Financial Aid

Financial Aid Glossary of Terms

ACCRUING INTEREST: This is the interest that begins accumulating once the loan is disbursed, increasing the amount needed to repay the loan.

ALTERNATIVE LOAN: A credit based loan, not based on financial need, which begins to accrue interest immediately upon disbursement and borrowed from a private lender. These loans are not federal loans and usually require a co-signer.

ANNUAL PERCENTAGE RATE (APR): The annual rate it costs to borrow a loan when the loan fees required to secure the loan are added to the interest rate calculation.

AWARD YEAR (AY): The time period for which your financial aid award offer is intended to cover. An award year does not exceed 12 months; the reason you must complete a new FAFSA for each aid year.

BANNER WEB: Password protected, interactive, web based, access to PLU student information (financial aid, registration, and student accounts).

CAMPUS BASED AID: Financial aid terminology that refers to the three federal student aid programs that are awarded at the campus level: The Federal Perkins Loan, the Federal Work Study program, and the Federal Supplemental Education Opportunity Grant (SEOG).

CAPITALIZED INTEREST: The interest that has accrued since the loan disbursed and is added to the loan principal. Capitalization will occur on the Unsubsidized Direct Loan, Parent PLUS, Grad PLUS and private alternative loans if the accruing interest is not paid as it accumulates.

COHORT DEFAULT RATE: The percentage of borrowers who entered loan repayment over the past three years, who have defaulted on their federal student loans in that time. Each school has a cohort default rate calculated by the federal government, as well as each state and each type of school (two or four year public schools, non-profit four year private schools like PLU, and two and four year for-profit proprietary schools).

COST OF ATTENDANCE: The total cost to attend school for one academic year, including tuition, fees, room, meals, books, and other related expenses. The sum of your financial aid, outside scholarships, and any private loans cannot exceed this amount.

CREDIT BALANCE: The amount of financial aid or payments made on your account that exceed your university charges. You can request your credit balance as a refund check, or have it held for your next semester’s expenses (if in the same academic year).

DATA RELEASE NUMBER (DRN): This number is printed on the Student Aid Report (SAR) or is available at You can provide your DRN to a school so that school can add themselves to the list of schools you are authorizing to receive your FAFSA information.

DEFAULT: Failure to make payment on a federal student loan for more than 270 days when a payment is required. A defaulted federal student loan will cause you to be ineligible for additional federal student aid, lower your FICO score on your credit report, add collection costs to your loan balance, and can result in the garnishment of your wages.

DEFERMENT: A postponement of loan payments without accruing interest on a subsidized loan. Deferments are available for in-school enrollment (half-time or greater), economic hardship, military active duty or post-military active duty student status. Students must request a deferment with their lender.

DISCLOSURE STATEMENT: A statement issued by the lender that outlines the cost of borrowing, taking into account the loan fees charged or deducted and the amount of interest that will accrue during repayment.

ENTRANCE COUNSELING OR INTERVIEW: A required session for first time recipients of the Federal Direct, Perkins and Nursing Loans, as well as the Grad PLUS Loan and TEACH Grant program.  Entrance Counseling is completed on for the Direct & PLUS loans, as well as the TEACH Grant. The Federal Perkins and Nursing Loans require Entrance Counseling each year at

EXIT COUNSELING OR INTERVIEW: A required session for students leaving school after borrowing a federal student loan or receiving funds from the Federal TEACH Grant program.  The session will prepare the student for the upcoming repayment period and provide information about their rights & responsibilities, loan deferment, forbearance and available cancellation provisions.  Exit Counseling is completed on for the Direct and PLUS loans and TEACH Grant program. The Federal Perkins and Nursing Loans require Exit Counseling at

EXPECTED FAMILY CONTRIBUTION (EFC): The amount a family is expected to pay toward college costs for the academic year’s terms of enrollment. This amount is determined by completing the FAFSA, using the Federal Methodology of need analysis.

FEDERAL DIRECT SUBSIDIZED LOAN: A need-based loan on which the government pays the interest for you while you are in school at least half time and (in most cases) during the six month grace period after leaving school.

