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Glossary of Financial Aid Terms

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Academic Calendar
Academic calendar is the academic term of the amount of academic work completed by students at a school.

Academic Level
Grade level determined by the number of accumulated credits at a school.

Academic Year
A measure of academic work to be accomplished by a student. A school defines its own academic year, but federal regulations set minimum standards schools must adhere to it they wish to award federal financial aid funds. For instance, the academic year must be at least 30 weeks of instructional time in which a full-time student is expected to complete at least 24 semester or trimester hours, 36 quarter hours, or 900 clock hours.

Accrual Date
The date on which interest charges for a loan begin to accrue.

Accrued Interest
Interest that accrues on a loan(s) and is payable by the borrower or federal government.

One of the two national standardized college entrance examinations used in the US. The other is the SAT. The ACT is widely used in the West and Midwest. Most universities require either the ACT or the SAT as part of an application for admission.

A practice in which a school will admit marginal students, but not award them any financial aid. Very few schools use admit-deny, because studies have shown that lack of sufficient financial aid is a key factor in the performance of marginal students.

Advanced Placement Test
Test used to earn credit for college subjects studied in high school. They are offered by ETS in the spring. AP tests are scored on a scale from 1 to 5 (the best possible score).

Application Deadline
The date an application must be received at TSAC's office.

Asset Protection Allowance
A sum subtracted from a family's total assets when determining the "expected family contribution" to college costs. This provides a safety net for families, and the allowance increases with the age of the parents.

Award Letter
An official document from a college or other financial aid sponsor that lists all of the financial aid being offered to the student. The letter provides details explaining how the student's financial need was determined, describes the details of the financial aid package (amount, source, and type of aid), and discusses the terms and conditions attached to the financial aid award.

Award Year
The twelve month period beginning July 1st and ending June 30th of the following year for which funding has been authorized.


Balloon Payment
A larger than usual payment used to pay off the outstanding balance of a loan without penalty. Not all loans allow balloon payments. Simple interest loans, like many educational loans, generally do allow balloon payments.

When a person is declared bankrupt, he is found to be legally insolvent and his property is distributed among his creditors or otherwise administered to satisfy the interests of his creditors. Federal student loans, however, cannot normally be discharged through bankruptcy.

Base Year
The twelve-month period ending on December 31 preceding the year in which a student will enroll. Applicants seeking aid for 2000-2001 would have used 1999 as the base year.

Board of Directors administering the Tennessee Student Assistance Corporation.


Campus-Based Financial Aid
The Federal Perkins Loan, the Federal Supplemental Educational Opportunity Grant, and the Federal Work-Study programs. These three programs are called 'campus-based' because the funds are administered directly by the school's financial aid office, which awards these funds to students using federal guidelines.

See 'Loan Forgiveness'.

Accrued interest that is added to the principal balance of a loan. In other words, the interest will be added to the principal amount of your loan, and additional interest will be based upon the higher amount. This will increase the amount you have to repay. If you choose to pay the interest as it accumulates, you'll repay less in the long run.

Citizenship/Eligibility for Aid
To be eligible to receive federally funded college aid, a student must be one of the following:
a United States citizen
a non-citizen national
a permanent resident with an I-151 or I-551 without conditions
a holder of an I-94 showing one of the following designations:
"Asylum Granted"
"Indefinite Parole" and/or "Humanitarian Parole"
"Cuban-Haitian Entrant, Status Pending"
"Conditional Entrant" (valid if issued before April 1, 1980)
a participant in a suspension of deportation case pending before Congress

Individuals in the U.S. on an F1 or F2 visa only or on a J1 or J2 exchange visa only cannot get federal aid.

Cost of Attendance is used to determine the student's scheduled Pell Grant award and is always based on the cost for a full-time student for an entire academic year. These costs can consist of:

  • Tuition and fees.
  • Allowances for room and board.
  • Allowance for books, supplies, transportation, and miscellaneous personal expenses.
  • Allowances established by the school for dependent care, disability-related expenses, study abroad, and employment expenses related to cooperative education programs.
  • Special exceptions to which cost components apply, including less than half- time students, correspondence study students, incarcerated students, and students receiving instruction by telecommunications.
  • Cost of computer allowance.

