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.

APTITUDES
Aptitudes are natural talents, special abilities for doing, or learning to do, certain kinds of things. Manual dexterity, musical ability, spatial visualization, and memory for numbers are examples of such aptitudes.

ASSET PROTECTION ALLOWANCE
A sum subtracted from a family’s total assets when determining the Expected Family Contribution to college costs. This allowance provides a safety net for families. The allowance increases with the age of the parents. The allowance is roughly one thousand times the oldest parent’s age.

ASSETS 
The amount a family has in non-retirement savings and investments. This includes savings and checking accounts; a business; a farm or other real estate; and stocks, bonds, and trust funds. Cars are not considered assets, nor are such possessions as stamp collections or jewelry. The net value of the principal home is counted as an asset by some colleges in determining their own awards but is not included in the calculation for eligibility for federal funds.

AWARD LETTER (AKA FINANCIAL AID PACKAGE)
An award letter is an official document issued by the Financial Aid Office that lists all of the financial aid awarded to the student. This letter provides details on their analysis of the student’s financial need and the breakdown of the 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.

BASE YEAR
Colleges determine your Expected Family Contribution by looking at your income and assets for the twelve-month period, ending on December 31, preceding the school year for which you are seeking financial aid. That year is called the “base year.” For example, if your child is applying for financial aid for the 2006-2007 school year the school will use the calendar year 2005 as the base year to determine your Expected Family Contribution.

BUSINESS/FARM SUPPLEMENT
An additional financial aid form required by some colleges for parents and students who own a business or farm. This form is processed by the College Scholarship Service and is a supplement to the Financial Aid Profile.

CAMPUS-BASED FINANCIAL AID PROGRAMS
The university administers campus-based financial aid programs. The federal government provides the university with a fixed annual allocation, which is awarded by the financial aid administrator to deserving students. Such programs include the Federal Supplemental Educational Opportunity Grant, the Federal Perkins Loan, and Federal Work-Study (FWS).

COLLEGE BOARD (THE)
A nonprofit membership organization comprised of colleges, secondary schools, and educational associations that administers the SATs and runs the College Scholarship Service.

COLLEGE SCHOLARSHIP SERVICE (CSS)
CSS is the arm of The College Board that processes the CSS financial aid information.

COST OF ATTENDANCE (COA)
The total amount it will cost a student to attend college for one year, including tuition and fees; housing and food; books and supplies; travel costs directly related to attendance; child care expenses; and costs related to a handicap. Other expenses may be added at the discretion of a college’s financial aid administrator.

CUSTODIAL PARENT 
For financial aid applications, the custodial parent is the one with whom the student lived more than 50% during the previous calendar year.

DIRECT LOAN
See FEDERAL DIRECT LOAN

DISBURSEMENT
Disbursement is the release of loan funds to the school for the enrolled student. The payments are made in two to three installments, one for each semester.

EARLY ACTION
An admissions process with earlier deadlines and earlier notification dates than the regular admissions process. Students who apply to an early action program do not commit to attending the school if admitted, as they must do if they apply to an Early Decision program. Ivy League schools do not allow you to apply to more than one Ivy League early action program.

EARLY DECISION
An admissions process with earlier deadlines and earlier notification dates than the regular admissions process. Students who apply to an early decision program commit to attending the school if admitted. For this reason, early decision can be applied to only one school. Unfortunately, this means the student has accepted the offer of admission before knowing what financial aid package will be offered. You should only participate in an early decision program if you simply don’t want to consider any other schools.

EDUCATIONAL TESTING SERVICE (ETS)
ETS is the company that produces and administers the SAT and other educational achievement tests such as PSAT and AP Program tests.

EXPECTED FAMILY CONTRIBUTION (EFC)
A figure determined by a congressionally mandated formula that indicates how much of a family’s resources should be considered “available” for college expenses. Factors such as taxable and nontaxable income and the value of family assets are taken into account to determine a family’s financial strength. Allowances for maintaining a family and for future financial needs are then taken into consideration before determining how much a family should be able to put toward the cost of college.

