Don't let the jargon intimidate you. Learn the terms used in the college funding and admissions process. Equipped with the knowledge in this glossary you'll make better, smarter decisions about how to plan for college, apply to college, and pay for college.
These are state-sponsored plans that allow parents to contribute any
amount they choose to save for college. The plan grows tax-free and if it is used for college, it is free of federal taxes
and state taxes in some states. You don’t have to live in the state to use its 529 Plan and you can spend it at any college
anywhere in the nation.
This is a one-page summary of your grades, SAT scores and
activities both in and out of school. It is a very useful tool that no college-bound student should be without.
This is a standardized reasoning test that colleges accept as a supplement to or in place of the more traditional SAT I. For some students it is a bit more "user friendly".
This is income from all sources as reported on your 1040. It is usually found on the bottom line of page one of the 1040 long form and represents your reported income BEFORE deductions.
AP Courses prepare high school students for a special test created and scored by ETS (Educational Testing Service). The scoring range is 1-5. Students scoring 3 or better can sometimes receive college credit and/or advanced standing in that academic area at college.
These include all bank accounts, rental and commercial property plus investments such as stock and bonds and the like. For financial aid purposes, they do not include retirement funds or life insurance policies with a cash value nor do they include possessions such as automobiles and boats.
Financial aid eligibility is based upon the calendar year preceding the academic year for which the student is applying for aid. For instance, financial aid for the student’s freshman year in college is based upon the calendar year that includes the student’s second semester as a junior and the first semester as a high school senior.
This form is an addendum to the CSS PROFILE Form for filers who also own a business or farm. Essentially, it resembles a 1040 Schedule "C". It is covered by the form completion tools in TuitionCoach.
All financial resources provided by the college. These funds tend to be more discretionary than federal or state-based aid.
Every accredited high school has been given a code that identifies that school in matters relating to standardized testing programs. It is available in your school’s guidance and registrar’s offices. To save time, you should jot it down and keep it in a known place.
Regulations require that to receive public financial aid, the student must be a citizen or eligible non-citizen. A more detailed description can be found in the TuitionCoach tool, "Complete Financial Aid Forms the Smart Way".
Some high schools calculate the student’s GPA and then place them in rank order with the highest at the top and work their way down.
The dominant player in the pre-college marketplace. It has branches like the ETS, CSS and other college-related activities.
College Fairs are local events where college representatives provide students with information about their college and colleges in general. College Fairs are a good way to get a feel for the college landscape at a low cost in terms of both dollars and time. If you go to one, bring along a strong cloth bag and an up-to-date academic resume. Stuff the former and distribute the latter.
Many high schools have a special evening that deals with college issues. They vary widely but it is a good idea to find out if and when your school plans one. You should try to attend.
This is a branch of The College Board that produces and processes the PROFILE form, a financial aid form required by many costly, private colleges and some scholarship foundations.
This is an application accepted by an increasing number of colleges across the nation. It allows the student to apply to many colleges with one application. Many colleges accepting the Common Application require supplemental essays. The student should check on deadlines and supplemental essay requirements for each college that accepts the Common Application. For more information, visit www.commonapp.org
It is possible to consolidate student loans taken out over the course of attending colleges so that you get one statement every month at a preferred rate. Check with your college financial aid office to see if they have any specific recommendations.
This the commonly-used term that represents the entire cost of one year of college. It includes tuition, room and board, fees, sometimes books and occasionally travel. Every college has a published figure called the Cost of Attendance or the less-used Student Budget (which means the same thing). Colleges often have four COAs, one for a student living on campus, one for a student living off campus, one for a student living with relatives and one for students living at home.
The Coverdell ESA is similar to an IRA in terms of tax-free contributions. The account can be used for any legitimate education expense including K-12 and college. When used for education expenses, the funds remain untaxed.
When students and parents fail to repay loans, they may be held in default of the terms on the promissory note and may be subject to adverse comments on their credit report and aggressive attempts to collect. Instead of defaulting on a loan, the best remedy is to maintain active communications with the lender who will usually work with you to avoid unpleasant consequences.
