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Glossary of Terms

This glossary contains terms found in Commission publications, on this website, and in the education community. Several subsets of this glossary are available; click on the description in the menu to view them.

Definitions of Financial Aid Terms

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Cal Grant Financial Aid Programs

Through the California Student Aid Commission (CSAC), the State operates the Cal Grants A and B Entitlement Program, the Cal Grant A and B Competitive Program, and the Cal Grant C Program. The Cal Grant Program is the single largest state-funded program of postsecondary financial aid in the United States. Initiated in 1955, it now encompasses three major grant award types.

Senate Bill 1644 (Ortiz, Chapter 403, Statutes of 2000) changed the scope of the Cal Grant A and B Programs in 2000 creating two distinct programs, Entitlement and Competitive. The Cal Grant A Entitlement Program provides tuition and fee assistance to low- and middle-income students, and the Cal Grant B Entitlement Program provides access allowance and tuition & fee assistance to disadvantaged and low-income students.

Cal Grant A Competitive Awards are for students with a minimum 3.0 GPA who are from low-and middle-income families. These awards help pay tuition and fees at qualifying schools with academic programs that are at least two years in length. Cal Grant B Competitive Awards are for students with a minimum 2.0 GPA who are from disadvantaged and low-income families.

Cal Grant A and B Competitive Awards are for students who either aren't eligible for the Entitlement awards or who missed the application deadlines for the Entitlement award program. The main difference is that the Competitive awards are not guaranteed. For both Cal Grant A and B Competitive Programs, eligibility is based on financial need and academic qualification. The Competitive program is limited to 22,500 awards.

CSAC also operates the Cal Grant C Program, which helps vocational education students with tuition and training costs. This program provides assistance with tuition & fee and books & supplies to vocationally oriented low- and middle-income students. Eligibility for the "C" program is based on financial need. Cal Grant C awards help pay for tuition and training costs at occupational or career colleges. This $576 award is for books, tools and equipment. You may also receive up to an additional $2,592 for tuition at a school other than a California Community College. To qualify, you must enroll in a vocational program that is at least four months long at a California Community College, private college, or a vocational school. Funding is available for up to two years, depending on the length of your program.

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Cost of Attendance

The cost of attendance for a college student is generally defined as including: tuition and fees, books, supplies and related educational materials, housing, transportation, miscellaneous personal expenses, and dependent care, if applicable. Each institution determines its own student cost. Some of these expenses are not included in the cost of attendance for students attending on less than ahalf-time basis or those who are telecommuting or using other remot-access technology. In some cases, the cost of attendance may include additional costs: if the student is disabled, the cost of attendance includes an allowance for extra costs related to the disability. If the student is enrolled in a formal course of study outside the United States, the cost of attendance may include the cost of travel to and from the foreign place of study.

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A deferment is a period of time that a borrower can postpone making scheduled loan repayments to the lender. For some loans, interest does not accrue during a deferment period. Even though loan payments are postponed, repayments are not cancelled Ė the repayment period is simply extended by the period of deferment. A deferment for full-time or part-time study at an eligible college or university is referred to as an ďin-school deferment.Ē


A loan is considered to be delinquent when a borrower doesnít make a payment or file for a deferment to delay payment on a loan on the schedule set forth in the loan agreement. A borrower can be charged late fees for being late or delinquent in making loan payments. If a borrower misses a number of payments in a row, the loan can be considered in default.

Dependency Status

For federal student finanical aid purposes, a studentís dependency status determines whether or not the student is financially able to pay college costs or is dependent upon his/her parents to meet these costs. All students are considered dependents of their parents unless of of the following conditions apply: the student is at least 24 years of age as of January 1 of the year of attendance, is married, is a graduate or professional student, has a legal dependent other than a spouse, is a Veteran of the U.S. Armed Forces, is/was an orphan or ward of the court, or was a ward of the court until 18 years of age.

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Expected Family Contribution

Expected Family Contribution (or EFC) is a term used in the college financial aid process. It is the estimate of the parents' and/or student's ability to contribute to paying the costs of the students's postsecondary education. The lower the EFC, the less money a family has to contribute to a child's education and the more financial aid the student is likely to receive.

EFC is usually calculated based on a student's FAFSA (Free Application for Federal Student Aid). Some colleges and universities use the their own forms to help determine the EFC.

