Student Loan Terminology

What do All These Financial Terms Mean?

There are A LOT of new words and phrases which are associated only with the financial aid application process. Don’t panic if you don’t know what some of them are, use our handy glossary here and get the clarity you need!

Financial Aid Glossary:

• Anticipated Total Cost: This is when you take the cost of tuition and housing and meal plans (if living on campus) which the school can tell you, and add it to your best guess at how much you might spend on textbooks, schools supplies, transportation to-and-from college, and money you will want for entertainment, clothes, etc. for a full school year. Add all of those things together and you’ll have the “anticipated total cost” of one year of college.
• Deferment: When you postpone repayment by demonstrating financial hardship.
• Entrance Loan Counseling: An online class that you are required to view in order to receive your loan.
• FAFSA Submission Summary: Replaces the Student Aid Report, (SAR). Like the SAR, you will receive your summary from the Federal Student Aid office once you file the FAFSA. This report shows your Student Aid Index (SAI).
• Fixed Interest: Interest rates that don’t change with the market or increase with inflation.
• Grace Period: The time period after graduating that you don’t have to pay your loan back (typically 6 months for Direct Subsidized / Unsubsidized Loans).
• Interest Rate: This is an additional charge for using borrowed money. It’s calculated as a percentage of the amount of money you still owe (the unpaid principal of the loan).
• Loans: Money that you borrow, that you eventually have to pay back.
• Loan Term: How long you need to pay the loan back (typically 10 years for Direct Subsidized / Unsubsidized Loans, but can vary).
• Principal: This is the original amount of money that you borrowed that you have to pay back (before any interest charges).
• Promissory Note: A signed, legal document promising to pay your loan back to the lender in a specified amount of time.
• Subsidized: The government is paying for the interest on your loan while you are in school half-time, for the first six months after you leave school (grace period), and during a period of deferment.
• Student Aid Index (SAI): replaces the Expected Family Contribution (EFC). The info you input on the FAFSA will determine your SAI which is your eligibility for federal financial aid. The new formula to calculate your SAI removes the number of family members in college and the SAI can be a negative number as low as -1500 to give financial aid office more insight when determining your financial need.