Sometimes colleges will allow the student to defer admission for a semester or year provided the student has a compelling reason to do so.
This is the difference between the Cost of Attendance (COA) and the calculated Expected Family Contribution (EFC).
Sometimes under unusual circumstances, a normally dependent student can be treated as an independent student by the college. To do so, the student will have to provide a compelling, documented case for such an override. Negotiations of this kind will be done at the college level with a specific college.
Any student applying for financial aid who is still carried as an exemption by a parent on the tax form and/or who has not answered "yes" to any of the dependency determination questions on the FAFSA is a dependent student. This means that parent financial information will be required on financial aid forms.
These are student loans taken directly from the federal government, not through private lenders. The 2011-12 interest rate is 3.4%. The College Cost Reduction and Access Act of 2007 cut the fixed interest rates on newly originated subsidized Stafford loans for undergraduate students temporarily but they are scheduled to return to 6.8% in 2012-13.
Some colleges provide an opportunity to apply early and get an early admission decision. If accepted, the student is not obligated to attend.
Colleges allow students to apply for an early decision well before the regular decision deadlines are generally due. ED requires that if a student is accepted, he/she must attend. Generally, there are certain admissions advantages to ED but there are also downsides. First, seniors in high school are "works in progress" and as such, what they like in October, they may loathe in May so making an early college choice before knowing much about colleges may be a mistake. Second, if you are turned down in ED and another college asks whether you applied ED or EA, your "yes" answer will tell that college they are a second-choice school. This is not an admissions-friendly discovery. Some colleges have EDI and ED II programs.
This is the organization that creates the SAT, the AP exams and other standardized tests.
The FAFSA and the PROFILE forms will determine the amount you will be expected to pay for one year of college which is called your EFC. Not unlike taxes, that amount is often the product of how perceptively you complete the financial aid forms. If that is a concern, and it should be, you are in the right place. Subscribe to TuitionCoach!
The Free Application for Federal Student Aid is the primary document that must be completed to qualify for need-based aid and for unsubsidized loans for students and parents. TuitionCoach will help you complete the FAFSA in the most advantageous way possible to qualify for need-based aid and to protect the family in a time of unanticipated financial difficulty.
The federal government has a specialized formula that determines your EFC. It changes marginally every two to four years. Mastery of the components of the formula may have a profound effect on your eligibility for need-based aid. TuitionCoach will turn you into an FM pro!
Normally, colleges listed on your financial aid form will include with an acceptance letter a preliminary financial aid award. It lists all of the loans and/or grants and/or work/study the student has been awarded. TuitionCoach has a tool to help you evaluate each award and suggests ways to improve it if there is reason to do so.
This refers to the shortfall in need-based aid. For instance, if your demonstrated need is $20,000 and the financial aid award is $14,000, you have a "gap" of $6,000 in your financial aid award. TuitionCoach will remind you if there is a gap and will suggest ways to close the gap or eliminate it entirely.
Schools calculate cumulative grades to arrive at a generally accepted outcome called the Grade/Point Average or GPA. There are different formulas for different measures such as unweighted, weighted, or special GPA’s for certain programs like California’s Cal Grant Program.
These refer to "free" money offered on your behalf to help pay for college. The vast majority are need-based but an increasing number are merit- based. Many colleges have found that offering merit-based scholarships or grants are an effective recruiting tool.
In order to qualify for need-based aid, the student must be considered at least a half-time student or enrolled in a minimum of six units.
This refers to the difference between what you report as the value of your home or vacation house after you subtract the debt against that property. It can profoundly affect your eligibility for need-based financial aid. There are many strategies that can help you deal with this issues discussed in some detail in the TuitionCoach toolbox. You would be well-advised to use them.
This Clinton administration program allows for a tax credit of up to $1,650 annually for the first two years of college. The credit phases out beginning for joint tax filers with AGIs of $90,000 or more and $45,000 for single taxpayers.
"Institutional Documentation" is a relatively new addition to the financial aid maze. Several elite colleges have contracted a private firm to analyze tax forms and other documents to determine the actual cash flow before a financial aid offer is made by the college. The IDOC people look for "phantom" losses and expenses such as carryover losses and depreciation.
