CFC Glossary

Sometimes the world of financial aid can seem confusing. Because of this, Northwest University has assembled this list of different financial aid terms you may come across. This glossary is modified from the “Financial Aid Glossary” as seen on FastWeb by Kay Peterson, Ph.D.

Academic Year

The period in which school is in session. For Northwest University, the period is typically late August through early May.

Accrual Date

The date on which interest charges on an education loan begin to accrue.


Cash in checking and savings accounts, trusts, stocks, bonds, other securities, real estate (excluding primary residence), income-producing property, business equipment, and business inventory. Considered in determining Expected Family Contribution (EFC).

Asset Protection Allowance

The portion of the parents’ assets that are not included in the calculation of the parent contribution (calculated by the Federal Methodology formula).

Associate Degree

A two-year college degree.

Award Letter

See Financial Aid Offer

Bachelor’s Degree

A four-year college degree.


The estimated cost of attendance for a student at an institution. Used to determine amount of financial aid. Typically includes tuition, fees, book, supplies, room and board, personal expenses, and transportation.

Campus-Based Programs

U.S. Department of Education federal student aid programs administered by colleges and universities. Includes Federal Supplemental Educational Opportunity Grant (FSEOG) and Federal Work Study.

Central Processing System (CPS)

The computer system that receives the student's Free Application for Federal Student Aid. The Central Processing System performs database matches and calculates the official Expected Family Contribution (EFC) and sends out the Student Aid Report (SAR).

Commuter Student

A student who lives at home and commutes to school.

Consolidation Loan

Loan that allows the borrower to lower their monthly payments by combining their original loans into one loan. Consolidation loans typically have longer repayment periods and greater interest accrual. Borrower benefits may be affected.


Individual who assumes responsibility for a loan if the borrow fails to repay. Students are typically required to have a co-signer when they are applying for a student loan (non-federal loans) from a bank.

Cost of Attendance

See budget.

Custodial Parent

In cases where a student’s parents are divorced or separated, the custodial parent is the parent with whom the student lived with the most during the past 12 months. If the student did not live with either parent during the past 12 months, then the custodial parent would be the parent with whom the student last lived with.


Failure to repay or otherwise meet the terms and condition of a loan. Default typically occurs after six months of delinquent payments. Penalties include a bad credit rating, loss of future financial aid eligibility, withholding of tax refunds, garnishing of wages, and loss of monthly payment options.


Period during which the repayment of a loan is suspended because the borrower meets certain eligibility requirements (e.g. enrolled in college at least half-time).


Failure to make a scheduled loan payment.

Dependency Status

Status that determines if parental information is required on the Free Application for Federal Student Aid (FAFSA). There are two statuses:

  1. Dependent Students: required to provide parental information on the FAFSA.
  2. Independent Students: not required to provide parental information on the FAFSA.

Dependency status is determined by several questions on the FAFSA.

You are considered Dependent if you answer "No" to all the questions. You are considered Independent if you can answer "Yes" to at least one of the questions. See the FAFSA for the list of questions.


The process by which financial funds are made available to students for use in meeting educational expenses. Funds are applied directly to the student’s account, although some funds may be disbursed directly to the student (i.e. Washington State Aid).

For Northwest University, a student’s financial aid is credited to their account in equal disbursements per semester after all of their documentation has been submitted and reviewed. The amount disbursed each semester is indicated on your Financial Aid Offer Letter. For example, a $1,000 grant will be disbursed $500 for Fall Semester and $500 for Spring Semester.

Enrollment Status

Enrollment status is determined by how many credits you are enrolled in each term. The amount you are eligible for in financial aid is determined by the number of credits for which you are enrolled. Typically, students must be enrolled at least half time to qualify for financial aid.

Expected Family Contribution (EFC)

The dollar amount that a family is expected to pay toward their student’s educational costs. EFC is based on earnings, assets, family size, and the number of family members in college.


See Free Application for Federal Student Aid.

Family Contribution

See Expected Family Contribution (EFC).

Federal Direct Loan

Federally guaranteed, low-interest rate loan for students. There are two types of Federal Direct Loans: subsidized (need-based) and unsubsidized (non need-based). Both types allow deferment of payments until a student leaves school.

Federal Direct PLUS Loans (Parent Loans for Undergraduate Students)

Federal loans available to parents of dependent students to help finance their child’s education. Parents may borrow up to the difference between the cost of attendance and the financial aid their child is already receiving.

Federal Methodology

The need analysis formula used to determine the Expected Family Contribution (EFC). The Federal Methodology considers taxable and nontaxable income and assets, family size, and the number of family members in college.

Federal Pell Grant

Federal grant program for undergraduate students who demonstrate financial need according to the Free Application for Federal Student Aid (FAFSA).

Federal Processor

The Federal Processor is the organization that processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and uses it to compute eligibility for federal student aid.

Federal Supplemental Educational Opportunity Grant (FSEOG)

This is a federal grant for students with exceptional financial need as determined by the Free Application for Federal Student Aid (FAFSA) and the University.

Federal Work Study (FWS)

Federally-sponsored Work Study Program is designed to incentivize employers to hire undergraduate and graduate students part-time during the school year. Eligibility is based on financial need. These employment opportunities would be on- or off-campus for Northwest University. Part or all of the Work Study award is paid directly to the employer. The student would be paid for their work by the employer directly.

Financial Aid Administrator

Also referred to as a Student Financial Services Counselor. University employee responsible for preparing and communicating information about student loans, grants, scholarships, and employment programs to students and agencies.

