as academics, athletics, music, etc.

Methodology: Refers to the system used to calculate the expected family contribution (i.e., the Federal Need Analysis Methodology).

Military Scholarships: Reserve Officer Training Corps (ROTC) scholarships available for the Army, Navy, and Air Force at many colleges and universities throughout the United States. These scholarships cover tuition and fees, books and supplies, and include a subsistence allowance.

Need: See Financial Need.

Need Analysis: A system by which a student applicant's ability to pay for educational expenses is evaluated and calculated. Need analysis consists of two primary components: (a) determination of an estimate of the applicant's and/or family's ability to contribute to educational expenses; and (b) determination of an accurate estimate of the educational expenses themselves.

Need Analysis Formula: Defines the data elements used to calculate the expected family contribution (EFC); there are two distinct formulas: regular and simplified. The formula determines the EFC under the Federal Need Analysis Methodology.

Need-based Aid: Student assistance awarded because a student's financial circumstances would not permit him or her to afford the cost of a postsecondary education.

Non Need-based Aid: Aid based on criteria other than need, such as academic, musical, or athletic ability. Also, refers to federal student aid programs where the expected family contribution (EFC) is not part of the need equation.

Packaging: The process of combining various types of student aid (grants, loans, scholarships, and employment) to attempt to meet full amount of student's need.

Parent Contribution: A quantitative estimate of the parents' ability to contribute to post-secondary educational expenses.

Parent Loan: See Federal Direct Parent PLUS Loan.

Principal (of a loan): The amount of money borrowed through a loan; does not include interest or other charges, unless they are capitalized.

Professional Judgment (PJ): Aid administrator discretion, based on special circumstances of the student, to change data elements used in determining eligibility for federal student aid.

Promissory Note: The legal document which binds a borrower to the repayment obligations and other terms and conditions which govern a loan program.

Repayment Schedule: A plan that is provided to the borrower at the time he or she ceases at least half-time study. The plan should set forth the principal and interest due on each installment and the number of payments required to pay the loan in full. Additionally, it should include the interest rate, the due date of the first payment, and the frequency of payments.

Reserve Officer Training Corps Scholarship Program: Competitive scholarship that pays for tuition, fees, books and a monthly living stipend and other benefits in exchange for participating in drills and classes during the academic year, military camp during the summer, and, upon graduation, full-time active duty in the military for at least four years.

Return to Wisconsin Scholarship: Scholarships which provide a 25% discount of non-resident tuition to children and grandchldren of UWL graduates.

SAR: See Student Aid Report.

SAR Information Acknowledgment: A non-correctable one-page Student Aid Report. Students who file electronic applications or who make electronic corrections to applicant information through a school receive this acknowledgment.

Scholarship: A form of financial assistance that does not require repayment or employment and is usually made to students who demonstrate or show potential for distinction, usually in academic performance.

Simplified Needs Test: An alternate method of calculating the expected family contribution for families with adjusted gross incomes of less than $50,000, who have filed, or are eligible to file, an IRS Form 1040A or 1040EZ, or are not required to file an income tax return. Excludes all assets from consideration.

Student Aid Report (SAR): The official notification sent to a student as a result of the Central Processing System (CPS) receiving an applicant record (via FAFSA) for the student. The SAR summarizes applicant information, an Expected Family Contribution (EFC) for the student, and displays other special messages related to the student's application. In some instances the SAR may need to be submitted to the financial aid office at the school the student plans to attend, but only if the school requests it.

Student Contribution: A quantitative estimate of the student's ability to contribute to postsecondary expenses for a given year.

Subsidized Stafford Loan: See Federal Direct Loan

Subsidy: The money the federal government uses to help underwrite student aid programs; primarily refers to government payments to lenders of the in-school interest on Federal Stafford Loans.

Talent Incentive Program Grant (TIP): Need-based grants available to qualified undergraduate students who are Wisconsin residents and demonstrate exceptional financial need.

Taxable Income: Income earned from wages, salaries, and tips, as well as interest income, dividend income, business or farm profits, and rental or property income.

Title IV Programs: Those federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended. Includes: the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, Federal Perkins Loan, Federal Stafford Loan, Federal PLUS Loan, Federal Direct Loan, Federal Direct PLUS Loan, and SSIG.

Unmet Need: The difference between a student's total cost attendance at a specific institution and the student's total available resources.

Unsubsidized Stafford Loan: See Federal Direct Loans.

Untaxed Income: All income received that is not reported to the Internal Revenue Service or is reported but excluded from taxation. Such income would include but not be limited to any untaxed portion of Social Security benefits, Earned Income Credit, welfare payments, untaxed capital gains, interest on tax-free bonds, dividend exclusion, and military and other subsistence and quarters allowances.

Veterans Educational Benefits: Assistance programs for eligible veterans and/or their dependents for education or training.

Vocational Rehabilitation: Programs administered by state departments of vocational rehabilitation services to assist individuals who have a physical or mental disability which is a substantial handicap to employment.

Wisconsin Academic Excellence Scholarship: This program is available to top students at Wisconsin high schools. The program is administered by local school boards, the Wisconsin Department of Public Instruction and the Wisconsin Higher Educational Aids Board.

Wisconsin Higher Education Grant (WHEG): Need based grants available to qualified undergraduate students who are Wisconsin residents.

Abbreviations commonly used in financial aid administration

ACT: American College Testing Program
AGI: Adjusted Gross Income
AOP: Advanced Opportunity Program Grant
BA: Bachelors of Arts Degree
BIA: Bureau of Indian Affairs
BS: Bachelors of Science Degree
CLEP: College-Level Examination Program
COA: Cost of Attendance
CPS: Central Processing System
DL: Direct Loans
ED: Education Department, U.S.
EFC: Expected Family Contribution (also FC, Family Contribution)
ELC: Entrance Loan Counseling
FAFSA: Free Application for Federal Student Aid
FM: Federal Methodology
FPPLUS: Federal Parent PLUS Loan
FSEOG: Federal Supplemental Educational Opportunity Grant
FWS: Federal Work-Study
GPA: Grade Point Average
IPA: Income Protection Allowance
IRS: Internal Revenue Service
MPN: Master Promissory Note
PC: Parental Contribution
ROTC: Reserve Officer Training Corps
SAR: Student Aid Report
SC: Student Contribution
SEOG: Federal Supplemental Educational Opportunity Grant
TIP: Talent Incentive Program Grant
WHEG: Wisconsin Higher Education Grant
XLC: Exit Loan Counseling