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Financial Aid Glossary

By Kay Peterson, Ph. D.

January 04, 2013

Need-Blind Admissions: The school decides whether to offer of admission to a student without considering the student’s financial situation. Most schools use a need-blind admissions process.

Need-Sensitive Admissions: The school takes the student’s financial situation into account for some admissions decisions. Some schools use need-sensitive admissions for borderline students.

Packaging: A financial aid administrator’s attempt at combining various types of student aid (grants, loans, scholarship and employment) to attempt to meet a student’s financial need.

Parents’ Contribution: A quantitative estimate – calculated by the federal government – of the parents’ ability to contribute to postsecondary educational expenses.

Pell Grant: Federal grant program for undergraduate students who demonstrate financial need and have not yet completed a baccalaureate degree.

Perkins Loan: Low-interest, subsidized federal loan (five percent) for students with exceptional financial need (as determined by the college).

PLUS Loans (Parent Loans for Undergraduate Students): Federal loans available to parents of dependent undergraduate students to help finance their child’s education. Parents may borrow up to the difference between education costs and financial aid received from a bank or other lending institution.

Preferred Lender List: A college’s list of loan providers that they recommend to students.

Prepaid Tuition Plan: A college savings plan guaranteed to rise in value at the same rate as college tuition. Several states and institutions offer such programs.

Principal: The amount borrowed or owed on a loan.

Professional Judgement: For need-based federal aid programs, financial aid administrators can adjust the expected family contribution (EFC), or the cost of attendance (COA), or change the dependency status (with documentation) when extenuating circumstances exist (for example, if a parent becomes unemployed, disabled or deceased).

Promissory Note: A legally binding contract a student signs before receiving loan funds that details the terms of the loan and obligates the borrower to repay.

Satisfactory Academic Progress: A school’s policy concerning the minimum number of courses that must be completed each semester, the maximum time frame, and the minimum GPA required to receive financial aid.

Scholarship: A form of financial assistance that does not require repayment or employment and which is usually offered to students who show potential for distinction, or who possess certain characteristics important to the scholarship provider (such as religious beliefs, hobbies, ethnicity, etc.).

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