Paying for college can seem overwhelming – and trying to decipher the jargon that goes along with paying for college can be even more confusing. The Federal Student Aid Information Center is a great source of information for all things financial aid, and it provides an extensive glossary outlining the many terms you may encounter. We’ve shared a few of the most common below – for the full list, visit their website.
Accrue – To accumulate interest on a loan.
Annual Percentage Rate (APR) – The actual yearly cost of borrowing money reflected as a percentage rate.
Award Letter – A letter from your school that details your federal, state, institutional and private student financial aid.
Cost of Attendance (COA) – The total cost to attend school for the academic year, as determined by your school.
Credit Score – A number reported by credit bureaus and used by lenders to determine whether to lend you money, and what interest rate to charge you.
Deferment – A benefit of certain student loans that allows you to temporarily stop making payments. Interest may still accumualte during this time.
Expected Family Contribution (EFC) – Your Expected Family Contribution (EFC) is the number that’s used to determine your eligibility for federal student aid. This number results from the financial information you provided in your FAFSA application. Your EFC is reported to you on your Student Aid Report (SAR).
Financial Need – The cost of attendance minus your expected family contribution.
Grace Period – A period of time that generally begins on the day after a borrower graduates, leaves school, or drops below half-time enrollment and usually ends six to nine months later.
Interest – The cost to borrow money. Interest is calculated as a percentage of the outstanding (unpaid) principal balance.
Interest Rate – The percentage charged when you borrow money. See also Annual Percentage Rate (APR).
Loan Servicer – An entity that collects payments on a student loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a student loan on behalf of a loan holder.
Principal – The loan amount you borrowed plus any capitalized interest.
Repayment – To pay back money you borrowed by making scheduled payments to a loan holder or servicer.
Student Loan – Money you borrow for school and must repay with interest.