Students over 24 or married or having a bachelor’s degree are automatically assumed by most colleges and graduate programs to be independent. That is, they are on their own financially and as such, their parents’ financial information is not included on the financial aid form. There are certain other ways of becoming independent if the above conditions are not met (veteran, ward of the court, married or having dependents). These extraordinary circumstances will have to be documented).
Some colleges offer opportunities for a student to create an individual course or project that is not specifically listed in the course catalogue. Students can usually determine if the college offers this option in the college course catalogue.
Some colleges have their own supplementary or pre-financial aid form documents. They are typically simple versions of the more comprehensive forms that will follow. Don’t be careless when you complete these seemingly harmless forms.
This formula is used by private colleges and any organization that requires the PROFILE form. Because it includes home equity, it can have a huge impact on eligibility for need-based financial aid. TuitionCoach has a line-by-line completion guide for the PROFILE that will guide you safely through the dangerous waters of the Institutional Methodology.
Many colleges offer opportunities for students to actually work on a field of interest as a way to validate the student’s choice of major.
These are common retirement plans. For financial aid purposes, you have to report the annual contribution as pre-tax income (but not the actual value of the IRA or the 401k or 403b plans).
Several colleges have programs associated with a variety of graduate schools. Areas range from medical and dental programs, architecture, music, fine arts, business, languages and a host of others. If you have a strong, unshakable desire to follow a clear professional path, you may want to investigate these programs. They often make the journey a year or two shorter.
For many colleges, letters of recommendation from teachers is an integral part of the admissions process. Try to choose teachers who will write something about you the college doesn’t already know (and they know a lot from the application and your transcript).
This is the second part of the Clinton Administration’s Tax Credit program. You can claim an annual amount (for the total family) of up to $2,000 of college costs and any other post secondary education costs even if you are not in a degree program. Like the Hope Scholarship, the benefit starts to phase out at adjusted gross incomes of $90,000 or more for families filing a joint return and $45,000 for single tax filers. Unlike the Hope Scholarship, there is no limit to the number of years you can claim the credit.
Colleges will require a report on your first-semester senior grades to look for any drop off or improvement that may affect the admission status. First semester senior grades count so you can’t afford to go into academic "cruise control"!
Many students want to concentrate on more than one academic area in college so they either have a double major or the less-stressful minor in one of the areas of concentration. For instance, a student who wants to go into foreign service may want to major in political science and minor in Russian. The combinations are nearly endless.
Many colleges have an arrangement so that you can elect to pay the EFC by the month rather than in a lump sum or two. This may allow you to pay for college out of your income stream rather than dipping into your assets. Before you decide to enroll in a plan, check the interest rate (if any) and fees.
The NCAA operates a data center for students who may want to continue athletics at the Division I and II levels in college. Information can be found at www.ncaaclearinghouse.net.
This refers to financial aid used to fill the gap between the cost of college and the amount the parents are expected to pay for college. Your COA minus your EFC equals your Demonstrated Need. Any aid used to fill the need is "need-based aid."
Net worth refers to the value of an asset after you subtract any debt against it like a mortgage on a home.
For PROFILE filers who are divorced or separated, you may be required to have the non-custodial parent submit a "Non Custodial Parent Form" to any college that requests it. The form lists income, assets and a variety of other information. TuitionCoach provides a guide to help with the actual completion of the Non Custodial Parent Form along with strategies that show divorced and/or separated parents how they can work together to help their children attend college.
Aid offered that is not tied to demonstrated need is non-need based aid. Merit Scholarships or any scholarship offered for any other reason that is not specifically tied to need is non-need based aid. Parent loans are sometimes offered by colleges as need-based aid. It isn’t. Anyone can get a PLUS loan regardless of need.
These are federally-sponsored grants to low income families. They are included in need-based aid offers by the colleges. Pell grants can exceed $4,000 annually.
This loan program is currently under heavy administration pressure to be terminated. It is a 5% need-based loan that many colleges use when financial need is comparatively profound. Payback is deferred until the student graduates from college.
