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Financial Aid Glossary (F - J)

When it comes to Financial Aid, Student Loans, Scholarships and Grants, oftentimes you will come across terms, acronyms and words that you’ve never heard of. To make defining them a simple process, the Student Loan Whiz has provided a comprehensive list of the words and phrases you’ll need to be familiar with. When it comes to financial aid and funding your educational dreams, we have what you’re looking for.


Federal Direct Student Loan Program (FDSLP)
Similar to the (FFELP) Federal Family Education Loan Program. The US government provides the funds for these loans directly to students and their parents through their schools. Benefits of the program include a faster turn-around time and less bureaucracy than the old "bank loan" program. The FDSLP includes the Federal Direct Stafford Loan (Subsidized and Unsubsidized) and the Federal Direct Parent Loan for Undergraduate Students (PLUS).

Federal Family Education Loan Program (FFELP)
This program includes the Federal Stafford Loan (Subsidized and Unsubsidized), the Federal Perkins Loan and the Parent Loan for Undergraduate Students (PLUS). Private lenders, such as banks, credit unions and savings & loan associations, provide the funds for these loans. The federal government guarantees these loans against default.

Federal Methodology
The need analysis formula used to determine the EFC. The Federal Methodology takes family size, the number of family members in college, taxable and nontaxable income and assets into account. Unlike most Institutional Methodologies, however, the Federal Methodology does not consider the net value of the family residence.

Federal Processor
The organization that processes the information submitted on the (FAFSA) Free Application for Federal Student Aid, and uses it to compute eligibility for federal student aid. There are two different federal processors serving specific geographic regions.

Federal Work Study (FWS)
A program providing undergraduate and graduate students with part time employment during the school year. The federal government pays a portion of the student's salary, making it cheaper for businesses and departments to hire students. For this reason, work study students often find it easier to get part-time jobs. Eligibility for FWS is based on need. Money earned from a FWS job is not counted as income for the subsequent year's need analysis process.

A form of financial aid given to graduate students to help support their education. Some fellowships include a tuition waiver or a payment to the university in lieu of tuition. Most fellowships include a stipend to cover reasonable living expenses (e.g., just above the poverty line). Fellowships are a form of gift aid and do not have to be repaid.

Financial Aid
Money provided to the student and the family to help them pay for the student's education. Major forms of financial aid include gift aid (grants and scholarships) and self-help aid (loans and work).

Financial Aid Administrator (FAA)
The acronym FAA, stands for a number of things, but when it comes to financial aid it is 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."

Financial Aid Form (FAF)
The old name for the Financial Aid PROFILE. The Financial Aid PROFILE is a supplemental financial aid form processed by the College Scholarship Service (CSS). It is not necessary to file a Financial Aid PROFILE in order to apply for Federal student financial aid; the FAFSA is sufficient. Many private colleges and universities use the Financial Aid PROFILE to award institutional funds.

Financial Aid Notification (FAN)
See Award Letter.

Financial Aid Office (FAO)
The college or university office that is responsible for the determination of financial need and the awarding of financial aid.

Financial Aid Package
The complete collection of grants, scholarships, loans and work-study employment from all sources (federal, state, institutional and private) offered to a student to enable them to attend the college or university. Note that unsubsidized Stafford loans and PLUS loans are not considered part of the financial aid package, since these financing options are available to the family to help them meet the EFC.

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.

Financial Need
See Need.

Financial Safety School
A school you are certain will admit you, and which is inexpensive enough that you can afford to attend even if you get no (or very little) financial aid.

First-Time Borrower
A first-year undergraduate student who has no unpaid loan balances outstanding on the date he or she signs a promissory note for an educational loan. First-time borrowers may be subjected to a delay in the disbursement of the loan funds. The first loan payment is disbursed 30 days after the first day of the enrollment period. If the student withdraws during the first 30 days of classes, the loan is canceled and does not need to be repaid. Borrowers with existing loan balances aren't subject to this delay.

Fixed Interest
In a fixed interest loan, the interest rate stays the same for the life of the loan.

During a forbearance the lender allows the borrower to temporarily postpone repaying the principal, but the interest charges continue to accrue, even on subsidized loans. The borrower must continue paying the interest charges during the forbearance period. Forbearances are granted at the lender's discretion, usually in cases of extreme financial hardship or other unusual circumstances when the borrower does not qualify for a deferment. You can't receive a forbearance if your loan is in default.

Free Application for Federal Student Aid (FAFSA)
Form used to apply for Pell Grants and all other need-based aid. As the name suggests, no fee is charged to file a FAFSA.

The practice of failing to meet a student's full demonstrated need.

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

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

Grace Period
A short time period after graduation during which the borrower is not required to begin repaying his or her student loans. The grace period may also kick in if the borrower leaves school for a reason other than graduation or drops below half-time enrollment. Depending on the type of loan, you will have a grace period of six months (Stafford Loans) or nine months (Perkins Loans) before you must start making payments on your student loans. The PLUS Loans do not have a grace period.

