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National and Community Service (AmeriCorps)

A program established through the National and Community Service Trust Act of 1993, designed to reward individuals who provide community service with educational benefits and/or loan forgiveness or cancellation.

National Health Service Corps Scholarship (NHSC)

This scholarship program is for students who pursue full-time study in certain health professions and are willing to serve as primary care practitioners in underserved areas. The scholarship covers tuition and required fees and provides a stipend for twelve months.

National Student Loan Data System (NSLDS)

This national database includes Title IV loan information, as well as selected federal grant data.

Need Analysis

A system by which a student’s ability to pay for educational expenses is evaluated. Need analysis consists of two primary components: (a) an estimate of the applicant’s and/or family’s ability to contribute; and (b) an estimate of the educational expenses themselves. This analysis is done based on information supplied on the FAFSA and other documentation as each school may require.

Need-Analysis Formula

Defines the data used to calculate the Expected Family Contribution (EFC); there are two distinct formulas: regular and simplified. The formula determines the EFC under the Federal Need-Analysis Methodology.

Need-Based Aid

Student assistance awarded because a student’s financial circumstances would not permit him or her to afford the cost of a postsecondary education.

Need blind

Admissions decisions may be made without reviewing your financial aid request, that is, your financial need is not known to the committee at the time of their decision.

Non-Need-Based Aid

Aid based on criteria other than need, such as academic, musical, or athletic ability. Also refers to federal aid programs where the Expected Family Contribution (EFC) is not part of the need equation.

Non-Institutional Costs

These are costs associated with college that are not assessed by the institution, such as off-campus room and board, books, supplies, transportation, and other miscellaneous expenses.

Nursing Student Loan (NSL)

Loans available to nursing students attending approved nursing schools offering a diploma, or an associate, bachelor’s, or graduate nursing degree.

Out-of-State Student

At a public institution, a student who is not a legal resident of the state or local district that is legislatively and fiscally responsible for that institution. Generally, such students are charged higher tuition rates.


A situation in which the student’s combined resources, including Expected Family Contribution (EFC) and financial aid for college, are greater than the cost of attendance. Within certain tolerance levels, overawards are not permitted for students receiving federal student assistance funds.


This is the process of combining various types of student aid (grants, loans, scholarships, and employment) in an attempt to meet the full amount of student’s need. The results are conveyed in an award letter.

Packaging Philosophy

This is a school’s rationale for combining different types of aid to meet a student’s need, and varies from school to school. In talking with a financial aid officer, it is very important for a student to find out where their case fits into the school’s packaging approach.

Part-time Student

One who attends school on a less than full-time basis, as defined by the school. All federal and most state aid programs have eligibility requirements relating to enrollment status (full-time, half-time, part-time, etc.)


This is an attribute of certain financial aid for college programs that allows a student to receive funds from any eligible institution, rather than from one specific institution. This applies to Pell Grants, as well as to some state scholarships that may be used outside the state awarding the funds. Awards from most aid programs are not portable.

Preliminary Scholastic Assessment Test (PSAT)/National Merit Scholarship Qualifying Test

Similar in format to the SAT, this test is usually taken in October of your junior year, but is shorter and takes less time. It is a qualifying instrument for the National Merit Scholarship Awards Program and can be helpful for early college guidance.

Prepayment Penalty

The charge the lender assesses to borrowers who repay a loan faster than the maximum repayment period stated in the promissory note. Federal loan programs do not have prepayment penalties.


The amount of money borrowed through a loan. This does not include interest or other charges, unless they are capitalized.

Privacy Acts

These are collective statutes that protect individuals from the release of specified data without prior written consent.

Projected-Year Income

Income expected during the first calendar year of the award year or some other 12-month period.

Promissory Note

This legal document binds a borrower to the repayment obligations and other terms and conditions that govern a loan program. For many federal loan programs, promissory notes are now executed electronically.


A congressional review process intended to refine authorized federal programs to ensure they continue to meet the needs of the populations they are intended to serve.

Regular Student

A regular student is one enrolled or accepted at an institution of higher education for the purpose of obtaining a degree, certificate, or other recognized credential offered by the institution.

Renewal FAFSA

The Renewal FAFSA is preprinted with the student’s prior-year responses to certain data items that are likely to remain constant. The object is to make it faster and easier to complete than the original.

Repayment Schedule

A plan provided to a loan borrower at the time he or she ceases half-time study. The plan should set forth the principal and interest due at each installment and total number of payments. It should also include the interest rate, the due date of the first payment, and the frequency of payments. Any problems with the repayment schedule should be discussed immediately with the loan-servicing agency.

Reserve Officers’ Training Corps (ROTC)

Each branch of the military sponsors a ROTC program. In exchange for a certain number of years on active duty, you can have a portion of your college education paid for by the armed forces. Contact the program for more financial aid information about this option.

Residency requirement

“Residency” has more than one meaning. It may refer to a college’s policy requiring a specific number of courses to be taken on campus to receive your degree, or it may refer to the legally required amount of time you must reside in a state to be considered eligible for in-state tuition at one of its public colleges or universities.