College Board
A nonprofit educational association of colleges, universities, educational systems and other educational institutions.

See 'Loan Consolidations'.

Cooperative Education
A program offered by many colleges in which students alternate periods of enrollment with periods of employment, usually paid, and which can lengthen the usual baccalaureate program to five years.

Cumulative Grade Point Average
See 'GPA'.

Custodial Parent
If a student's parents are divorced or separated, the custodial parent is the one with whom the student lived the most during the past 12 months. The student's need analysis is based on financial information supplied by the custodial parent.


The United States Department of Education

See 'Application Deadline'.

A loan is in default when the borrower fails to pay a regular installment on time or otherwise fails to meet the terms and conditions of the loan. If you default on a loan, the university, the holder of the loan, and the government can take legal action to recover the money, including garnishing your wages. Defaulting on a government loan will make you ineligible for future federal financial aid. This ineligibility for financial aid remains in effect until such time as the defaulted loan is paid in full or until you have made at least 6 consecutive on-time reasonable monthly payments as determined by the holder of the loan.

Deferment occurs when a borrower is allowed to postpone repayment of a student loan. For example, some federal loan programs allow students to defer their loans while they are in school. Other loan programs allow the student to defer the interest payments by capitalizing the interest.

Dependency Status
A student's dependency status determines to what degree the student is expected to have access to parental financial resources. An independent student is one who is 24 years old as of January 1 (e.g., born before January 1, 1974 for academic year 1997-98), is married, is a graduate or professional student, has legal dependents other than a spouse, is a veteran, or is an orphan or ward of the court. All other students are considered dependent and, as such, must provide parental information on the Free Application for Federal Student Aid.

Any child of the student who receives more than half support from the student (the child does not live with the student), including a natural or adopted child, or a child for whom the student is legal guardian. Also, any person who lives with the student and receives more than half support from the student during the award year.

Dependent Student
A student who does not qualify as an independent student.

Direct Student Loan Program
See 'Federal Direct Student Loan Program'.

See 'Executive Director'.

The release of loan funds to the school for delivery to the borrower. The payment will be made co-payable to the student and the school. Loan funds are first credited to the student's account for payment of tuition, fees, room and board and other school charges. Any excess funds are then paid to the student in cash or by check. Unless the loan amount is under $500, the disbursement will be made in at least two equal installments.

Discretionary Income
Income that is available to a person or family after all financial obligations, including taxes, have been accounted for.


Early Admission
A program that allows gifted high school juniors to skip their senior year and enroll instead in college. The term "Early Admission" is sometimes used to refer collectively to Early Action and Early Decision programs.

This process, Electronic Data Exchange, allows participating destination points to exchange data.

When you apply for federal student aid, the information you report is used in a formula established by the U.S. Congress. The formula determines your Expected Family Contribution (EFC), an amount you and your family are expected to contribute toward your education (although this amount may not exactly match the amount you and your family end up contributing). If your EFC is below a certain amount, you'll be eligible for a Federal Pell Grant, assuming you meet all other eligibility requirements.

Electronic Funds Transfer is used by lenders to wire funds directly to participating schools without requiring an intermediate check for the student to endorse.

Eligible Applicants
An eligible applicant is a student who has submitted the necessary application forms and meets the eligibility requirements for the particular program for which was applied.

To release a child from the control of a parent or guardian. Declaring a child to be legally emancipated is not sufficient to release the parents or legal guardians from being responsible for providing for the child's education. If this were the case, then every parent would "divorce" their children before sending them to college. The criteria for a child to be found independent are much stricter. See Dependency Status.

Entrance Interview
Required counseling session at which a college administrator, usually a financial aid officer, must inform student borrowers about their rights and responsibilities. See also 'Exit Interview'.

An ESAR is an electronic reproduction of a Student Aid Report, usually produced locally by the Office of Student Financial Aid. Once the ESAR is signed, it is just as valid as a regular SAR.

Educational Testing Service. The world's largest private educational measurement institution and a leader in educational research. ETS develops and administers achievement, occupational, and admission tests -- such as the SAT for the College Board -- for clients in education, government, and business. ETS annually administers 9 million exams in the United States and 180 other countries.