FEDERAL DIRECT LOAN
One of a group of federal loans–Stafford, Perkins, and PLUS Loans-managed by the school and funded by the federal government. Included in these programs are government-subsidized loans for students and unsubsidized loans for both students and parents.

FEDERAL DIRECT STUDENT LOAN PROGRAM (FDSLP) 
The FDSLP is a program that is similar to the Federal Family Education Loan Program (FFELP). The US government provides the funding 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 METHODOLOGY
The need analysis formula used to determine your Expected Family Contribution. 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’s residence.

FEDERAL PELL GRANT
The Pell grant is a federal grant that provides funds of up to $4,000 based on the student’s financial need.

FEDERAL PLUS LOAN 
See PARENT LOANS FOR UNDERGRADUATE STUDENTS (PLUS).

FEDERAL PROCESSOR
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 EDUCATIONAL OPPORTUNITY GRANT (FSEOG)
A federal grant awarded by colleges to undergraduate students with the highest demonstrated need, as determined by the federal need analysis formula.

FEDERAL WORK-STUDY PROGRAM (FWS)
The Federal Work-Study (FWS) program provides 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. 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. Several states also have work-study programs that are similar to the federal program.

FINANCIAL AID PACKAGE
The financial aid package is the complete collection of grants, scholarships, loans, and work-study employment from all sources (federal, state, institutional, and private) which a college or university offers to a student to enable him/her to attend.

FINANCIAL AID PROFILE
A financial aid application developed by the College Scholarship Service that many colleges use to determine aid given from their own funds.

FINANCIAL NEED
The difference between the Cost of Attendance (COA) and the Expected Family Contribution (EFC) is the student’s financial need – the gap between the cost of attending the school and the student’s resources. The financial aid package is based on the amount of financial need. The process of determining a student’s need is known as need analysis. Cost of Attendance (COA) – Expected Family Contribution (EFC) = Financial Need

FREE APPLICATION FOR FEDERAL STUDENT AID (FAFSA)
The official application used by all colleges to determine eligibility for federal aid.

GAPPING
Gapping is the practice of the college failing to meet a student’s full-demonstrated need. See also Unmet Need.

GIFT AID
Gift aid is financial aid, such as grants and scholarships, which does not need to be repaid.

GUARANTEE AGENCY OR GUARANTOR
These are state agencies that are 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 guarantee fee is a small percentage of the loan that must be paid to the guarantee agency to insure the loan against default. The insurance fee is usually 1% of the loan amount (and by law cannot exceed 5% of the loan amount).

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.

INDEPENDENT STUDENT
An independent student is one who reports only his or her own income (and that of a spouse, if relevant) when applying for federal financial aid. Students who will be 24 or older by December 31, 2006 will automatically be considered “independent” for 2006-2007. Students who are under 24 will be considered independent if they are:

• married and not claimed as a dependent on their parents’ 1999 federal income tax return
• the supporter of a legal dependent other than a spouse
• a veteran of the U.S. Armed Forces
• an orphan or ward of the court
• classified as independent by a college’s financial aid administrator because of other unusual circumstances
• a graduate or professional student

INSTITUTIONAL METHODOLOGY
If a college or university uses its own formula for determining financial need for allocation of the school’s own financial aid funds, the formula is referred to as the Institutional Methodology (IM). However, colleges must use the Federal Methodology in awarding any federal funds.

LEVERAGING
Leveraging is a practice used by colleges based upon the belief that 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.

MERIT-BASED
Financial aid that is merit-based depends on academic, artistic, athletic merit, or some other criteria, but does not depend on financial need. Merit-based awards use grades, test scores, hobbies, and special talents to determine eligibility for scholarships. There is a minimum GPA required, which is typically 3.00, to keep a merit scholarship that is offered through the school.

NEED
See Financial Need.

