ACADEMIC YEAR--This is a measure of academic work to be
accomplished by a student. A school defines its own academic year,
but federal regulations set minimum standards to determine federal
financial aid awards. For instance, the academic year must be at least
30 weeks of instructional time in which a full-time student is
expected to complete at least 24 semester or trimester credit hours,
36 quarter credit hours, or 900 clock hours.
AWARD YEAR -- An award year begins on July 1 of one year and
extends to June 30 of the next year. Funding for Federal Pell Grants
and campus-based programs is provided on the basis of the award
year. For example, a student is paid out of funds designated for a
particular award year, such as the 1996-97 award year.
BASE YEAR -- For need analysis purposes, the base year is the
calendar year preceding the award year. For instance, 1995 is the
base year used for the 1996-97 award year. The Free Application for
Federal Student Aid (FAFSA) uses family income from the base year
because it is more accurate and easier to verify than projected year
CAMPUS-BASED PROGRAMS -- The Federal Supplemental
Educational Opportunity Grant (FSEOG), Federal Perkins Loan, and
Federal Work-Study (FWS) programs. These three programs are
called "campus-based" because the funds are allocated to and
administered directly by a school's financial aid office, which awards
the funds to students using federal guidelines.
CENTRAL PROCESSING SYSTEM (CPS) -- The Department's
processing facility for application data. The CPS receives student
information from the application processors, calculates a student's
official EFC, performs several eligibility database matches, prints the
STUDENT AID REPORT (SAR), and produces Institutional Student
Information Records (ISIRs).
CITIZEN/ELIGIBLE NONCITIZEN -- A student must be one of the
following to receive federal student aid:
- U.S. citizen
- U.S. national (includes natives of American Samoa or Swain's
- U.S. permanent resident who has an I-151, I-551, or I-551C
(Alien Registration Receipt Card)
If a student is not in one of these categories, he or she must have an
Arrival-Departure Record (I-94) from the U.S. Immigration and
Naturalization Service (INS) showing one of the following designations:
- "Asylum Granted"
- "Indefinite Parole and/or Humanitarian Parole"
- "Cuban-Haitian Entrant, Status Pending"
- "Conditional Entrant" (valid only if issued before April 1, 1980)
- Other eligible noncitizen with a Temporary Resident Card (I-688)
Or a student can be eligible on the basis of the Family Unity Status
category with an approved I-797 (Voluntary Departure and
If a student has only a Notice of Approval to Apply for Permanent
Residence (I-171 or I-464), he or she is not eligible for federal
If a student is in the United States on an F1 or F2 student visa, or on
a J1 or J2 exchange-visitor visa only, he or she can't get federal
student aid. Also, persons with G series visas (pertaining to
international organizations) are not eligible for federal student aid.
Citizens of the Federated States of Micronesia, the Republic of the Marshall
Islands, and the Republic of Palau are eligible for Federal Pell Grants, Federal
Supplemental Educational Opportunity Grants, or Federal Work--Study
only. These applicants should check with their schools' financial aid
administrators for more information.
CONSOLIDATION LOAN/DIRECT CONSOLIDATION Loan --
There are two categories of consolidation loans--Federal Family
Education Loan (FFEL) Program Consolidation Loans and Direct
Consolidation Loans. Both allow the borrower to combine different
types and amounts of federal student loans to simplify repayment. A
consolidation loan pays off the existing loans; the borrower then
repays the consolidation loan.
COST OF ATTENDANCE (COA) -- A student's cost of attendance
includes tuition and fees, room and board expenses while attending
school, and allowances for books and supplies, transportation, loan
fees (if applicable), dependent care costs, costs related to a disability,
and other miscellaneous expenses. In addition, reasonable costs for a
study-abroad program and costs associated with a student's
employment as part of a cooperative education program may be
included. The cost of attendance is estimated by the school, within
guidelines established by federal regulations. The cost of attendance
is compared to a student's Expected Family Contribution (EFC) to
determine the student's need for aid.
DEFAULT -- Failure to repay a loan in accordance with the terms of
the promissory note. Default can also occur if students fail to submit
requests for deferments or discharges (cancellations) in a timely
DEFAULT RATE -- A percentage calculated each year for a
postsecondary school on the basis of the number of former students
who defaulted on FFEL Program loans received at that school.
DEPARTMENT (OR ED) -- Abbreviated names for the U.S.
Department of Education.
ELIGIBLE PROGRAM -- A course of study that requires a certain
minimum number of hours of instruction and that leads to a degree
or certificate at a school participating in one or more of the federal
student financial aid programs described in this handbook. Generally,
to get student aid, a student must be enrolled in an eligible program.