When you file the FAFSA electronically, the student and one parent will have to apply for a PIN number so that you can electronically sign the document and so the file can be accessed later on for changes. To get a PIN number, go to: www.pin.ed.gov
This is a practice test that will help the student prepare for the ACT. For information, go to the ACT website at: www.ACT.org/PLAN/.
PLUS loans are unsubsidized, non need-based loans that parents may qualify for every year. The parent may borrow up to the entire cost (COA) of college every year minus any financial aid given to the student and any money paid out of pocket by the parent. It is a 10-year note and payment begins 60 days after the disbursement. The current rate is 7.8% from the direct PLUS loans.
This refers to the best time to file financial aid forms. Generally that time period is between January 1 and March 1. If you can file early within this period, your chances at a better financial aid package are enhanced. If you miss the March 1 deadline, you may be ineligible for state and campus-based, need-based aid. This deadline is absolute and unforgiving.
This financial aid form produced by the College Scholarship Service (CSS), a branch of The College Board, is required by expensive, private colleges and uses the Institutional Methodology (IM) to determine the family’s ability to pay for college. Unlike the FAFSA, the PROFILE asks about home equity and many other issues from a databank of hundreds of optional questions that any college may include on the PROFILE. The TuitionCoach form completion tool, "Complete Financial Aid Forms the Smart Way" will guide you through this troublesome form.
Students and parents taking out loans will have to sign a form that says you intend to pay back the loan at whatever terms are outlined in the loan papers (typically mandated by the federal government). It is your promise to repay the loan... hence, the term promissory note. Parents do not have to co-sign most student loans.
This is a standardized test given in the junior year. It has two primary values. First, it will provide you with a reasonable preview of what your score on the SAT I might be and suggest some areas that you might want to review before the real SAT I is taken. Second, the score you receive may qualify you as a semi-finalist or finalist for the National Merit Scholarship (Hence the name, National Merit Scholarship Qualifying Test). Either status can be a real admissions plus so it is definitely worth taking. Sign up for the test is normally done through your high school.
Some colleges offer ROTC classes in the various branches of the military. Joining ROTC can provide very significant scholarships in return for a specified tour of duty with the military. This can provide a college education at a very low price (provided that when you serve your military obligation no one is shooting at you).
These are standardized tests to evaluate a student’s reasoning ability and readiness for college-level work. In an era of general grade inflation and varying high school standards, the SAT I is a helpful, objective tool in assessing certain college-related abilities in a student. It is one of several tools that form a complete admissions file.
These SATs measure achievement and subject mastery rather than more general reasoning abilities. Students would be well-advised to take SAT Subject Tests in AP subjects while they are studying for AP tests. By preparing for the AP test, the student is also preparing for the SAT in that subject.
We single out this computer function as a very important reminder that applications, essays, resumes, financial aid forms and a host of other documents typically are not completed in one sitting. Most will be the subject of constant revision so it is absolutely important that you press the "save" button on your computer with great frequency. You should also backup the information onto a floppy, zip drive or rewritable CD from time to time in case the information on your computer is lost.
Your high school will provide colleges with a statement about you and your work and usually an overview about your school. It contains things like average SAT scores, the number of students taking AP classes, percent of students who go on to college, graduation requirements and even an overview of the community it serves. This helps colleges place a student’s performance in a more meaningful context.
These are additional questions tacked on to the PROFILE form. The colleges requiring the form can ask the CSS to add any array of items from a collection of several hundred questions to the PROFILE in a special addendum called "SQ". Some colleges don’t ask any "SQ" questions. Others ask many.
Loans (you have to pay back) and work/study (you have to actually work) are called self-help aid because they require specific action on the part of the student.
For low-income families, this is an different way to calculate the EFC that excludes family assets from consideration.