The EFC is usually subtracted from the total cost of attendance to determine a student's financial need. If a student's EFC exceeds the projected cost of attendance, the student has financial need. Eligibility for a number of federal, state, local, and institutional aid programs is based on a student's EFC.

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FAFSA Ė Free Application for Federal Student Aid

The Free Application for Federal Student Aid (known as the FAFSA), is a form that can be filled out annually by current and anticipating university students (both undergraduate and graduate) and sometimes their parents in the United States to determine their eligibility for federal student financial aid (including Pell grants, Stafford loans, PLUS loans, and work-study programs). In addition, most states and schools use information from the FAFSA to award non-federal aid.

The FAFSA consists of numerous questions regarding the student's finances, as well as those of his or her family; these are entered into a formula that determines the Expected Family Contribution (EFC). A number of factors are used in determining the EFC including the family size, income, number in college, and assets (not including retirement and 401K). This information is required because of the expectation that parents will contribute to their child's education.

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Financial Aid "Package"

A financial aid package is a combination of scholarships, grants, loans, and work study funds provided to students. A postsecondary institution puts together these financial aid resources based upon the student's need and particular circumstances. These aid packages are a means of helping students pay the costs of a college education in the most effective way possible.


Forbearance is an arrangement between a lender and the borrower to alter loan payment agreements. These delays can allow a borrower to make smaller payments on the loan, make no payments at all for a short period of time, or provide additional time for a student to make a payment on a loan.

Forbearance assists the borrower by having the lender agree to delays its right to foreclose (cancel) the loan and demand immediate repayment if the borrower can make the overdue loan payments during a set period of time.

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A graduate is a student who has completed the requirements for a bachelorís degree and who is enrolled in a masterís or higher degree program in a postsecondary institution.


A grant is gift of financial assistance to students that does not have to be repaid. Through the California Student Aid Commission (CSAC), the State operates the Cal Grants A and B Entitlement Program, the Cal Grant A and B Competitive Program, and the Cal Grant C Program.

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Independent Student

An independent student, according to criteria established by the federal government, is a college student who meets one or more of the following conditions:
  • 24 years or older by December 31 of the award year;
  • Orphan or ward of the court;
  • Veteran of the Armed Forces of the U.S.; or
  • Graduate/professional student; or
  • Married; or
  • Has legal dependents other than a spouse; or
  • Unusual circumstances that can be documented by the financial aid administrator.

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A loan is grant of money that must be repaid to the lender. Loan programs have varying repayment provisions, some of which are governed by state and federal laws. Most loans include requirements for the repayment of the principle (the orginal loan amount), and interest (additional fund charged by the lender for making the loan).

Loan Consolidation

Loan consolidation is any type of financial program where a borrower refinances two or more existing loans into one loan. This allows the borrower to make one loan payment each month that is smaller than the combined total of several different loans.

This type of payment arrangement can be helpful in dealing with the borrower's monthly cash flow, particulalry for borrowers who have several different types of loans each with different payment terms. However, loan consolidation increases the total cost of borrowing and does not discharge (remove) the loan obligation.

Loan Default

A loan default occurs when a borrower misses a number of payments or simply stops making payments on a loan that is due. If a student defaults on a student loan, the studentís credit rating will be affected and the IRS could take away any tax refund the student expects to receive. In addition, a lender (or the federal government) could charge the borrower whatever collection fees are necessary to collect on the loan, and possibly refer the matter to a court for handling.

If a borrower allows a loan to go into default, the borrower loses the opportunity for deferment (or postponement of repayment), and the borrower will not be able to receive any federal financial aid until satisfactory arrangements to repay the loan have been made with the lender or guarantor or the loan obligation is discharged (handled).

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Merit-Based Aid

Merit-based financial aid is aid provided to students because of special talent or ability the student have have. Merit is usually determined by academic measurements such as grades, test scores, rigorous course taking, or similar competitive conditions. This type of aid differs from "need-based" aid in that it is not dependent upon the recipient's financial situation and need for assistance.

Many merit-based financial aid programs do take into account the financial need of the students. The California Student Aid Commission's Cal Grant Competitive Program uses grade-point average to determine persons eligible for an award but also factors in the financial need of students in making the actual awards.

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National Postsecondary Student Aid Study (NPSAS)

A national survey of students from public and private 2-year and 4-year colleges designed to determine how students and families pay for college. The survey includes undergraduate, graduate, and first professional students and is conducted every 3-4 years by the National Center of Education Statistics.