Executive Director
TSAC's CEO (Chief Executive Officer).

Exit Interview
Students with educational loans are required to meet with a financial aid administrator before they graduate or leave school or stop attending on at least a half-time basis. During this exit interview, the OSFA reviews the repayment terms of the loan and the repayment schedule with the student. See also 'Entrance Interview'.

Expanded Lending Option (ELO)
Under ELO, some schools can offer higher annual and cumulative loan limits to students receiving the Perkins Loan. The ELO is restricted to schools with a Perkins Loan default rate of 15% or less.


This is the application that must be filed by an applicant to apply for any student financial aid distributed by the federal government.

Federal Direct Student Loan Program (FDSLP)
The FDSL Program is similar to the FFELP Program except that students can obtain federal loans directly from their college or university from funds provided by the U.S. Department of Education, instead of from a bank or lender. The goal is to provide faster turnaround time via less bureaucratic intervention. The FDSL Program includes the Federal Direct Stafford Loan (subsidized and unsubsidized), the Federal Perkins Loan, and the Parent Loan for Undergraduate Students (PLUS) Program.

Federal Methodology
The Federal Methodology is the need analysis formula used to determine the Expected Family Contribution (EFC). It takes into account taxable and nontaxable income, assets, family size, and the number of family members in college. Unlike many Institutional Methodologies, it does not consider the net value of a family's home.

Federal Pell Grant Program
This is a type of federal financial aid awarded to qualified applicants. A Federal Pell Grant, unlike a loan, does not have to be repaid. Generally, Pell Grants are awarded only to undergraduate students who have not earned a bachelor's or professional degree. (A professional degree is usually earned after earning a bachelor's degree in a field such as medicine, law, or dentistry.) In some cases, you may receive a Pell Grant for attending a postbaccalaureate teacher certificate program. For many students, Pell Grants provide a foundation of financial aid to which other aid may be added.

Federal Perkins Loan
A low interest (5%) loan to help students pay for their education after high school. Repayment begins nine (9) months after graduation, withdrawal, or enrollment less than half-time. These loans are for undergraduate students with exceptional need. Priority is given to Federal Pell Grant recipients.

Federal PLUS Loan
Loan for parents of undergraduate students who want to borrow funds to help pay for the child's college education. This credit-based loan is made to the parent who must begin repaying it within 60 days of the first disbursement.

Federal Stafford Loan
Formerly called the Guaranteed Student Loan (GSL), this is a federally funded program that lets students borrow funds to meet educational expenses. Stafford loans come in two forms -- subsidized and unsubsidized. Subsidized Staffords are awarded based on need; unsubsidized loans do not require demonstrated need. The interest on the subsidized Stafford is paid by the federal government while the student is in school and during the six-month grace period. The interest on the unsubsidized Stafford is paid by the borrower.

The amounts that may be borrowed depend on the student's year in school. Undergraduates may borrow up to $23,000 ($2,625 the first year; $3,500 the second year; $5,500 the third, fourth, and fifth years), and graduate and professional students may borrow $8,500 per year in subsidized loans and up to $10,000 in unsubsidized loans, for an aggregate limit, including undergraduate borrowing, of $65,000 in subsidized Staffords, plus $13,000 in unsubsidized Staffords.

Federal Stafford Loans have a variable interest rate set at 3.1 percent above the federal 91- day Treasury-bill rate, with a cap of 8.25 percent. The rate is adjusted annually on July 1.

Funds are borrowed directly form banks or other lending institutions, or, for colleges participating in the Federal Direct Loan Program, from the federal government.

Federal Supplemental Educational Opportunity Grant (SEOG) Program
A federal grant program for undergraduate students with exceptional need. Students demonstrating financial need may be awarded grants of up to $4,000. SEOG grants are awarded by the school's financial aid office. To qualify, a student must also receive a Pell Grant.

Federal Work Study
The Federal Work-Study program is a form of cooperative education which provides students with on and off-campus employment while in school that is theoretically career-oriented (but general office and clerical positions are not uncommon).. Eligibility is based on need. Essentially FWS pays a portion of the student's salary while the hiring departments and business pay the remainder.