Grade Point Average (GPA)
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.

Graduate Assistantship
There is 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.

A type of financial aid based on financial need that the student does not have to repay.

Gross Income
Income before taxes, deductions and allowances have been subtracted.

Guarantee Agency or Guarantor
State agencies responsible for approving student loans and insuring them against default. Guarantee agencies also oversee the student loan process and enforce federal and state rules regarding student loans.

Guarantee Fee
A small percentage of the loan that is paid to the guarantee agency to insure the loan against default. The insurance fee is usually 1% of the loan amount. Also known as a Default Fee.

Guaranteed Student Loan (GSL)
(Now called the Stafford Loan.) A guaranteed loan is insured against default. In the case of guaranteed student loans, the Federal government agrees to repay the loans in case of default. Each loan is charged a guarantee fee to cover the costs of defaulted loans.

Half Time
Most financial aid programs require that the student be enrolled at least half time to be eligible for aid. Some programs require the student to be enrolled full time.

Health Education Assistance Loan (HEAL)
A low interest loan administered by the US Department of Health and Human Services (HHS). It is available to medical school students pursuing medicine, osteopathy, dentistry, veterinary medicine, optometry, podiatry, clinical psychology, health administration and public health. Undergraduate pharmacology students are also eligible.

Health Professions Student Loan (HPSL)
A low interest loan administered by the US Department of Health and Human Services (HHS). It is now known as the Primary Care Loan (PCL).

The lender, institution or agency that holds legal title to a loan. The holder may be the bank that issued the loan, a secondary market that purchased the loan from the bank or a guarantee agency if the borrower defaulted on the loan.

Home Equity
Current market value of a home less the mortgage's remaining unpaid principal. It is based on the market value, not the insurance or tax value. For a conservative estimate of your home's market value, try using the Federal Housing Index Calculator.

Horizontal Equity
The principle of horizontal equity is that families with similar financial circumstances should pay the same amount, regardless of how their assets, investments and income are defined.

In-State Student
A student who has met the legal residency requirements for the state, and is eligible for reduced in-state student tuition at public colleges and universities in the state.

The amount of money received from employment (salary, wages, tips), profit from financial instruments (interest, dividends, capital gains), or other sources (welfare, disability, child support, Social Security and pensions).

Income-Based Repayment
Under an income-based 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-based repayment plan is not available for PLUS Loans. Income-based repayment is available in both the FFEL and Direct Loan programs. Monthly payments are capped at 15% of discretionary income, where discretionary income is defined as the amount by which income exceeds 150% of the poverty line.

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. Income contingent repayment is available only in the Direct Loan program. Monthly payments are capped at 20% of discretionary income, where discretionary income is defined as the amount by which income exceeds 100% of the poverty line. Income Contingent Repayment also has a secondary cap based on income percentage factors that rarely applies to most borrowers.

Income-Sensitive Repayment
Under an income-sensitive 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. Income-sensitive repayment is available only in the FFEL program. Monthly payments are pegged at 4% to 25% of gross monthly income and must be at least the interest that accrues.

An independent student is at least 24 years old as of January 1 of the academic year, is married, is a graduate or professional student, has a legal dependent other than a spouse, is a veteran of the US Armed Forces, or is an orphan or ward of the court (or was a ward of the court until age 18). A parent refusing to provide support for their child's education is not sufficient for the child to be declared independent.

Individual Retirement Account (IRA)
One of several popular types of retirement funds. It is not legal to borrow money from your IRA to help pay for your children's education.

Installment Loan
A consumer loan in which the principal and interest are repaid on a regular (usually monthly) schedule. The payments are called "installments" and are all for the same amount.

Institutional Methodology (IM)
If a college or university uses its own formula to determine financial need for allocation of the school's own financial aid funds, the formula is referred to as the Institutional Methodology.

Institutional Student Information Report (ISIR)
The electronic version of SARs delivered to schools by EDExpress.

Insurance Fee
Fee passed on by the lender to the federal government as insurance against default. Insurance fees are charged as the loan is disbursed, and typically run to 1% of the amount disbursed.

Amount charged to the borrower for the privilege of using the lender's money. Interest is usually calculated as a percentage of the principal balance of the loan. The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan. All federal loans issued since October, 1992 use variable interest rates that are pegged to the cost of US Treasury Bills.

Internal Revenue Service (IRS)
Federal agency responsible for enforcing US Tax laws and collecting taxes.

Part-time job during the academic year or the summer months in which a student receives supervised practical training in a their field. Internships are often very closely related to the student's academic and career goals, and may serve as a precursor to professional employment. Some internships provide very close supervision by a mentor in an apprenticeship-like relationship. Some internships provide the student with a stipend, some don't.

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