Key College Finance Terms

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Adjusted Gross Income (AGI): A student’s or family’s wages, salaries, interest, dividends, etc., minus certain deductions from income as reported on a federal income tax return. Commonly referred to as AGI.


Award Letter: An offer from a college or career school that states the type and amount of financial aid the school is willing to provide if you accept admission and register to take classes at that school.


Dependent Student: A student who does not meet any of the criteria for an independent student. An independent student is one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, someone with legal dependents other than a spouse, an emancipated minor or someone who is homeless or at risk of becoming homeless.


Direct Loan: A federal student loan, made through the William D. Ford Federal Direct Loan Program, for which eligible students and parents borrow directly from the U.S. Department of Education at participating schools. Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans are types of Direct Loans.


Direct PLUS Loan: A loan made by the U.S. Department of Education to graduate or professional students and parents of dependent undergraduate students. The borrower is fully responsible for paying the interest regardless of the loan status.


Federal Family Education Loan (FFEL) Program: Under this program, private lenders provided loans to students that were guaranteed by the federal government. These loans included Subsidized Federal Stafford Loans, Unsubsidized Federal Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans. Federal student loans under the FFEL Program are no longer made by private lenders. Instead, all new federal student loans come directly from the U.S. Department of Education under the Direct Loan Program.


Federal Pell Grant: A federal grant for undergraduate students with financial need.


Federal Perkins Loan: A federal student loan, made by the recipient’s school, for undergraduate and graduate students who demonstrate financial need.


Federal Student Aid: Financial aid from the federal government to help students pay for education expenses at an eligible college or career school. Grants, loans, and work-study are types of federal student aid. Students must complete the FAFSA to apply for this aid.


Grant: Financial aid, often based on financial need, that does not need to be repaid (unless, for example, the student withdraws from school and owes a refund).


Need-based: Based on a student’s financial need. Example: A need-based grant might be awarded based on a student’s low income.


PLUS Loan: A loan available to graduate students and parents of dependent undergraduate students for which the borrower is fully responsible for paying the interest regardless of the loan status.


Retention Rate: Measures the percentage of first-time students who are seeking bachelor’s degrees who return to the institution to continue their studies the following fall.


Scholarship: Money awarded to students based on academic or other achievements to help pay for education expenses. Scholarships generally do not have to be repaid.


Subsidized Loan: A loan based on financial need for which the federal government pays the interest that accrues while the borrower is in an in-school, grace, or deferment status.


Unsubsidized Loan: A loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan.


Work-Study: A federal student aid program that provides part-time employment while students are enrolled in school to help pay their education expenses.


— Source: U.S. Department of Education


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