ROTC Scholarship Program

These competitive scholarships provide for tuition, fees, books, a monthly living stipend, and other benefits. In exchange, a student participates in drills and classes during the academic year, military camp during the summer, and, upon graduation, full-time active duty in the military for at least four years.

SAR Information Acknowledgment

A non-correctable one-page Student Aid Report (SAR), containing only part one of the SAR. Students who file electronic applications or who make electronic corrections through a school receive this acknowledgment, which is sent for informational purposes only.

Satisfactory Academic Progress

The progress required of a student financial aid recipient to fulfill a specified educational objective.


A scholarship does not require repayment and is generally made to students who demonstrate potential for distinction, usually in academic performance.

Scholarships for Disadvantaged Students (SDS)

A federal scholarship program designed to assist disadvantaged students enrolled in certain health disciplines. SDS funds may be used for tuition and other educational and living expenses incurred while enrolled as a full-time student.

Scholarship Search Services

Organizations that claim to help students find financial aid funds. Families who are interested in using such a service should carefully investigate the company first. There are many legitimate services which feature free, comprehensive, and frequently updated listings of available awards.

Self-Help Aid

Funds provided through the work and effort of the student, including savings from past earnings, income from current earnings, or a loan to be repaid from future earnings.

Self-Help Expectation

This is the assumption that a student has an obligation to help pay for a portion of his/her education.

Simplified Needs Test

An alternate method of calculating the Expected Family Contribution (EFC), for families with adjusted gross incomes of less than $50,000 who have filed or are eligible to file an IRS Form 1040A or 1040EZ, or are not required to file an income tax return. This method excludes all assets from consideration. It is part of the federally mandated need-analysis methodology, or FM.

Special Allowance

The payment the federal government provides to lenders to bring total interest rates up to market value. This acts as an incentive to lending institutions to offer loans in the Federal Family Education Loan programs.

Specialized Training for Army Reserve Readiness (STARR)

An educational program sponsored by the Army Reserve whereby the Reserve pays expenses for Reservists who train in selected medical specialties at their local colleges.

Statement of Educational Purpose

A statement signed by the student financial aid recipient indicating his/her agreement to use all funds awarded for education or education-related purposes only. The form is included as part of the FAFSA.

Student Aid Report (SAR)

An account of the government’s review of your FAFSA, the SAR is sent to you and released electronically to the schools that you listed on your registration. The SAR doesn’t supply you with a dollar amount but indicates whether or not you’re eligible for aid.

Student Contribution

This is an estimate of the student’s ability to contribute to postsecondary expenses for a given year.


The money the federal government uses to help underwrite student aid programs. This primarily refers to government payments to lenders of the in-school interest on Federal Stafford Loans.

Taxable Income

Income earned from wages, salaries, and tips, as well as interest income, dividend income, business or farm profits, and rental or property income.

Title IV Programs

Those federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended. Includes: the Pell Grant, Supplemental Educational Opportunity Grant, Work-Study, Perkins Loan, Stafford Loan, PLUS Loan, Direct Loan, Direct PLUS Loan, and LEAP. The FAFSA is the application for all.

Tuition Payment Plans

This is a strategy by which payment for the cost of postsecondary education is extended into a future period of time. Payment plans are administered by the school itself or contracted to an outside agency that charges a nominal fee. They are basically installment plans, usually without interest charges.

Unmet Need

This is the difference between the cost of attendance and a student’s total available resources.

Untaxed Income

All income received that is not reported to the IRS, or is reported but excluded from taxation. Such income would include, but not be limited to, any untaxed portion of Social Security benefits, Earned Income Credits, welfare payments, untaxed capital gains, interest on tax-free bonds, dividend exclusion, and military and other subsistence and living allowances.

Variable Interest Rate

Variable interest rates on loans are adjusted at regular intervals. Federal Stafford, PLUS, Direct Loan, and Direct PLUS Loans carry variable rates that are determined annually.


The process of confirming financial aid information submitted on the FAFSA through the comparison of specified documents to the data on the Student Aid Report (SAR) or ISIR. Schools must verify data for students selected by the federal Central Processing System (CPS). Schools may also select additional applicants to undergo the verification process.

Verification Worksheet

The document the postsecondary institution sends to the student, to be completed by the student and his or her family and returned to the institution for verification purposes.

Veteran (for the purposes of determining dependency)

A person who has served in active duty in the Army, Navy, Air Force, Marines, or Coast Guard, or was a cadet or midshipmen at one of the academies (except Coast Guard), and who was discharged other than dishonorably. Veterans are considered to be independent, with no minimum length of service. Veteran status is key question on the FAFSA. If you are a veteran, it is not necessary to supply parental information.

Veterans Educational Benefits

Assistance programs for eligible veterans and/or their dependents. To learn more, contact your VA office.

Vocational Rehabilitation

Programs administered by state departments of vocational rehabilitation services to assist individuals who have a physical or mental disability.

William D. Ford Federal Direct Loan (Direct Loan) Program

This is the collective name for the Direct Loan (Subsidized and Unsubsidized), Direct PLUS Loan, and Direct Consolidation Loan Programs. Funds for these programs are provided by the government to students and parents through schools. Unlike the FFEL program, there is no separate application to determine eligibility.