The term "need", as used in student financial aid, usually refers to the difference between the resources available to a student and the cost of attending the studentís selected postsecondary institution. A students resources may include funds available from parents, students savings, money from work, and other sources.

Once need is determined for a student, a financial aid package is put together that may include grants, loan, work study, or other means of closing the gap between available resources and actual costs.

Need Analysis

Need analysis is the process of objectively determining the demonstrated need of an applicant for financial aid. The postsecondary institution's financial aid administrator assesses the studentís financial need in order to determine the studentís eligibility for Federal student aid. If these calculations show that a studentís cost of attendance exceeds his or her expected family contribution, the student is identified as having need.

A student's financial need may be addressed in many ways, including: student and parent loans, grants of money that do not have to be repaid, student work study programs, or estimates of money the student will earn from working while in college.

Need-Based Aid

Need-based aid is awarded on the basis of the financial needs of the student to attend college. Postsecondary institutions generally use the Free Application for Federal Student Aid (FAFSA) to help determine federal, state, and institutional need-based aid eligibility. At private institutions, a supplemental application may be necessary for institutional need-based aid.

Non-Portable Funding

This term refers to college funding that cannot be transferred to another college or university. Many colleges use scholarship funds that are specific to that particular college or university. If a student receiving non-portable funding transfers to another college or university, the scholarship monies remain at that school. Some institutions may even require a repayment of certain scholarship funds if a student leaves the institution in a way that violates the terms of the scholarship award.

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Portable Funding

This term refers to student financial aid awards that may be used at any college or university Ė regardless of whether or not the students remains at his or her original school or transfers to another one. The State of California's Cal Grant financial aid program is one example of portable student financial aid, however it is available only for qualified in-state institutions. Most federal student financial aid is portable among qualified instutions across the nation, assuming no changes in the student's eligibility status.

Prepaid Tuition Plan

Prepaid tuition plans are college savings plans that are guaranteed to increase in value at the same rate as college tuition at the participating institution. These college savings plans offer the same rate of increase on the savings as the increase in college costs, so that the participating student's tuition will be paid when he/she enters the postsecondary institution.

These plans, along with other college savings plans, are Qualified Tuition Programs (QTP) and are also known as "Section 529 Plans." These are named after section 529 of the Internal Revenue Code, which specifies the requirements for the plans to be free from federal income taxes. Prepaid tuition plans allow the user to lock in future tuition rates at participating in-state colleges at current prices and are usually guaranteed by that state.

Various schools and states offer these types of programs, though in recent years more states have moved towards the more traditional college savings plans allowed under section 529. These plans are more flexible savings vehicle, but do not offer a tuition guarantee.

Professional Judgment

In the area of student financial aid, professional judgment is the discretion an institution's financial aid administrator has to adjust, with proper documentation, the expected family contribution (EFC), the cost of attendance (COA), or dependency status of a student. Such discretion can be used when major changes occur in the student or family situation. Examples of such changes may include death, divorce, unemployment, disability, etc.

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A scholarship is an award of financial aid for college attendance that usually is given for academic merit or achievement or for a special talent a student posesses in an extra-curricular activity. A scholarship is considered gift aid and does not have to be paid back.

Scholarship Loan

A scholarship loan is money which generally is given for academic merit or achievement or for a special talent a student posesses in an extra-curricular activity. As a loan, these awards must be repaid in cash or by some type of service after graduation. Repayment provisions vary by program.


In student financial aid, self-help is that portion of the total college budget a student is responsible for. The studnet is expected to produce sufficient earnings to meet this expectation through summer and part-time jobs, student savings, and other student or family assets.

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Title IV Programs

This term refers to all programs created by Title IV of the federal Higher Education Act of 1965, as amended, and generally refers to student financial aid programs. These programs include: includes the following programs: Unsubsidized FFEL loans, Subsidized FFEL loans, Unsubsidized Federal Direct Stafford Loans, Subsidized Federal Direct Stafford Loans, Federal Perkins Loans, FFEL PLUS Loans, Federal Direct PLUS Loans, Federal Pell Grants, Federal SEOG.

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A student enrolled in the first two years of a 4 or 5 year baccalaureate degree program, in an associate's degree program, or a vocational or technical program below the baccalaureate who is a degree-seeking student and has not earned a first bachelorís degree at a college or university.

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Work-Study Program

Also known as "College Work-Study," these state and federal programs provides students with part-time employment to help them finance the costs of postsecondary education.

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