This refers to any extraordinary event that affects the family’s ability to pay for college and which requires an override of the formal methodology that determines the EFC. Grounds for such consideration include but are not limited to:
Loss of employment
Loss of earnings caused by disability or natural disaster
Loss of an untaxed income or benefit
Separation or divorce
Death of a parent
The term given to the most common student loans. They are authorized by the college and they are taken out through private banks and financial institutions. Stafford loans can be subsidized (need-based) or unsubsidized (non need-based). The 2009-10 interest rate is 5.95% for subsidized loans and an eyebrow-raising 6.8% for unsubsidized loans.
When the FAFSA is processed, you will receive a document called the SAR which reveals the calculated EFC and a process by which you can make changes and additions to the FAFSA.
More commonly called the cost of attendance, or COA, this refers to the entire cost of one year at the college.
Many colleges allow its students to spend at least a semester out of the country. Study Abroad programs blend with the college's curriculum so that participants will not lose credit or add time to the normal four-year expectation for college. Students who choose this option carefully, often find the experience to be one of the most rewarding of their college years and, indeed, their lives beyond college.
This means that the loan is a need-based loan which does not have to be paid back until completion of college. In the meantime, interest will not accrue.
This is a grant (free money) for typically low-income students and is included in financial aid awards by the college.
This is the term that refers to all federal need-based financial aid programs. Pronounced "Title Four."
This official school-generated document lists all courses and grades along with future courses. It also verifies whether the student has passed certain graduation requirements. Transcripts include PSAT, SAT I, II, and ACT scores, AP results and other data. Students can pick up an unofficial transcript at any time but colleges will require an official, certified copy with the school’s seal and the registrar’s signature as the only acceptable proof of grades.
Some colleges have three "semesters" during the academic year rather than the more common two semesters. It is a bit more complicated to deal with but it may offer more flexibility in course offerings.
This term covers a number of categories whereby the student has no immigration papers or written proof relating to citizenship or visa status. Generally, such students will not be eligible for need-based or any other form of public assistance.
These programs provide ways to put money in the name of a minor for certain tax advantages. The parent is the custodian of the funds until the minor turns 18 or 21. They are good for tax purposes, but not so good for financial aid purposes.
This refers to any gap between the actual demonstrated need of the family and the amount of financial aid offered by the college. For instance, if the demonstrated need is $10,000 and the college offers $7,000 in need-based aid, there is an unmet need or "gap" of $3,000.
These loans are available to any student in a degree or certificate program. Payback is not deferred nor is the interest paid by the government while the student is still in college. For undergraduates, the annual amounts are the same as subsidized Stafford loans except in special circumstances when a parent is turned down for a PLUS loan. In those instances, the student is able to borrow another $4,000 unsubsidized student loan annually. Under the new rules even students receiving subsidized, need-based Stafford loans are eligible for another $2,000 in unsubsidized loans annually.
This is when the grade/point average is calculated with every grade being treated equally.
This is the graduating student with the highest GPA in the school. In this era of high-achieving students, it is not unusual for valedictorians to display off-the-chart GPA’s. Nor is it unusual to have several valedictorians at one school.
This is the process by which the college can determine the truthfulness of the information you put on the financial aid forms. Most private college will require verification with every student qualifying for financial aid and about 30% will be randomly selected for verification by public colleges only requiring the FAFSA.
Colleges use the wait list to hedge their admissions bets in the event acceptances don’t pan out they way they planned. Some colleges use the wait list to serve as a more gentle form of rejection since they know in advance most of the wait list students will not get in and will commit to other colleges that seem more interested in them. Colleges who have wait lists are not evil. It is simply a reasonable, time-tested part of the admissions process.
Some colleges offer a semester at one of the colleges in Washington, D.C. for students interested in government, law or public policy. For those students, a semester in Washington D.C. can provide invaluable experience and a wealth of connections.
This is a special GPA calculation that provides a one-point advantage to students taking honors and AP courses. If an "A" is a 4 in a normal course, it is a "5" in a weighted system. Thus, many students graduate with a GPA higher than 4.0.
Work Study provides funds that are earned through part-time employment to assist students to help meet college costs. This is a form of self-help. There are many different types of jobs that qualify for the program. Hourly wages must not be less than the federal minimum wage. Payment of funds happen regular based on hours worked.