Comprehensive Student Loan and Financial Aid Terminology for College Planning

Associate's Degree

A two-year college degree (often from a community college) that can prepare you for a career or further study.

Cosigner

A person (often a parent) who agrees to repay a loan if the borrower doesn't.

Default

Failure to repay a loan according to the terms, which hurts credit and can have serious financial consequences.

Deferment

A pause on student loan payments (sometimes interest also stops).

Direct PLUS Loans

Federal loans available to graduate students and parents of undergraduates; credit history is considered.

Direct Subsidized Loan

A federal loan for undergraduates where the government pays the interest while you're in school.

Student Aid Index (SAI)

A number from FAFSA used by colleges to figure out how much financial aid you may receive.

Federal Student Aid

Money from the U.S. government to help pay for college (includes loans, grants, and work-study).

Financial Aid Offer

A letter from a college showing how much aid (loans, grants, scholarships, work-study) you are eligible for.

Fixed-Rate Loan

A loan with an interest rate that stays the same for the entire repayment period.

Forbearance

A pause or reduction in student loan payments, but interest usually keeps adding up.

FAFSA (Free Application for Federal Student Aid)

The form students fill out to apply for federal financial aid.

Gap Year

A year taken off between high school and college to work, travel, or gain experience.

Gift Aid

Free money for college, like scholarships or grants, that you don't have to pay back.

Grace Period

A set time after graduation (often 6 months) before you must start repaying student loans.

Grants

Free money for education, usually based on financial need.

Interest Rates

The percentage of money charged by a lender for borrowing a loan.

Internship

A short-term work experience (paid or unpaid) that gives you career-related skills.

Loan Refinancing

Taking out a new loan to replace an old one, usually to get a lower interest rate.

Loan Consolidation

Combining multiple loans into one single loan with one payment.

Loan Servicer

The company that manages your loan payments and communication.

Opportunity Cost

What you give up when you make a choice (example: choosing college over working full-time right away).

Net Price

The real cost of college after financial aid, scholarships, and grants are subtracted.

Principal

The original amount of money borrowed, not including interest.

Private Student Loan

A loan from a bank or private lender (not the government) to pay for college.

Repayment Period

The length of time you have to pay back your loan.

Repayment Plan

The schedule and rules for how you'll repay your loan (such as monthly payments and duration).

Return on Investment (ROI)

The benefit you get from spending money, such as how much income you'll likely earn after paying for a degree.

Room and Board

The cost of housing and meals at college.

Scholarship

Free money for education, often based on merit, talent, or special qualifications.

Sticker Price

The published total cost of college before financial aid is applied.

Student Aid Report / FAFSA Submission Summary

A summary document you get after submitting FAFSA, showing your Student Aid Index and what colleges will use to determine aid.

Trade School

A school that teaches specific job skills (like welding, plumbing, or cosmetology).

Tuition

The cost of classes and instruction at a college.

Variable-Rate Loan

A loan with an interest rate that can change over time.

Vocational Training

Education focused on preparing for a specific trade or job.

Work-Study

A program where students work part-time jobs (usually on campus) to help pay for expenses.