Glossary of Financial Aid Terms

Academic Year:

A period of time schools use to measure a quantity of study. For example, a school’s academic year may consist of a fall and spring semester, during which a student must complete 24 semester hours. Academic years vary from school to school and even from educational program to educational program at the same school.


The interest on your loan will be added to the principal amount of your loan and additional interest will be based upon the higher amount. This will increase the amount you have to repay. If you choose to pay the interest as it accumulates, you’ll repay less in the long run.

Citizen/Eligible Non-Citizen:

You must be one of the following to receive federal student aid:

  • US citizen
  • US national (includes natives of American Samoa or Swain’s Island)
  • US permanent resident who has a I-151, I-551, or I-551C (Alien Registration Receipt Card)

There are additional categories that may qualify for federal student aid; for more information, review the complete article on eligibility for federal student aid.

Cost of Attendance (COA):

  • The total amount it will cost a student to go to school–usually expressed as a yearly figure. It’s determined using rules established by the US Congress. The COA includes tuition and fees, on-campus room and board (or a housing and food allowance for off-campus students); and allowances for books, supplies, transportation, loan fees (if applicable), dependent care, costs related to a disability, and miscellaneous expenses.
  • Also included are reasonable costs for eligible study abroad programs. An allowance (determined by the school) is included for reasonable costs connected with a student’s employment as part of a cooperative education program.
  • For students enrolling less than half-time, the COA includes only tuition and fees and an allowance for books, supplies, transportation, and dependent care expenses. Talk to the financial aid administrator at the school you’re planning to attend if you have any unusual expenses that might affect your cost of attendance.


Failure to repay a loan according to the terms agreed when you sign a promissory note. Default may also result from failure to submit requests for deferment or cancellation on time. The consequences of default are severe.

Eligible Program:

A course of study that leads to a degree or certificate and meets the US Department of Education’s requirements for an eligible program. To get federal financial aid, you must be enrolled in an eligible program, with two exceptions:

Financial Aid Package:

The total amount of financial aid (federal and non-federal) a student receives.

General Education Development (GED) Certificate:

Certificate students receive if they’ve passed a specific, approved high school equivalency test. Students who don’t have a high school diploma but who have a GED may still qualify for federal student aid. A school that admits students without a high school diploma must make a GED program in the vicinity available to these students and must inform them about the program.

Guaranty Agency:

The organization that administers the FFEL Program for your school. The federal government sets loan limits and interest rates, but each guaranty agency is free to set its own additional limitations, within federal guidelines.

Half Time:

  • At schools measuring progress by credit hours and semesters, trimesters, or quarters, half time enrollment is at least six semester hours or quarter hours per term.
  • At schools measuring progress by credit hours but not using semesters, trimesters, or quarters, half time enrollment is at least 12 semester hours or 18 quarter hours per year.
  • At schools measuring progress by clock hours, half time enrollment is at least 12 hours per week.

Note that schools may choose to set higher minimums than these.

You must be attending school at least half time to be eligible to receive Direct or FFEL Program Loans. Half time enrollment is not a requirement to receive aid from the Federal Work-Study or Federal Perkins Loan programs.

Promissory Note:

The binding legal document you sign when you get a student loan. It lists the conditions under which you’re borrowing and the terms under which you agree to pay back the loan. It will include information about your interest rate and about deferment and cancellation provisions. It’s very important to read and save this document because you’ll need to refer to it later when you begin repaying your loan.

Regular Student:

One who is enrolled at an institution to obtain a degree or certificate. Generally, to receive aid from the programs discussed here, you must be a regular student. For some programs, there are exceptions to this requirement. See the definition of eligible program for more information.

Satisfactory Academic Progress:

  • To be eligible to receive federal student aid, you must maintain satisfactory academic progress toward a degree or certificate. You must meet your school’s written standard of satisfactory progress. Check with your school to find out its standard.
  • If you received federal student aid for the first time on or after July 1, 1987, and you’re enrolled in a program that’s longer than two years, the following definition of satisfactory progress also applies to you:
  • You must have a C average by the end of your second academic year of study or have an academic standing consistent with your institution’s graduation requirements. You must continue to maintain satisfactory academic progress for the rest of your course of study.

Selective Service Registration:

If required by law, you must register, or arrange to register, with the Selective Service to receive federal student aid. The requirement to register applies to males who were born on or after January 1, 1960, are at least 18 years old, are citizens or eligible non-citizens, and are not currently on active duty in the armed forces. (Citizens of the Federated States of Micronesia, the Marshall Islands, or Palau are exempt from registering.)

Subsidized Loan:

A subsidized loan is awarded on the basis of financial need. You will not be charged any interest before you begin repayment or during authorized periods of deferment. The federal government “subsidizes” the interest during these periods.

Unsubsidized Loan:

 An unsubsidized loan is not awarded on the basis of need. You’ll be charged interest from the time the loan is disbursed until it’s paid in full. If you allow the interest to accumulate, it will be capitalized–that is, the interest will be added to the principal amount of your loan and additional interest will be based upon the higher amount. This will increase the amount you have to repay. If you choose to pay the interest as it accumulates, you’ll repay less in the long run.