Glossary of Terms

Award Year: The award year begins in July and extends through June of the next year. Funding for the Federal Pell Grant and campus based programs (such as Federal Work Study, and SEOG ) is provided to MSU on the basis of the award year.

Base Year: The base year is the calendar year preceding the award year. For instance, 2006 is the base year used for the 2007-2008 award year. The Free Application for Federal Student Aid (FAFSA) uses family income from the base year because it is more accurate and easier to verify.

Cost of Attendance (Also Known As Cost of Education or Student Budget): The student's cost of attendance includes not only tuition, fees and books but also living expenses such as room and board and miscellaneous personal expenses. Cost of attendance is determined by the school using guidelines established by federal law and regulation. A student's cost of attendance is compared to the expected family contribution to determine their need for aid.

The Department (or ED): Abbreviation for the U.S. Department of Education.

Default: Failure to repay a loan in accordance with the terms of the promissory note.

Default Rate: A percentage calculated each year for each post secondary school based on the number of former students who have defaulted on a Federal student loan received while attending that school.

Expected Family Contribution (EFC): The EFC is determined by US Department of Education using the information reported on your Free Application for Federal Student Aid (FAFSA). It is based on family income, assets, the number of family members in the household, and the number of members attending college. It does not represent the amount you owe MSU. Refer to your Student Aid Report (SAR) for your EFC.

Financial Need: The difference between the student's cost of attendance and the expected family contribution (EFC).

Free Application for Federal Student Aid (FAFSA): The federal aid application used to collect household and financial information from students.

Promissory Note (Prom Note or MPN): A legal document which a borrower must sign detailing the terms of a loan. By signing a note, the borrower promises to repay the loan, with interest, in specified installments. The promissory note includes information about the grace period, deferment or cancellation provisions and the student's rights and responsibilities. Most students now sign an electronic promissory note.

Student Aid Report (SAR): An output document mailed to the student by the Federal aid student processor. The SAR contains financial and other information reported by the student and the family on the FAFSA. That information is entered into a processing system and a SAR is produced. The student's eligibility for aid is determined by using the EFC.

Verification: A procedure whereby schools check the information the student reported on the financial aid application. Schools must verify information provided by students who are selected by the Federal Central Processing System. If your application is selected, you will receive a letter requesting documentation; generally a copy of the previous years tax return and a worksheet.

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