Includes the Federal Stafford Loan (Subsidized and Unsubsidized), the Federal Perkins Loan and the Parent Loan for Undergraduate Students (PLUS). The funds for these loans are provided by private lenders, such as banks, credit unions and savings and loan associations. These loans are guaranteed against default by the federal government.

Financial Aid Package
The total financial aid award received by a student from all sources (federal, state, institutional, and private). The financial aid package is likely to be made up of a combination of aid (grants, loans, scholarships, and work-study). Unsubsidized Stafford loans and PLUS loans are not considered part of the financial aid package, since they are available to the family to help meet the Expected Family Contribution.

Financial Aid Transcript (FAT)
A record of all federal aid received by the student at each school attended. If you have previously attended an institution of higher education and are now applying for financial aid from the different university, the university will require a FAT from each of the schools previously attended, regardless of whether aid was received or not. They are required to do this by federal law. You have to submit a FAT even if you were in high school at the time. An electronic FAT process will be in place soon which will eliminate the need for the student to submit a FAT. The FAT is not the same as an academic transcript.

A forbearance is a condition where the lender allows the borrower to postpone repaying the principalof their loan, but requires the borrower to continue paying the interest charges.

Full Servicer
See 'Servicer'..


The practice of failing to meet a student's full demonstrated need. See also Unmet Need.

The practice of withholding a portion of a borrower's wages to repay his or her loan, often without their consent.

General Equivalency Degree.

Gift Aid
Financial aid that is given to you and you do not have to repay it. For example, scholarships or grants.

Grade Point Average. An average of a student's grades, converted to a 4.0 scale (4.0 is an A, 3.0 is a B, and 2.0 is a C). Some schools use a 5.0 scale for the GPA.

Grace Period
The period of time that begins when a loan recipient ceases to be at least half-time and ends when the repayment period begins. During the grace period interest does not accrue on the loan. In addition, no principal payments on the loan principal are required during the grace period.

Graduate Assistance
There are two types of graduate assistantships: teaching assistantships (TA) and research assistantships (RA). TAs and RAs receive a full or partial tuition waiver and a small living stipend. TAs are required to perform teaching duties. RAs are required to perform research duties, not necessarily related to the student's thesis research.

Graduate Student
A student who is enrolled in a Masters or PhD program.

Graduated Repayment
A schedule where the monthly payments are smaller at the start of the repayment period and gradually become larger.

Financial award for which there is no expectation of repayment or services to be performed.

TSAC's full servicer for the Federal Family Education Loan Program (FFELP) and the Tennessee Student Assistance Awards (Grants) (TSAA) Program.

Guarantee Fee
A small percentage of a student loan that is paid to the guarantee agency as a form of insurance against default.

Guaranty Agency
Private, non-profit corporations designated to administer the Federal Family Education Loan Program (FFELP). A guaranty agency agrees to pay back a loan if the borrower should default. For example, the federal government guarantees the Federal Direct Student Loans. Each state has a different guaranty agency that administers the Federal Stafford and PLUS loans under the FFELP programs for students in that state.


Half-time student
An enrolled undergraduate student who is carrying a half-time academic load as defined by the school.


Income Contingent Repayment
Under an income contingent repayment schedule, the size of the monthly payments depends on the income earned by the borrower. As the borrower's income increases, so do the payments. The income contingent repayment plan is not available for PLUS Loans.

An Individual Education Account (IEA) is a federal program under which you can consolidate multiple federal education loans into a new, single account--this means you'll have to make only one monthly payment to cover all your loans.

Independent Student
For financial aid purposes, an independent student is one who is at least 24 years old as of January 1, is married, has a legal dependent other than a spouse, is a veteran of the U.S. Armed Forces, is a graduate or professional student, or is an orphan or ward of the court (or was a ward of the court until age 18). All other students are considered dependent. Parental refusal to provide support for a child's education is not sufficient for the child to be declared independent.

Institutional Methodology
A formula, other than the federal methodology, used by a college or university to determine financial need for the allocation of said school's financial aid funds.


