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Glossary of Financial Aid Terms

This page gives explanation to various terms and issues useful in understanding the financial aid process. By reviewing these items, even briefly, you will more fully understand the dynamics that affect your aid application flow. There is also consumer information that can help you make your financial aid last longer and have more value to you personally.

Academic Year
This is the fall and spring semesters combined. (Ex: Fall 2020 + Spring 2021)

Accrual Date
The day interest charges on an educational loan begin to accrue.

Academic Competitiveness Grant (ACG)
For freshman and sophomore students who took rigorous programs of study in high school and/or are eligible for Pell grants.

The estimate of a student's cost of attending SWOSU. Same as Cost of Attendance.

Campus-Based Aid
Programs administered by SWOSU, using annual federal allocations. They include Federal Supplemental Educational Opportunity Grants (FSEOG) and Federal Work Study.

The process of adding unpaid interest to the principal balance of an educational loan, thereby increasing the total amount to be repaid.

Capitalized interest
When interest is capitalized, it's added each month to the loan principal instead of being charged to you. This makes the principal grow each month. Since interest is a percentage of the principal, the interest also grows each month. When repayment begins, you pay more total interest than you would if you'd paid it as it was charged - you pay interest on interest.

Central Processing System
Federal offices in Iowa or Illinois that receive FAFSA data, check students' eligibility, and compute Expected Family Contributions (EFC).

Citizen/ Eligible Non-citizen
United States immigration status you must have in order to receive federal student aid.

Consolidation Loan
A loan program that allows a borrower to combine various educational loans into one new loan. By extending the repayment period (up to 30 years depending on the loan amount) and allowing a single monthly payment, consolidation can make loan repayment easier for some borrowers. But since interest rates can be higher after this procedure, it is not recommended unless absolutely necessary.

Cost of Attendance (COA)
An estimate of a student's tuition, fees, books, room, board, transportation and personal costs related to attending SWOSU. This is typically the maximum amount of aid a student can receive in a term. Aid received in excess of this limit must be returned to its source. Same as budget.

If a student loan borrower doesn't make payments for 270 days, he or she is considered in default. The federal government takes over collection of the student loan. This isn't pretty! If you default, your school, the organization that holds your loan, the state, and the federal government can all take action to recover the money, including notifying national credit bureaus of your default. Your wages and/or tax returns may be garnished, and you will no longer be eligible to receive federal financial aid.

Temporary postponement of loan payments. Interest on unsubsidized loans continues to accumulate during deferment.

Dependent student
Any student who doesn't meet the definition of an independent student is dependent. The parents' income is included in calculations of need.

The release of loan funds to the school for delivery to the borrower. Disbursements for most loans are made in equal multiple installments.

Entrance/ Exit Interviews
Counseling sessions that borrowers are required to complete before receiving their first loan disbursement (Entrance) and before leaving school (Exit). These requirements are intended to inform borrowers about their rights and responsibilities with regard to borrowing student loans. They may be completed on the Internet or by viewing a video in the Office of Student Financial Services.

Expected Family Contribution (EFC)
The amount the federal government expects a student and family to contribute toward the cost of attendance, based on the family's income and assets as reported on the FAFSA. Also known as total family contribution (TFC). The Budget minus the EFC determines the student's financial need.

The application a student must file to receive most aid. Best completed on the Internet at by February 28th prior to college attendance in the fall, but can be completed at other times if needed. Remember that a new FAFSA is required every year!

Federal Family Education Loan Program (FFELP)
Education loans provided by private lenders and guaranteed by the federal government. Subsidized and Unsubsidized Federal Stafford Loans and Parent PLUS loans are included in this category.

Federal Work Study (FWS)
Student work opportunities paid entirely or partially by the federal government. Employment can be either on or off campus. Employment is usually limited to a 20-hour per week maximum. Most jobs pay minimum wage.

Financial Aid
Any grant, scholarship, Federal Work Study or student loan offered to help pay for educational costs.

Financial Aid Administrator (FAA)
A representative of the Student Financial Services Office.

Financial Aid Award Letter
A notice for students that lists aid awarded and tells students what to do next.

Financial Aid Package
The total of all types of financial aid a student receives. Federal and non-federal aid such as grants, loans, work study and scholarships are combined into a "package" to help meet the student's need.

Financial Need
The difference between a student's Expected Family Contribution and budget. Helps determine if the student is eligible for need-based aid.

An authorized temporary postponement or reduction in student loan payments granted by a lender. May apply to principle, interest or both. Interest continues to accumulate. A forbearance may be granted at the lender's discretion when a borrower is willing to repay their loan but is unable to do so.

Free Application for Federal Student Aid (FAFSA)
The application a student must file to receive most aid. Best completed on the Internet at by February 28th prior to college attendance in the fall, but can be completed at other times if needed. Remember that a new FAFSA is required every year!

Federal Supplemental Educational Opportunity Grant is a need-based fund awarded to some full-Pell recipients.

