One of the criteria used to establish student eligibility in order to receive Title IV program assistance is that a student must have earned a high school diploma or its equivalent. Students who are not high school graduates (or who have not earned a General Education Development (GED) Certificate*) can demonstrate that they have the "ability to benefit" from the education or training being offered by passing an approved ability-to-benefit (ATB) test.

The school must have accreditation from an accrediting body recognized by the U.S. Department of Education to be eligible to participate in the administration of federal student aid programs. Accreditation means that the school meets certain minimum academic standards, as defined by the accrediting body.

These are credit hours that an institution accepts toward a degree from courses that the student has earned elsewhere. Such credit may be given for work done at another higher education institution, by examination or “testing out,” or by military service.

An agreement under which a student receiving a TEACH Grant commits to the specific obligation to teach for four complete years in a designated high need field at a low-income elementary or secondary school within eight years of completing or ceasing enrollment in a TEACH Grant-eligible program.

An award letter from a school states the type and amount of financial aid the school is willing to provide the student accepts admission and registers to take classes at that school.

With certain loans, such as subsidized FFEL Loans, the U.S. Department of Education pays the interest that accrues on these loans while the student is enrolled at least half-time and during periods of deferment. However, with subsidized loans in forbearance, unsubsidized loans or PLUS Loans, the student or the student’s parents and graduate or professional degree students are responsible for paying interest as it accrues on these loans. When the interest is not paid, it is capitalized or added to the principal balance, which increases the outstanding principal amount due on this loan. Interest that is capitalized and, therefore, added to the original amount of the loan subsequently accrues interest, adding an additional expense to the loan.

The process of combining one or more loans into a single new loan.

Credit hours are units of value given to classes. Some classes may be worth two or three credits, while others are worth four credits. Credits vary by class and by school. Many schools base tuition costs on the number of credit hours taken. Some charge a specific dollar amount per credit hour.

Failure to repay a loan according to the terms agreed to when you signed a promissory note. For the FFEL and Direct Loan programs, default is more specific—it occurs if you fail to make a payment for 270 days if you repay monthly (or 330 days if your payments are due less frequently). The consequences of default are severe. Your school, the lender or agency that holds your loan, the state and the federal government may all take action to recover the money, including notifying national credit bureaus of your default. This may affect your credit rating for as long as seven years. For example, you might find it difficult to borrow money from a bank to buy a car or a house. In addition, the Internal Revenue Service can withhold your U.S. individual income tax refund and apply it to the amount you owe, or the agency holding your loan might ask your employer to deduct payments from your paycheck. Also, you may be liable for loan collection expenses. If you return to school, you’re not entitled to receive additional federal student financial aid. Legal action also might be taken against you. In many cases, default* can be avoided by submitting a request for a deferment, forbearance, discharge or cancellation and by providing the required documentation.

This government agency administers several federal student financial aid programs. Also referred to as USED (U.S. Department of Education).

William D. Ford Federal Direct Loan (Direct Loan) Program. Loans made through this program are referred to as Direct Loans. Eligible students and parents borrow directly from the U.S. Department of Education at participating schools. Direct Loans include subsidized and unsubsidized Direct Stafford Loans (also known as Direct Subsidized Loans and Direct Unsubsidized Loans), Direct PLUS Loans, and Direct Consolidation Loans. You repay these loans directly to the U.S. Department of Education.

Estimated Financial Aid. This is the amount of financial aid a student will likely be eligible for. The figure is calculated based on all required financial aid forms.

A program of organized instruction or study that leads to an academic, professional, or vocational degree or certificate, or other recognized educational credential. To receive federal student aid, you must be enrolled in an eligible program*, with two exceptions:

– If a school has told you that you must take certain course work to qualify for admission into one of its eligible programs, you can get a Stafford Loan for up to 12 consecutive months while you’re completing that preparatory course work. You must be enrolled at least half-time*, and you must meet the usual student aid eligibility requirements.

– If you’re enrolled at least half time in a program to obtain a professional credential or certification required by a state for employment as an elementary or secondary school teacher, you can get a Federal Work-Study, Federal Perkins Loan, a Stafford Loan, or your parents can get a PLUS Loan, while you’re enrolled in that program.

Financial Aid Administrator. An FAA is a college or university employee involved in the administration of financial aid. Also known as financial aid advisors, officers or counselors.

Free Application for Federal Student Aid. Filling out a FAFSA form is the first step in the financial aid process. To be eligible to receive federal financial aid, a student must complete a FAFSA.