EXPECTED FAMILY CONTRIBUTION (EFC) -- The amount,
determined by a formula Congress established, that a student's
family is expected to contribute toward the cost of attendance. It is
determined for the purposes of the federal Student Financial
Assistance Programs. The EFC is printed on the front of a Student
Aid Report (SAR) or on an Institutional Student Information Record
WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM --
Federal Direct Stafford/Ford Loans (Direct Subsidized Loans),
Federal Direct Unsubsidized Stafford/Ford Loans (Direct
Unsubsidized Loans), Federal Direct PLUS Loans, and Federal
Direct Consolidation Loans. Funds for these programs are lent to
student and parent borrowers from the federal government through
colleges and career schools that participate in the program. The
program began operating on July 1, 1994.
FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM --
The Federal Stafford (subsidized and unsubsidized), Federal PLUS,
and Federal Consolidation Loan programs. Funds for these programs
are provided by private lenders, and the loans are guaranteed by the
FINANCIAL NEED -- The difference between a student's cost of
attendance (COA) and the Expected Family Contribution (EFC).
FREE APPLICATION FOR FEDERAL STUDENT AID (FAFSA)
AND RENEWAL FAFSA -- The application filled out and filed by a
student that collects household and financial information used by the
federal government to calculate the Expected Family Contribution
INSTITUTIONAL STUDENT INFORMATION RECORD (ISIR) --
A federal output record that contains the student's EFC as calculated
by the central processing system (CPS) and all the financial and
other data submitted by the student on the FAFSA. The ISIR can be
received electronically by schools that participate in the Electronic
Data Exchange (EDE) system. (See Student Aid Report.)
NEED ANALYSIS -- The process of analyzing household and
financial information on a student's financial aid application and
calculating an Expected Family Contribution (EFC).
OVERAWARD -- Generally, any amount of federal financial aid
that exceeds the student's financial need. (The overaward concept
does not apply in the Federal Pell Grant Program.)
OVERPAYMENT -- Any payment of a Federal Pell Grant, Federal
Perkins Loan, FSEOG, or SSIG that exceeds the amount for which a
student was eligible. An overpayment may be the result of an
overaward, an error in cost of attendance or Expected Family
Contribution (EFC), or a student not meeting any other eligibility
criterion, such as citizenship or enrollment in an eligible program.
PROMISSORY NOTE -- A binding legal document that a borrower
signs to get a loan. By signing this note, a borrower promises to
repay the loan, with interest, in specified installments. The
promissory note will also include any information about the grace
period, deferment, or cancellation provisions, as well as a borrower's
rights and responsibilities with respect to that loan.
RENEWAL FAFSA -- The version of the FAFSA that students may
use if they applied for federal financial aid the previous award year.
If a student is among those allowed to complete a Renewal FAFSA,
it will be sent directly to him or her by the FAFSA processor or the
RESOURCES -- Other student aid that must be taken into account to
prevent an overaward in the campus-based programs, as defined in
federal regulations for the campus-based programs. Resources are
called other "estimated financial assistance" in determining a
student's eligibility for some federal student loans.
SAR INFORMATION ACKNOWLEDGEMENT -- A new,
noncorrectable one-page Student Aid Report composed of Part 1
only; it is sent to students who transmit electronic applications or
corrections through their schools.
SCHOOL -- A postsecondary educational institution, such as a
college, university, or career school. In this handbook, the term
"school" refers to such an institution.
SIMPLIFIED NEEDS TEST -- The primary purpose of the
Simplified Needs Test is to make it easier for some students to fill out
the Free Application for Federal Student Aid (FAFSA). If a
dependent student's parents' income is less than $50,000 and the
relevant family members were nontax filers or were eligible to use a
1040A or a 1040EZ to file their taxes, the student completes only the
first part of the application; the asset information will not have to be
STUDENT AID REPORT (SAR) -- A federal output document sent
to a student by the application processor. The SAR contains financial
and other information reported by the student on the Free
Application for Federal Student Aid (FAFSA). That information is
entered into the processing system, and the SAR is produced. The
student's eligibility for aid is indicated by the EFC, which is printed
on the front of the SAR. (See Institutional Student Information
SFA PROGRAMS -- The programs administered by the office of
Student Financial Assistance Programs within the U.S. Department
of Education: Federal Pell Grants, Federal Supplemental Educational
Opportunity Grants, Federal Work-Study, Federal Perkins Loans,
Federal Direct Stafford/Ford Loans, Federal Direct PLUS Loans,
Federal Stafford Loans, Federal PLUS Loans, and State Student
VERIFICATION -- A procedure where a school checks the
information a student reported on the FAFSA, usually by requesting
a copy of signed tax returns filed by the student and, if applicable,
the student's parent(s) and spouse. Schools must verify students
selected for verification by the federal central processing system,
following procedures established by federal regulations. The
contractor prints an asterisk next to the Expected Family Contribution
(EFC) on SARs to identify students selected for verification. Many
schools also select students for verification in addition to those
selected by the central processing system.