One of the first things students and families notice during the financial aid process is that the forms and paperwork are filled with acronyms. Misunderstanding these terms can result in mistakes on your forms, which can cause delays in the process.
This financial acronym cheat sheet demystifies this lingo, so you can focus on filling out your forms accurately and making smart financial decisions as you go. Each term below is listed in the order you're most likely to encounter it during the financial aid process.
Before You Begin
As you get ready to apply for financial aid, familiarize yourself with these basics:
- ED (U.S. Department of Education): The department of the United States government that's responsible for all federal student aid programs.
- CPS (Central Processing System): The U.S. Department of Education uses this system to process and review all of the financial aid applications they receive.
- DL (William D. Ford Federal Direct Loan Program): All federal Stafford and PLUS loans you receive will be distributed through this program. For DL loans, the federal government lends money directly to students (instead of going through a private bank as they once did).
Applying For Financial Aid
Knowing these terms will help you get through the application process smoothly:
- FAFSA (Free Application for Federal Student Aid): The application you need to use when applying for federal, most state, and some institutional financial aid. There is no cost to fill out the FAFSA. Find out what you can expect when you're completing yours.
- CSS PROFILE (College Scholarship Service PROFILE): An application for financial aid similar to the FAFSA, but more detailed. Some schools require you to provide this form when you apply for institutional aid. Unlike the FAFSA, you'll need to pay a small fee to fill out the CSS PROFILE, but it's NOT required to apply for federal student aid.
- AGI (Adjusted Gross Income): Total income earned before taxes are taken out, minus certain deductions. This number helps determine how much financial aid a student qualifies for—a smaller AGI usually means more aid, but several other factors are taken into consideration, too.
- SAR (Student Aid Report): You and your school both get a copy of this list of the information you and your family submitted on your FAFSA. After you receive your SAR, you may be able to make corrections or changes before your final award is processed.
Accepting Financial Aid
After you submit your application, you'll need to know these acronyms to make sense of your award and receive your financial aid:
- COA (Cost Of Attendance): The reasonable cost a school determines a student needs to pay to go there. This includes tuition, room and board, school supplies, transportation, personal expenses, and any other items you may need to pay for.
- EFC (Expected Family Contribution): The amount of money ED anticipates your family is able to pay for school. ED calculates this based on information from your FAFSA. Schools may also use this estimate to award institutional financial aid.
- EFA (Estimated Financial Assistance): Also known as your "award," this is the amount of financial aid your school estimates you'll receive for a single loan period (usually one academic year). It may include scholarships, grants, work-study, and loans.Your schooldetermines this number by subtracting yourEFC from its COA.
- MPN (Master Promissory Note): You'll need to sign this contract before borrowing student loans. Your MPN explains the terms and conditions of your loan, and legally binds you to repay the money you borrow, plus interest (even if you don't find your education satisfactory or have difficulty finding a job after school).
Managing Financial Aid
Understand these terms to track your financial aid and keep it in good standing while you're in school and after you leave:
- FAA (Financial Aid Administrator): A financial aid expert who works in the financial aid office at your school. You can contact them for advice and information about financial aid matters throughout the process.
- NSLDS® (National Student Loan Data System): The central database where ED stores the information about your federal student loans. You can access this system to find information like the amounts you've borrowed, who your loan servicer is, and what status your loans are in.
- SAP (Satisfactory Academic Progress): The level of academic achievement a student must meet and maintain in order to continue receiving financial aid. Check out what's required for you to meet the standards and keep receiving your aid.
Want to learn the definitions of even more financial terms? Visit our glossary.