NEED ANALYSIS 
The process of determining a student’s financial need by analyzing the financial information provided by the student and his or her parents (and spouse, if any) on a financial aid form. The student must submit a need analysis form to apply for need-based aid. Need analysis forms include the Free Application for Federal Student Aid (FAFSA) and the Financial Aid Profile.

NEED-BLIND
Under need-blind admissions, the school decides whether to make an offer of admission to a student without considering the student’s financial situation. Most schools use a need-blind admissions process. A few schools will use financial need to decide whether to include marginal students on the wait list.

NEED-SENSITIVE
Under need-sensitive admissions, the school does take the student’s financial situation into account when deciding whether to admit him or her. Some schools use need-sensitive admissions when deciding to accept a borderline student or to pull a student off of the waiting list.

ORIGINATION FEE
Fee paid to the bank to compensate them for the cost of administering the loan. The origination fees are charged as the loan is disbursed, and typically run to 3% of the amount disbursed. A portion of this fee is paid to the federal government to offset the administrative costs of the loan.

PARENT CONTRIBUTION (PC) 
The parent contribution is an estimate of the portion of the student’s educational expenses that the federal government believes his or her parents can afford. It is based on income, the number of parents earning income, assets, family size, the number of family members currently attending a university, and other relevant factors. Students who qualify as independent are not expected to have a parent contribution.

PARENT LOANS FOR UNDERGRADUATE STUDENTS (PLUS) 
Federal loans available to parents of a dependent undergraduate student to help finance the child’s education. Parents may borrow up to the full cost of the child’s education, less the amount of any other financial aid received. PLUS Loans may be used to pay the Expected Family Contribution. There is a minimal credit check required for the PLUS loan, so a good credit history is required. Check with your local bank to see if they participate in the PLUS loan program. If your application for a PLUS loan is turned down, your child may be eligible to borrow additional money under the Unsubsidized Stafford Loan program.

PERKINS LOAN 
Formerly the National Direct Student Loan Program, the Perkins Loan allows students to borrow up to $3,000 per year (for up to five years) for undergraduate school and $5,000 per year (for up to six years) for graduate school. The Perkins Loan has one of the lowest interest rates, which is fixed at 5%, and is awarded by the financial aid administrator to students with exceptional financial need. The interest on the Perkins Loan is subsidized while the student is in school.

PRIVATE COLLEGE
A college whose annual Cost of Attendance ranges between $30,000 and $44,000. Examples: Roger Williams, Providence, St Anselm’s, and Clark.

PROFESSIONAL JUDGMENT (PJ)
For need-based federal aid programs, the financial aid administrator can adjust the Expected Family Income, adjust the Cost of Attendance, or change the dependency status (with documentation) when there are extenuating circumstances. For example, if a parent becomes unemployed, disabled, or dies, the financial aid administrator 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).

PUBLIC UNIVERSITY (IN STATE)
A college whose annual Cost of Attendance ranges between $20,000 and $25,000. Examples: University of Massachusetts and Westfield State University.

PUBLIC UNIVERSITY (OUT OF STATE)
A college whose annual Cost of Attendance ranges between $25,000 and $40,000. Examples: University of New Hampshire, University of Vermont, University of Connecticut, and University of Rhode Island.

SCHOLARSHIP
Scholarships are a form of financial aid that is given to undergraduate students to help pay for education. Most scholarships are restricted to paying all or part of tuition expenses, though some scholarships also cover room and board. Scholarships are a form of gift aid and do not have to be repaid. Many scholarships are restricted to students in specific courses of study or with academic, athletic, or artistic talent. There is a minimum GPA required to keep a merit scholarship that is offered through the school.

SCHOLASTIC APTITUDE TEST (SAT I) 
The SAT is one of the two national standardized college entrance examinations used in the US. The other is the ACT. The Educational Testing Service (ETS) administers the SAT. Most universities require either the ACT or the SAT as part of an application for admission.

SELF-HELP AID
This is a form of financial aid that is comprised of loans and student employment. Every financial aid package is required to include a minimum amount of self-help aid before any gift aid is granted. That level is known as the self-help level.