FEDERAL DIRECT UNSUBSIDIZED LOAN: A non need-based loan, where the borrower is always responsible for paying the interest on the loan.

FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFELP): Federal program that authorized commercial lenders to make federal education loans to students and parents. Discontinued after the 2009-10 academic year and replaced with the William D. Ford Direct Loan program.

FEDERAL METHODOLOGY: The federal formula used in determining a family’s ability to pay for college, which is then used to calculate a student’s demonstrated financial need.  Primarily considers the family’s adjusted gross income, some forms of untaxed income, household size and number in college (not counting parents or high school students taking college courses), family assets (not counting the value of their principal residence or retirement accounts) and the age of the older parent.

FEDERAL STUDENT AID REPORT (SAR): This is the FAFSA output document that summarizes the information submitted by the applicant on the FAFSA and the resulting EFC.

FREE APPLICATION FOR FEDERAL STUDENT AID (FAFSA): The FAFSA is a standard federal application, which is used to determine your eligibility for most forms of financial aid. The FAFSA should be completed early, every year at Pacific Lutheran University’s federal school code is 003785.

FINANCIAL AID: Any form of assistance, example: scholarships, federal and state grants, loans, and work study employment, etc.

FORBEARANCE: The option to postpone, suspend, or reduce loan payments for up to 12 months, due to a financial hardship. The borrower is required to request forbearance from the lender. Private loan lenders are not required to grant loan forbearance.

FSA ID  (Federal Student Aid ID):  This is your electronic signature to sign your FAFSA and promissory note for the Federal Direct Student Loans, as well as your login access for the NSLDS website.  You will be prompted to create your FSA ID and password when you attempt to submit a FAFSA for the first time.

GIFT AID: Grants, Scholarships, or awards that do not have to be paid back.

GRACE PERIOD: The time period between a student’s graduation date, withdrawal date, or date of dropping below half time enrollment and when his/her student loan payments begin. Grace periods are either six months (for FFELP and Direct Loans) or nine months (for Perkins or Nursing Loans). Students should complete the exit interview process during their grace period.

GRANTS: Gift aid that does not have to be repaid, generally awarded on the basis of financial need.

HIGHER EDUCATION COORDINATING BOARD (HECB or HEC BOARD): The now defunct state agency responsible for oversight of the state’s primary financial aid programs.  HECB has been re-organized under a new agency name, Washington Student Achievement Council (

I-9: U.S. Citizenship and Immigration Services form you must complete with your employer prior to beginning employment to document your eligibility to work in the United States. Requires government issued picture ID.

INDEPENDENT STUDENT: For financial aid purposes, anyone over the age of 24 (as of December. 31, 2016 for the 2016-17 academic year; December 31,  2017 for the 2017-18 year), is married at the time of completing the FAFSA, is providing more than 50% support of their dependent child(ren), is on active military duty or a veteran of the U.S. Armed Forces, has been declared an emancipated minor or homeless by an applicable governmental entity, was in foster care, or for whom both parents are deceased.

INTEREST RATE: The annual percentage that a loan accrues interest on the outstanding loan principal borrowed which must be repaid.

LOAN: Money that is borrowed and has to be repaid.

MASTER PROMISSORY NOTE (MPN): A single promissory note for each federal loan program (Direct, PLUS, Perkins, & Nursing) that allows you to sign only one promissory note per loan program for all years of borrowing at PLU.

MERIT AID: Scholarships that are typically awarded for prior outstanding academic achievements and not dependent upon financial need.

NATIONAL STUDENT LOAN DATA SYSTEM (NSLDS): A federal on-line warehouse where you can view your borrowing history for the Federal Perkins, Direct, Grad PLUS, and Stafford Loans.

NEED: The difference between the cost of attending school (COA) and the Expected Family Contribution (EFC).

NEED BASED AID: Aid awarded on the basis of the financial need of the student, based on the information submitted on the FAFSA.

OFFER: Financial aid package of awards.

