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Financial Aid Glossary

By Kay Peterson, Ph. D.

January 04, 2013

Secondary Market: An organization that buys loans from lenders, which provides the lender with the capital to issue new loans.

Servicer: An organization that is paid by a lender to administer their student loan portfolio.

Simplified Needs Test: An alternate method of calculating the expected family contribution for families with adjusted gross incomes less than $50,000, who have filed or are eligible to file an IRS Form 1040A or 1040EZ or who are not required to file an income tax return.

State Student Incentive Grants: States receive matching funds from the federal government to help fund this program for state residents.

Student Aid Report (SAR): The official notification sent to students after submitting the FAFSA. Students may be required to submit this document to the college’s financial aid office.

Student Contribution: A quantitative estimate of the student’s ability to contribute to postsecondary education expenses. (Typically 35 percent of his or her savings and half of the student’s summer earnings above $1,750).

Subsidized Loan: A loan that student borrowers do not have to pay interest on until after their grace period expires.

Supplemental Education Opportunity Grant (SEOG): Federal grant program for undergraduate students with exceptional need. SEOG grants up to $4,000 are awarded by the school’s financial aid office.

Title IV Programs: Federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended. Includes Federal Pell Grants, Federal Supplemental Educational Opportunity Grant, Federal Work Study, Federal Perkins Loan, Federal Stafford Loan, Federal PLUS Loan, Direct Loan, Direct PLUS Loan and SSIG.

Undergraduate Student: A student who has not yet received a bachelor’s degree.

Unmet Need: Difference between a student’s total cost of attendance at a specific institution and the student’s total available resources, including financial aid.

Unsubsidized Loan: A loan that student borrowers must pay all the interest on, including while they are enrolled.

Verification: The review process in which the financial aid officer requests documentation from a financial aid applicant to verify the accuracy of the application.

Work-Study:See Federal Work-Study for a description of the federally subsidized work-study program.

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