STAFFORD LOAN (AKA: DIRECT LOAN)
A Federal Education Loan Program for students. Stafford Loans can be either government-subsidized, in which case the government pays any interest while the borrower is attending college, or unsubsidized, in which case interest begins to accrue as soon as the loan is made.

STUDENT AID REPORT (SAR) 
Report that summarizes the information included in the FAFSA and must be provided to the school’s financial aid office. The SAR will also indicate the amount of Pell Grant eligibility, if any, and the Expected Family Contribution (EFC). You should receive a copy of your SAR four to six weeks after you file your FAFSA. Review your SAR and correct any errors on part 2 of the SAR. Keep a photocopy of the SAR for your records. To request a duplicate copy of your SAR, call 1-319-337-5665.

STUDENT CONTRIBUTION (SC) 
The amount of money the federal government expects the student to contribute to his or her education. This is included as part of the Expected Family Contribution. The Student Contribution depends on the student’s income and assets, but can vary from school to school. Usually a student is expected to contribute about 35% of his or her savings and approximately one-half of his or her summer earnings above $2,250.

SUBSIDIZED LOAN
With a subsidized loan, such as the Perkins Loan or the Subsidized Stafford Loan, the government pays the interest on the loan while the student is in school, during the six-month grace period after graduation, and during any deferment periods.

UNIFORM GIFT TO MINORS ACT (UGMA)
This is a popular method of saving money under a child’s name, based on the theory that the child has a lower tax rate than the parent. The parent or some adult family member acts as the “custodian” until the child is 21 years of age.

UNIFORM TRANSFER TO MINORS ACT (UTMA)
This is a popular method of saving money under a child’s name, based on the theory that the child has a lower tax rate than the parent. The parent or some adult family member acts as the “custodian” until the child is 18 years of age.

UNMET NEED 
In an ideal world, the financial aid office would be able to provide each student with the full difference between their Expected Family Contribution and the cost of education. Due to budget constraints, the financial aid office may provide the student with less than the student’s need (as determined by the financial aid office). This gap is the unmet need.

UNSUBSIDIZED LOAN 
A loan for which the government does not subsidize the interest while the student is in school. The borrower is responsible for the interest on an unsubsidized loan from the date the loan is disbursed, even while the student is still in school. Students may avoid paying the interest while they are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need and may be used to finance the Expected Family Contribution.

UNTAXED INCOME
Untaxed income is income that is sheltered from taxation, e.g. child support payments, welfare benefits, workman’s compensation.

VERIFICATION
Verification is a review process in which the financial aid office determines the accuracy of the information provided on the student’s financial aid application. During the verification process, the student and parents will be required to submit documentation for the amounts listed (or not listed) on the financial aid application. Such documentation may include signed copies of the most recent Federal and State income tax returns for the student, his or her spouse (if any) and the parents; proof of citizenship; proof of registration with Selective Service; copies of Social Security benefit statements, W2 and 1099 forms, among other things. The Federal processor randomly selects financial aid applications for verification. While most schools verify at least one third of all applications, some verify every application. Schools may select additional students for verification if they suspect fraud. An asterisk next to the Expected Family Contribution figure on the Student Aid Report (SAR) indicates that a SAR has been selected for verification. If any discrepancies are uncovered during verification, the financial aid office may require additional information to clear up the discrepancies. Such discrepancies may cause a final financial aid package to be different from the initial package described in the award letter sent by the school. Refusal to submit the required documentation results in cancellation of a financial aid package.

WARD OF THE COURT
A Ward of the Court is someone under the protection of the courts. The ward of the court may have a guardian appointed by the court; however, that guardian is not personally liable for the ward’s expenses and is not liable to third parties for the ward’s debts. The key issue for financial aid purposes is when a child becomes a ward of the court. If the student is declared a ward of the court before the end of the award year, the student is considered to be an independent student during the award year. Consequently, the student’s status would need to be updated with the financial aid administrator.