Financial Aid Offer

Official offer from the financial aid office of the college that lists all of the financial aid for which the student is eligible. The amounts listed in the letter are subject to change based on eligibility.

Financial Aid Package

The total amount of financial aid a student receives, including grants, loans, and work-study. The financial aid package is reported to the student on the Financial Aid Offer.

Financial Need

The difference between the student’s educational costs and the Expected Family Contribution (EFC).

Fixed Interest Loans

Interest rate stays the same throughout life of the loan (e.g. Stafford Loan).


The approved temporary suspension of loan payments due to a financial hardship (interest continues to accrue). The lender grants forbearance. A forbearance status can affect your credit score.

Free Application for Federal Student Aid (FAFSA)

The Federal application used to apply for most forms of financial aid. Apply for FAFSA online.

Gift Aid

Grants and scholarships that do not need to be repaid if earned.

Grace Period

The period after a student either graduates or leaves school and before loan payments must begin (typically six to nine months).


Financial aid that does not have to be repaid if earned and is typically based on financial need.

Guarantee Fee

A percentage of the loan that is paid to the guarantor to insure the loan against default. The fee is usually 1% of the loan amount.


A state agency or private, nonprofit organization that insures the loan against default with the guarantee fee.

Income Contingent Repayment

Payments where the size of the monthly payments depends on the income earned by the borrower. As the borrower’s income increases, so do the payments.

Master Promissory Note

A legally binding contract a student signs for the Federal Direct Loans. This promissory note only needs to be signed once at the attending college or university and can be used to request additional Federal Direct Loans for up to 10 years. The promissory note details the terms of the loan and obligates the borrower to repay.

Merit-based Aid

Financial aid based on academic, artistic, athletic, or other merit-oriented criteria. This financial aid is not need-based.

Needs Analysis

The process used by a college to evaluate an applicant’s financial resources and determine how much the student or family can pay toward the cost of the education.

Net Price Calculator

Net Price Calculator (for on-campus undergraduate costs)


When a financial aid administrator combines various types of student aid (grants, loans, scholarships, and employment) to help meet a student’s financial need.

Parents’ Contribution

A quantitative estimate of the parents’ ability to contribute to postsecondary educational expenses.


The amount borrowed or owed on a loan.

Professional Judgment

For need-based federal aid programs, financial aid administrators can adjust the available income of the family, the cost of attendance, or change the dependency status (with documentation) when extenuating circumstances exist.

Northwest University recognizes that an individual student may be facing extenuating circumstances such as a change of employment (such as reduction in pay, decrease in hours, or loss of employment), medical expenses not covered by insurance, tuition paid for a family member attending a private school (K-12), or emergency situations. Please communicate your special circumstance to Student Financial Services. A form can be sent to document the special circumstances and we will determine if any additional aid is available.

Promissory Note

A legally binding contract a student signs before receiving loan funds. The promissory note needs to be signed for each loan requested. The promissory note details the terms of the loan and obligates the borrower to repay.

Satisfactory Academic Progress (SAP)

A school’s policy concerning the minimum number of courses that must be completed each semester, the maximum time frame, and the minimum GPA required to receive financial aid.


A form of financial assistance that does not need to be repaid. Scholarships are generally offered to students who show potential for distinction, or who possess certain characteristics important to the scholarship provider (such as academic performance, talent, hobbies, ethnicity, etc.)

Secondary Market

An organization that buys loans from lenders, which provides the lender with the capital to issue new loans (i.e. SallieMae).


An organization that is paid by a lender to administer their student loan portfolio.

Simplified Needs Test

An alternative method of calculating the Expected Family Contribution (EFC) for families with an adjusted gross income less than $50,000, who have filed or are eligible to file an IRS Form 1040A or 1040 EZ, or who are not required to file an income tax return.

Student Aid Report (SAR)

The official report sent to the student after submitting the FAFSA. It contains the responses to the FAFSA question as well as the Expected Family Contribution (EFC) and allows you to make any necessary corrections for re-submittal.

Student Contribution

A quantitative estimate of the student’s ability to contribute to their postsecondary education expenses.

Title IV Programs

Federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended. Includes Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work Study, Federal Perkins Loan, Federal Stafford (Subsidized and Unsubsidized) Loan, and Federal PLUS Loan.

Undergraduate Student

A student who has not yet received a bachelor’s degree.

Unmet Need

The difference between a student’s total cost of attendance at a specific institution and the student’s total available resources, including financial aid.


The review process in which the financial aid administrator requests documentation from the family to verify the accuracy of the data on the Free Application for Federal Student Aid. Students are randomly selected for verification by the Department of Education. The verification process must be completed prior to receiving financial aid.

For Northwest University, if you are selected for verification, any additional documentation that is needed will be communicated to you through your Financial Aid Offer Letter. After all documents have been submitted and reviewed, any corrections to the data will be submitted to the Department of Education (if need be). A revised Financial Aid Offer Letter will be sent to you notifying you of the completion of verification and if there are specific actions needed. Your offer(s) will not be disbursed, and Federal Stafford Loans will not be originated until verification is complete.

Washington State Work Study

Washington State sponsored Work Study Program provides undergraduate and graduate students with school-year part-time employment. Eligibility is based on financial need. These employment opportunities are on- and off-campus for Northwest University.


When an enrolled student to either ceases attending certain courses, or ceases attending all courses.

Work Study

An employment program designed to facilitate part-time work. Read more about the Work Study Program.