If a school offers a talented student extra financial aid, regardless of need, the student is more likely to enroll. Leveraging is the controversial practice of figuring out how much it will take to attract such students and customizing aid offers to optimize the quality of the incoming class.

An award made to a student with a formal agreement for repayment with interest.

Loan Consolidations
A loan consolidation combines several loans into one bigger loan. This sometimes results in a lower interest rate, as when a consumer loan is used to pay off credit card balances. Such loans often reduce the size of the monthly payment by extending the term of the loan. An extension of the term of the loan may also increase the overall cost of the loan. Consolidation loans also simplify the repayment process by allowing a single payment instead of several. Direct Consolidation Loans are available through the establishment of an Individual Education Account (IEA).

Loan Forgiveness
Some loan programs provide for cancellation of the loan under certain circumstances. For example, if the student becomes a teacher in certain national shortage areas, they may be eligible for cancellation of all or part of the balance of their educational loans.


Student admitted to a degree granting program.

Merit Based
Financial aid that is based on the student's achievements in areas such as academics or special talents such as music or athletics.


Need Analysis
The process that determines a student's financial need by analyzing the financial information provided by the student and his or her parents (or spouse, if applicable) on a financial aid form. The need analysis is the first step in applying for financial aid.

All students must file a Free Application for Federal Aid (FAFSA) to apply for need- based federal financial aid programs . Some schools, particularly private colleges, also require students to fill out other forms (see institutional methodology) for aid funded by that college. For state financial aid programs, the FAFSA may or may not be the only form a student needs to submit.

Need Based
Financial aid that is based on the student's financial situation.


Origination fee
A fee paid to the bank to compensate for the cost of administering the loan. A portion of this fee is paid to the federal government to offset the administrative costs of the loan. Origination fees usually run to about 3 percent of the amount disbursed and are charged as the loan is disbursed.

Out-of-State Student
A student who does not meet the residency requirements for the state. State public colleges and universities often charge out-of-state students a higher tuition rate.

A student who receives federal support may not receive awards totaling more than $400 in excess of his or her financial need.


Parent Contribution
The amount a student's parents are expected to pay toward college expenses from their income and assets. The amount is determined by a need analysis. Some of the factors considered in this calculation are income, the number of parents earning income, assets, family size, and the number of family members currently attending college.

Pell Grant Program
See 'Federal Pell Grant Program'.

Perkins Loan
See 'Federal Perkins Loan'.

See 'Federal PLUS Loan'.

"After high school." Refers to all programs for high school graduates.

Professional Judgment
For need-based federal aid programs, the financial aid administrator can adjust the EFC, adjust the COA, or change the dependency status (with documentation) when extenuating circumstances exist. For example, if a parent becomes unemployed, disabled or deceased, the FAA can decide to use estimated income information for the award year instead of the actual income figures from the base year. This delegation of authority from the federal government to the financial aid administrator is called Professional Judgment (PJ).

Promissory Note
A legal document that the borrower signs to get a loan in which the borrower promises to repay the loan, with interest, in specified installments. The promissory note will also include any information about the grace period, deferment or cancellation provisions, and the student's rights and responsibilities with respect to the loan.

Promulgated Rules and Regulations
Rules and Regulations of a program that have met the prescribed methods for being published.


Renewal Free Application for Federal Student Aid (FAFSA)
Renewal form mailed to students who filed the FAFSA during the previous academic year. The renewal FAFSA reports information from the previous year's FAFSA application allowing students to update this information for the upcoming academic year. The renewal FAFSA serves the same purpose as the FAFSA.


A federal output document generated by the FAFSA processor and mailed to the student. The SAR contains the family's financial information and other information as reported by the student on the FAFSA. The student's eligibility for financial aid is indicated by the EFC printed on the front of the SAR.

Satisfactory Academic Progress
The academic progress required of a financial aid recipient to receive federal and or state financial aid funds.

The SAT is one of two national standardized college entrance examinations use in the United States.

A form of financial assistance which does not require repayment or employment and is made to the student based upon criteria established by the donor(s).

Self Help
Financial aid that carries an obligation in order to receive it. For example, loans or employment.

See 'Federal Supplemental Educational Opportunity Grant (SEOG) Program'.

