Financial Aid Glossary

Ability-to-benefit test: one of the ways to determine eligibility for federal aid for students who arenít high school graduates or donít have a GED certificate.

Assets: an item of value, such as home equity, other real estate, stocks, bonds, cash savings, trust funds, money market funds, college savings plans, retirement plans and prepaid tuition plans (the FAFSA does not ask you report home equity or retirement plan assets).

Cal Grant extended awards: your Cal Grant may be extended an additional year if youíre getting a teaching credential or are attending a mandatory five-year program; see Request for Cal Grants Fifth Year Benefits.

California residency: youíre considered a California resident if youíre an unmarried student, under 18, and your parents have been legal California residents for one year prior to the year in which you are applying for state financial aid; if you've lived for two years with a legal California resident, other than a parent; or if a parent is in the U.S. Armed Forces, stationed in California and on active duty when you enroll. All married students, regardless of age, and unmarried students 18 or older, must establish their own residency.

Campus-based aid: the three federal programs administered by colleges: Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant and Federal Work-Study.

Capitalization: when interest is added to the principal balance of a loan rather than being paid as it accrues; any future interest is based on the higher loan amount.

Citizen/national: U.S. citizens — those born in one of the 50 states, the District of Columbia, or abroad to a U.S.citizen — and nationals — citizens of Puerto Rico, the U.S. Virgin Islands, Guam and the Northern Mariana Islands and natives of American Samoa and Swainís Island — are eligible for most federal aid; citizens of the Federated States of Micronesia and the republics of Palau and the Marshall Islands are eligible only for Pell Grants, Federal Supplemental Educational Opportunity Grants and Federal Work-Study.

Cost of attendance: the total cost of college for the school year as calculated by colleges, including tuition, fees, books, supplies, transportation, food, housing, personal expenses, and sometimes the rental or purchase of a computer; also known as the student budget.

CSS/Financial Aid Profile: the financial aid application administered by the College Board required by some independent colleges and scholarship organizations to award private aid; only available online.

Deadline: the date or time before something must be done or is due; the due date.

Default: failure to make loan payments or otherwise honor a loanís terms.

Eligible noncitizen: a U.S. permanent resident who has a Permanent Resident Card (I-551 or I-151); a conditional permanent resident (I-551C); or a noncitizen who has an Arrival-Departure Record (I-94) from the Department of Homeland Securityís U.S. Citizenship and Immigration Services with one of the following designations: Refugee, Asylum Granted, Parolee (the I-94 confirms paroled for a minimum of one year and status has not expired), or Cuban-Haitian Entrant. Those in the U.S. on an F1 or F2 student visa, a J1 or J2 exchange visitor visa, or a G series visa (pertaining to international organizations) are not U.S. citizens or eligible noncitizens and so are ineligible for federal aid.

Expected family contribution (EFC): the portion of your own and your familyís financial resources that should be available to pay for college, based on a federal formula using the information on your FAFSA.

FAFSA: the Free Application for Federal Student Aid, the primary application for applying for financial aid from the federal government, states and colleges.

Federal methodology: the formula the federal government uses to determine a familyís ability to contribute toward a college education using the information submitted on the FAFSA to calculate the expected family contribution (doesnít count home equity and certain other assets); also used by states and some colleges.

Federal processor: the federal governmentís computer system that analyzes the information on your FAFSA, calculates your expected family contribution and sends out the Student Aid Report; also called the central processing system.

Financial aid eligibility: the difference between your expected family contribution and the collegeís cost of attendance; also known as your financial need.

Financial aid package: the total amount of financial aid offered, usually a combination of grants, scholarships, loans and work-study.

GED: General Education Development test/certificate used to measure academic achievement at the high school graduate level.

GPA: grade point average.

Grant: financial aid that doesnít need to be repaid; usually based on financial need.

Home equity: current home value minus the amount still owed.

Independent college: a nonprofit, private college that is not run by a government organization.

Institution-based aid: financial assistance offered and controlled by the individual colleges, such as alumni scholarships and endowments from private donors; also called university or college-based aid.

Institutional methodology: the formula used by some colleges to determine your eligibility for institutional aid; may count home equity and other assets the FAFSA does not.

Interest: the fee lenders charge you for using their money.

Merit-based aid: financial aid that is based on merit — grades, test scores, athletic ability, talents or other criteria — and not income or assets.

Need-based aid: financial aid that is based on your own or your familyís income and assets; most financial aid offered by states and the federal government is need-based.

PIN: personal identification number from the U.S. Department of Education that serves as your e-signature on the electronic FAFSA; also use your PIN to check on the status of your FAFSA and correct or print your SAR.

Private career college: a for-profit institution offering a course of study or job skills beyond high school.

Promissory note: a legally binding contract between a borrower and lender listing all terms and conditions of a loan; federal loans have a master promissory note.

Satisfactory academic progress: the progress you must maintain toward obtaining a degree or certificate thatís required to receive financial aid as established by your college.

Scholarship: money for college you donít have to repay, awarded based on grades, test scores, major, heritage or other criteria, but usually not financial need.

Selective Service registration: if required, you must register, or arrange to register, with the Selective Service for military draft to receive federal student aid (most males age 18-25, citizens or eligible noncitizens, and not currently on active duty in the Armed Forces).

Student Aid Report (SAR): the report summarizing the information you provide on the FAFSA.

Student budget: the total costs of attending a college; also known as the cost of attendance.

Undocumented students: students who live in the United States and are not U.S. citizens or legal permanent residents and who donít have an Alien Registration Card, visa or other legal documentation; includes students or their families who entered the country legally on tourist or work visas and chose to stay after their visas expired.

Untaxed income: all income you receive thatís not taxed or may not be reported to the IRS, including the untaxed portion of Social Security benefits, Earned Income Credit, welfare payments, interest on tax-free bonds, clergy and military allowances, and others (see FAFSA Worksheets A and B).

Verification: the procedure by which a college checks the information reported on the FAFSA, usually by requesting a copy of your (or your parentsí) signed tax return and other documentation.

Veteran: a person who has engaged in active duty in the U.S. Armed Forces or is a National Guard or Reserve enlistee called to active duty for purposes other than training, or who was a cadet or midshipman at one of the service academies, and who was released under a condition other than dishonorable; or whoíll be a veteran by June 30, 2012.

Vocational school: a school that offers a course of study beyond high school to teach specific job skills; also called a technical or trade school.