Glossary of Financial Aid Terms

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Acronyms

Federal Direct Student Loan Program (FDSLP): Similar to the Federal Family Education Loan Program (FFELP). The funds for these loans are provided by the US government 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): Includes the Federal Stafford Loan (Subsidized and Unsubsidized) 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 & loan associations. These loans are guaranteed against default by the federal government.

Federal Methodology (FM): The need analysis formula used to determine the Expected Family Contribution (EFC). The Federal Methodology takes family size, the number of family members in college, taxable and nontaxable income and assets into account. The Federal Methodology does not consider the net value of the family residence.

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

Federal Supplemental Education Opportunity Grant (FSEOG): Federal grant program for undergraduate students with exceptional need. FSEOG grants are awarded by the school's financial aid office, and provide up to $4,000 per year. To qualify, a student must also be a recipient of a Pell Grant.

Federal Work-Study (FWS): 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 departments and businesses to hire the student. For this reason, work-study students often find it easier to get a part-time job. 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.

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): 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 Notification (FAN): See Award Letter.

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 Expected Family Contribution (EFC).

Financial Aid Profile: A financial aid application developed by the College Scholarship Service (CSS) that many colleges use to determine aid given from their own institutional funds.

Financial Need: See Need.

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.

Forbearance: 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. More Info...