ORIGINATION FEE: The fees charged for borrowing a loan, often deducted from the loan prior to its disbursement. There is no origination fee for the Federal Perkins or Federal Nursing Loans. Origination fees on the Federal Direct Loan programs will differ, based on when the student receives the first disbursement of their Direct Loan or the PLUS Loan and whether the student is an undergraduate or graduate student.

PROFILE: A College Board, fee-based program that allows a school to calculate an expected family contribution that considers information not required on the Free Application for Federal Student Aid.  Profile results cannot be used to determine eligibility for federal student aid, only institutional scholarships and grants.  (Not utilized at PLU)

PROMISSORY NOTE: A promissory note is a binding legal document you sign when you borrow a student loan. It lists the conditions under which you are borrowing and terms under which you agree to pay back the loan. It will include information on how interest is calculated and what deferment and cancellation provisions are available to the borrower.

SATISFACTORY ACADEMIC PROGRESS (SAP): To be eligible to receive federal student aid, you must meet PLU’s written standards of satisfactory progress (policy may be viewed under Quick Links on the Financial Aid homepage).  Satisfactory progress monitors your cumulative GPA as well as credits earned toward your degree program.

SELF-HELP: Loan and/or employment (work study).

STAFFORD LOANS: The primary federal student loan program under the Federal Family Education Loan program (FFELP) through commercial lenders, which was discontinued after the 2009-10 academic year and replaced with the William D. Ford Direct Loan program.  The Direct Loan is still often referred to as the Federal Direct Stafford Loan.

STUDENT AID REPORT (SAR):  The document generated by the FAFSA after an application has been successfully transmitted to the U.S. Department of Education. It is a summary of the information provided by the applicant, as well as the Expected Family Contribution (EFC), the Data Release Number (DRN), and whether the applicant was selected for verification. The SAR is emailed to the applicant if an email address is provided on the FAFSA.

SUBSIDIZED LOANS: Need-based loans (Perkins, Nursing, and Direct Subsidized) whose interest does not begin to accrue until the student enters repayment, six to nine months after graduation, withdrawal, or dropping below half time enrollment.  (Note:  As part of sequestration,  interest on loans whose first disbursement occurred between July 1, 2012 and July 1, 2014 will begin to accrue interest during the grace period)

TILA (TRUTH-IN-LENDING ACT of 1968): Federal act that was designed to promote the informed use of consumer credit. Requires lenders to provide disclosure statements that outline the true cost of borrowing a loan when loan fees and interest accrual is included in the total cost.

TITLE IV FUNDS: Federal student aid funds that were authorized by the Title IV Act of the Higher Education Act of 1965, including all federal student aid programs available at PLU.

UNSUBSIDIZED LOANS: Loans that are not need-based, whose interest begins to accrue as soon as the loan is disbursed. These include the Unsubsidized Direct Loan, the Federal Parent PLUS and Grad PLUS loans, as well as all private/alternative loans.

VERIFICATION: A process to verify the accuracy of the data submitted on the FAFSA. Students are notified that they have been selected for verification on their SAR. To complete the verification process, you must submit a signed Verification worksheet and verify your prior year’s income tax information through the Data Retrieval Tool on the FAFSA or by submitting a Federal Tax return transcript.

WASHINGTON STUDENT ACHIEVEMENT COUNCIL: The state agency responsible for oversight of the Washington state student aid programs.  Previously the Higher Education Coordinating Board.

WORK STUDY: Work-study provides part-time employment for students (with demonstrated financial need) an opportunity to earn money to help meet educational costs.

W-2 Form: An Internal Revenue Service form that you should receive from your employer in January, outlining your calendar year earnings from that employer, as well as any withholdings taken out of your earnings during the year.

W-4 Form: An Internal Revenue Service form that you must complete with your employer so federal withholding taxes, if required, can be calculated for deduction from your paycheck per IRS regulations.

Yellow Ribbon: A program in which participating schools agree to match a portion of a student’s veterans benefits with their own scholarships or grants. See U.S. Department of Veteran Affairs website for information and application procedures.