A company designated to handle part or all (full service) aspects of an administered program.

Simplified Methodology (Simplified Need Test)
Need analysis used by families whose total adjusted gross incomes are under $50,000 and who are eligible to file a 1040EZ, 1040A, or who do not file a tax return. (In the case of independent students, the same criteria is applied to the student and, if applicable, the student's spouse.) The Simplified Methodology is essentially the same as the Federal Methodology, except the Simplified Methodology does not count either parent or student assets in the Expected Family Contribution calculation.

Student Loan Marketing Association (SLMA): Also known as Sallie Mae, the SLMA is the nation's largest secondary market, holding approximately one third of all educational loans.

Stafford Loan
See 'Federal Stafford Loan'

Subisdized Loan
The federal government pays the interest on the loan ('subsidizes' the loan) until the borrower begins repayment and during authorized periods of deferment thereafter.


Tennessee Code Annotated - The laws of the State of Tennessee.

Title IV Loan
A category of educational loans made, insured, and guaranteed as part of the Higher Education Act of 1965, and included in the Federal Family Educational Loan Program (FFELP); specifically Stafford, Unstafford, SLS, PLUS, and Consolidation Loans

Tennessee Student Assistance Awards (Grants) Program - Provides non-repayable financial assistance to financially needy undergraduate students who are residents of Tennessee and are enrolled, or accepted for enrollment, at a public or an eligible non-public post secondary educational institution in Tennessee.

Tennessee Student Assistance Corporation.

Tennessee Teaching Scholars Program - Designed to encourage exemplary students to enter the teaching field.


University Fees
Fees assigned by a school to a student registering for courses.

Unmet Need
When the combination of a student's financial aid package and the family contribution does not cover the costs of attending a particular college, the gap is called the Unmet Need.

Unsubsidized Loan
The borrower will be charged interest from the time the loan is disbursed until it is paid in full. The borrower can choose to pay the interest or allow it to accumulate. If the borrower allows the interest to accumulate, it will be capitalized - that is, the interest will be added to the principal amount of the loan and will increase the amount that will have to be repaid. If the borrower pays the interest as it accumulates, repayment will be less in the long run.

United States Department of Education.


Verification is a review process in which the OSFA determines the accuracy of the information provided on the student's financial aid application. During verification the student will be required to submit documentation to support the information listed (or not listed) on the financial aid application.

For Federal financial aid purposes such as determining dependency status, a veteran is a former member of the US Armed Forces (Army, Navy, Air Force, Marines or Coast Guard) who served on active duty and was discharged other than dishonorably (i.e., received an honorable or medical discharge). You are a veteran even if you serve just one day on active duty - not active duty for training - before receiving your DD-214 and formal discharge papers. (Note that in order for a veteran to be eligible for VA educational benefits, they must have served for more than 180 consecutive days on active duty before receiving an honorable discharge. There are exceptions for participation in Desert Storm/Desert Shield and other military campaigns.)

ROTC students, members of the National Guard, and most reservists are not considered veterans.

Since the 1995-96 academic year, a person who was discharged other than dishonorably from one of the military service academies (the U.S. Military Academy at West Point, the Naval Academy at Annapolis, the Air Force Academy at Colorado Springs or the Coast Guard Academy at New London) is considered a veteran for financial aid purposes. Cadets and midshipmen who are still enrolled in one of the military service academies, however, are not considered veterans. According to the US Department of Education's Action Letter #6 (February 1996), "a student who enrolls in a service academy, but who withdraws before graduating, is considered a veteran for purposes of determining dependency status".

Having a DD-214 does not necessarily mean that you are a veteran for financial aid purposes. As noted above, you must have served on active duty and received an honorable discharge.


Warrant Cancellation
TSAC issues state warrants in payment of its debts. This is the revocation of a warrant.

Work Study
A form of self-help aid. Work-study aid is money a student must earn by working a part- time job, usually at the college or university the student is attending or at a nonprofit organization. The Federal Work-Study Program is probably the most familiar example of this type of program, although many colleges may offer similar programs. Funds for most of the wages a work-study student earns come from the Federal Work-Study Program.