Federal Direct Student Loan Program. Through this program, student loans are provided directly to the student from the federal government, rather than through commercial lenders.

Also Federal Direct Loan. These student financial aid loans are obtained through banks, lending institutions or colleges. To qualify, students must be enrolled in a college degree program at least part-time. The loans may be subsidized (need-based, typically for low-income students), or unsubsidized (not need-based so any student can apply). Students apply by filling out the FAFSA. Formerly called the Guaranteed Student Loan.

Federal Family Education Loan (FFEL) Program. Loans made through this program are referred to as FFEL Loans. Private lenders provide funds that are guaranteed by the federal government. FFEL Loans include subsidized and unsubsidized FFEL Stafford Loans, FFEL PLUS Loans and FFEL Consolidation Loans. You repay these loans to the bank or private lender that made you the loan.

The total amount of financial aid (federal and nonfederal) a student is offered by the school. The financial aid administrator at a postsecondary institution combines various forms of aid into a “package” to help meet a student’s education costs. Using available resources to give each student the best possible package of aid is one of the aid administrator’s major responsibilities. Because funds are often limited, an aid package might fall short of the amount a student needs to cover the full cost of attendance. Also, the amount of federal student aid in a package is affected by other sources of aid received (scholarships, state aid, etc.).

This is a certificate students receive if they’ve passed a specific, approved high school equivalency test. Students who have a GED may still qualify for federal student aid. A school that admits students without a high school diploma must make available a GED program in the vicinity of the school and must inform students about the program.

A grant is money given to students for their education. Often based on need, grants may come from federal or state programs, or sometimes from private charitable organizations. It does not have to be repaid.

The guaranty agency is an organization that administers the Federal Family Education Loan (FFEL) Program in your state. This agency is the best source of information on FFEL Loans. For the name, address and telephone number of the agency serving your state, you can contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).

An independent student is one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court or someone with legal dependents other than a spouse.

Master Promissory Note. This form promises repayment, and is signed by a student or parent when taking out a PLUS or Stafford Loan.

The National Student Loan Data System (NSLDS) is a database for federal student financial aid where you can find out about the aid you’ve received. If you’ve only just applied for aid, you won’t find any information on NSLDS yet. NSLDS receives data from schools, guaranty agencies and U.S. Department of Education programs. The NSLDS Web site is generally available 24 hours a day, seven days a week. By using your PIN, you can get information on federal loan and Pell Grant amounts, outstanding balances, the status of your loans and disbursements made. You can access NSLDS at www.nslds.ed.gov.

Need-based financial aid is reserved for low-income students based on their ability to pay.

This federal program provides need-based educational grants for low-income students. Because they are grants, they do not have to be repaid.

Parent Loan for Undergraduate Students. These federal guaranteed loans are available for parents of undergraduates.

A promissory note is a 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 on how interest is calculated and what deferment and cancellation provisions are available to the borrower. 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 or at other times when you need information about provisions of the loan, such as deferments or forbearances.

A regular student is one who is enrolled or accepted for enrollment at an institution for the purpose of obtaining a degree, certificate or other recognized education credential offered by that institution. Generally, to receive federal student financial aid from the programs discussed in this guide, you must be a regular student. There are exceptions to this requirement for some programs.

Student Aid Report. This report summarizes the information entered on your FAFSA form, and shows the amount of your Expected Family Contribution.

These funds are given to, or earned by, students, and are to be used for tuition. There are numerous public and private sources for scholarships. Some are given based on need, some on merit or skill. Others have very specific stipulations on who can receive the scholarship.

Your Student Aid Report (SAR) summarizes the information you submit on your Free Application for Federal Student Aid (FAFSA) and provides you with your Expected Family Contribution (EFC). After you apply for federal student financial aid, you'll get your FAFSA results in an e-mail report by the next business day after your FAFSA has been processed, or by mail within 7-10 days. This report is called a Student Aid Report, or SAR. Your SAR details all the information you provided on your FAFSA. If there are no corrections or additional information you must provide, the SAR will contain your Expected Family Contribution (EFC), which is the number that’s used to determine your eligibility for federal student aid. Whether you applied online or by paper, we will automatically send your data electronically to the schools you listed on your FAFSA.

Subsidized Federal Stafford Loan. (See Federal Stafford Loan, above.)

(See Federal School Code, above.)

Verification is a process where your school confirms the data reported on your FAFSA. Your school has the authority to contact you for documentation that supports income and other information that you reported.