Glossary of Financial Aid Terms

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Acronyms

Ability to Benefit: The requirement that each student must be able to benefit from college attendance. For financial aid purposes, applicants must have either received a high school diploma, or general education diploma (GED), or taken and passed an assessment test approved by the government.

Academic Year: The period during which school is in session, consisting of at least 30 weeks of instructional time. The school year typically runs from the beginning of September through the end of May at most colleges and universities.

Accrue: To accumulate.

Accrual Date: The date on which interest charges on an educational loan begin to accrue. See also Subsidized Loan.

Achievement Tests (SAT II): A collection of tests that measure the student's proficiency and accumulated knowledge of specific subject areas. Different schools require different achievement tests as part of their admissions requirements. Since March 1994, these tests are now known as the SAT II tests. See also SAT and ETS.

Adjusted Available Income: In the Federal Methodology, the remaining income after the allowances (taxes and a basic living allowance) have been subtracted.

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

Alternative Loans: See Private Loans.

American College Test (ACT): 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.

Amortization: The process of gradually repaying a loan over an extended period of time through periodic installments of principal and interest.

Asset: An item of value, such as a family's business, investment farm net worth, real estate, stocks, bonds, mutual funds, cash, certificates of deposit (CDs), bank accounts, trust funds and other property and investments.

Asset Protection Allowance: A portion of your parents' assets that are not included in the calculation of the parent contribution, as calculated by the Federal Methodology need analysis formula. The asset protection allowance increases with the age of the parents.

Award Letter: An official document issued by a school's financial aid office that lists all of the financial aid awarded to the student. This letter provides details on the analysis of your financial need and the breakdown of your financial aid package according to amount, source and type of aid. The award letter will include the terms and conditions for the financial aid and information about the cost of attendance. You are required to sign a copy of the letter, indicating whether you accept or decline each source of aid, and return it to the financial aid office. Some schools call the award letter the "Financial Aid Notification (FAN)".

Award Year: The academic year for which financial aid is requested (or received).

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X

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Acronyms