Full-Time Enrollment
During fall and spring semesters:
Undergraduate: 12 or more credit hours. Graduate: 9 or more credit hours.
During summer semester:
Undergraduate: 6 or more credit hours. Graduate: 5 or more credit hours.

Grace Period
The period between when a borrower leaves school or drops below half-time enrollment and when they are obligated to begin repaying their loans -- usually six months for Stafford Loans.

Graduated Repayment
A direct loan repayment plan in which payments are smaller at the start and gradually become larger.

Half-Time Enrollment
During fall and spring semesters:
Undergraduate: 6 - 11 credit hours. Graduate: 5 - 8 credit hours.
During summer semester:
Undergraduate: 3 - 5 credit hours. Graduate: 3 - 4 credit hours.

Income Contingent Repayment
A repayment plan for Stafford Loans in which payments don't exceed 20 percent of discretionary income.

Independent Student
A student is independent if he or she is any of the following:

  • at least 24 years old by December 31 of the first year of the award
  • married
  • a graduate or professional student
  • a veteran
  • an orphan
  • a ward of the court
  • someone with legal dependents other than a spouse that they financially support at least 50 percent

A fee charged for the use of borrowed money. Interest is calculated as a percentage of the principal loan amount. The rate may be constant throughout the life of the loan (fixed rate) or it may change at specified times (variable rate). As of October 1, 1992, all federal education loans made to new borrowers have variable interest rates.

A financial institution (bank, savings and loan, or credit union) that provides the funds for students and parents to borrow educational loans.

National Student Loan Data System (NSLDS)
A database of all students who have received federal aid. Maintained by the U.S. Dept. of Education and updated by schools that award aid.

The difference between a student's budget and Expected Family Contribution.

Needs Analysis
A process of reviewing a student's aid application to determine the amount of financial aid for which a student is eligible. For federal aid, the needs analysis form is the FAFSA. However, for other aid contributors like scholarship donors, a separate needs analysis form may be required. Those are typically supplied by the donor.

New Borrower
A borrower who has no outstanding (unpaid) loan balances on the date (s)he signs the promissory note for a specific educational loan. New borrowers may be subject to different regulations than borrowers who have existing loan balances, like needing to complete an Entrance Interview.

Origination Fee
A fee charged by the federal government and deducted from loan proceeds before disbursement to partially offset administrative costs of the loans.

Parent Contribution
The part of the EFC that represents what the parents are expected to contribute.

Pell Grant
The largest federal student aid grant program. More than $4,000,000 paid annually to SWOSU students.

A federal loan for the parents of dependent students (Parent Loan for Undergraduate Students).

The amount borrowed on a student loan. Interest is charged on this amount, and origination fees will be deducted based upon this amount prior to disbursement.

Promissory Note
A legal document a borrower must sign to obtain a loan. By signing, the borrower agrees to repay the loan as described in the promissory note.

Repayment Schedule
Information sheet from a student loan borrower's lender which discloses the monthly payment, interest rate, total repayment obligation, due dates and length of time for repaying the loan.

Satisfactory Academic Progress (SAP)
A standard that measures completion rate, GPA, and number of hours taken. Students must meet the minimum standards to receive aid.

Secondary Market
An organization established to purchase education loans from lenders. This allows lenders to replenish capital to fund new loans. Selling loans is a common practice among lenders and does not affect the terms and conditions under which the loan was originally made.

See FSEOG for the Federal Supplemental Educational Opportunity Grant.

A loan processing center, which receives loan repayments from borrowers.

Statement of Educational Purpose
A statement in which a financial aid recipient promises to use financial aid funds for education costs only. The statement is part of the FAFSA.

The National Science and Mathematics Access to Retain Talent Grants (SMART)
Intended for juniors and seniors who are Pell grant eligible and enrolled in a major in physical technology, or engineering or foreign language critical to National Security.

Student Aid Report (SAR)
A document the Central Processing System sends to the student as a response to completing the FASFA. It contains information the student reported on the FAFSA. The student should contact the Office of Student Financial Services if any information on their SAR is incorrect.

Student Contribution (SC)
The part of the EFC that represents what the student is expected to pay.

Subsidized Stafford Loan
A federal loan for students that requires financial need. No interest is charged until the student enters repayment.

Summer Aid Application (SAA)
A short form students use to apply for summer aid. It is available in the Student Financial Services Office during spring semester.

Supplemental Educational Opportunity Grant (SEOG)
Abbreviation of FSEOG. Need-based grant awarded to some full-Pell recipients.

Unmet Need
The amount of financial aid eligibility that is not filled by aid sources. COA-EFC= unmet need.

Unsubsidized Stafford Loan
A federal loan for students that does not require financial need. Interest is charged from the time the loan is disbursed, but payment on principle is delayed until the student enters repayment.

A quality improvement process that requires some students to verify information they provided on the FAFSA. Aid is not awarded until this is done if required.