As you fill out financial aid forms and compare financial aid packages, you’ll probably see some unfamiliar terminology. While most terminology is universal across US colleges, some terms are unique to specific colleges. Don’t be afraid to ask your high school or admissions counselor about acronyms or processes. They want you to be as informed as possible throughout the process.
Financial Aid Terminology
Cost of Attendance (COA)
COA is more than just your tuition. It’s a combination of tuition and an estimate of the extras, including room and board, books, laptop, transportation, and other personal costs.
CSS Profile
CSS Profile is a form some schools require you to fill out to be considered for scholarships.
Entrance Loan Counseling (ELC)
ELC is an online training module that goes over the terms of the loan, origination fees, interest rates, repayment options, and more. ELC is mandatory when you take out both student and PLUS loans.
Student Aid Index (SAI)
The SAI is the number colleges use to determine how much financial aid you’re eligible for and which types. The SAI is an important financial need calculation on the Free Application for Federal Student Aid (FAFSA), the form used by colleges, states, and other scholarship providers to determine financial aid packages. Since you renew your FAFSA each year, your SAI can change while you’re in college.
Free Application for Federal Student Aid (FAFSA)
You must fill out the FAFSA every year you attend college to be considered for need-based aid and if you want to take out federal student loans to fund your education. The 2025–26 FAFSA will be widely available in December 2024. If you are unmarried and under the age of 24, have your tax info and your parents’ tax info from two years ago handy. You can read more about the FAFSA here.
Gift Aid
Gift aid is the best kind of aid because you don’t have to pay it back. Gift aid is usually in the form of grants and scholarships. Ideally, you want all your aid to fall into the gift aid category.
Master Promissory Note (MPN)
This is your loan contract that states that you agree to pay back all of the money you have borrowed, including interest.
Need
Need is the difference between the cost of attendance and your student aid index.
Need-Based Aid
Need-based aid is determined based on your financial need. Your grades, community involvement, and athletic prowess do not come into play. The amount of need-based aid is generated by subtracting your Student Aid Index from the Cost of Attendance.
Need-Blind
When a university is need-blind, it does not consider your financial need/status when making admissions decisions. Need-blind schools never deny you because of your inability to pay full tuition. Fortunately, many schools are need-blind.
Need-Aware
Need-aware is the opposite of need-blind. Need-aware colleges take your ability to pay tuition into consideration when they are making admissions decisions.
Origination Fee
An origination fee is paid to the bank to compensate them for administering a loan. The fees are usually 3% of the amount disbursed. A portion of the money is paid to the federal government to help offset its administrative costs.
Pell Grants
These are federally funded need-based grants awarded based on your FAFSA application. You do not pay these back.
Parent Loans for Undergraduate Study (PLUS Loans)
Parents can apply for a PLUS loan up to the Cost of Attendance minus any other aid. Qualification for this loan is based on a positive credit history. Parents must begin repayment on the PLUS loan once the loan is disbursed. However, they can request a deferment while the student is enrolled at least half-time in school. PLUS loans begin accruing interest as soon as they disburse.
Public Service Loan Forgiveness (PSLF)
Public Service Loan Forgiveness is a program where your remaining direct federal student loan debt can be forgiven after 120 payments under a qualifying repayment plan and while employed by a qualifying governmental agency or non-profit organization.
Renewable Scholarship
A renewable scholarship is awarded for more than one aid year. Renewable scholarships typically require a recipient to maintain specific academic standards. Some require students to reapply every year.
Satisfactory Academic Progress (SAP)
To continue to receive aid, you must meet specific benchmarks, such as credit completion or a certain GPA. Make sure you understand the specific requirements for your aid.
Student Aid Report (SAR)
You’ll receive this report via email after submitting the FAFSA. The SAR is your opportunity to review submitted information to ensure everything is accurate.
Subsidized Loans
Subsidized loans do not accrue interest while you are still enrolled at least half-time status and for the following grace period. Repayment begins six months after either graduation or dropping below half-time status.
Unsubsidized Loans
Unsubsidized student loans from the government begin accruing interest immediately upon disbursement. Repayment begins six months after either graduation or dropping below half-time status. If you can, consider making interest-only payments while in school so the interest doesn’t capitalize.
Verification
If your FAFSA was selected for verification, don’t panic. About one-third of applications get selected, some at random, and some because they found mismatching information on the application that requires further explanation. Each institution lets you know what paperwork is required to complete this process. Complete the paperwork immediately because your financial aid package can’t be finalized until it’s completed.
Work-Study
Work-study is a program that allows you to earn money by applying for on-campus jobs. You typically have to apply for these positions just like any other job. The salary helps offset a portion of your Cost of Attendance. Most work-study jobs are generally no more than 20 hours per week.
Academic Terminology
Bursar’s Office
The office where you pay your tuition bill.
Class Standing
Freshman (0-30 credit hours earned), Sophomore (31-59 credit hours earned), Junior (60-89 credits earned), Senior (90+ credit hours earned).
CLEP Test
CLEP stands for College Level Exam Program. CLEP tests can be taken in many subjects to demonstrate college-level proficiency and award you college credit for a specific course. If you are interested in taking a CLEP test, check with your college regarding CLEP acceptance policies, scores needed, etc.
Credit Hours
Most college courses will be three credit hours. In a typical 16-week semester, you will spend three hours in the classroom per week learning academic material. Your work for that class doesn’t end after those three hours, so set aside additional time to complete your homework. You typically complete 120 credit hours to earn a bachelor’s degree.
Degree Audit
This is a report showing your progress toward your college degree completion. If you took any dual credit courses, AP courses, or CLEP tests, including the necessary documentation to your college to ensure these courses are reflected on your degree audit.
Electives
Electives are courses outside of your degree plan. Some degrees have room for electives, and you can take any college course to meet your total credit hour requirement. Other times, you can choose electives within a specific subject area.
FERPA
FERPA stands for Family Educational Rights and Privacy Act. FERPA is designed to protect the privacy of your educational records and allows you the right to review your records. Once you turn 18 or attend a postsecondary institution, you’re the only person who sees the information unless you sign a release form authorizing others. This means your parents will not be given your academic transcript, disciplinary records, or GPA without your permission.
Transient Enrollment
This is enrollment at an institution other than your own college that you attend. For example, it’s considered transient enrollment if you go home for the summer and take a course at a college or university in your hometown.