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Kalamazoo College

Glossary of Terms

Award Letter

A letter from your school that details federal, state, institutional and/or private student financial aid.


Cost of Attendance (COA)

The total cost to attend school for the academic year, as determined by your school.  This amount includes: tuition, fees, room & board, estimated living expenses, estimated transportation costs, estimated books and supplies, and miscellaneous costs.


Debt-to-Income Ratio

The amount of debt compared to your overall income. Lenders use this ratio when determining whether to lend you money. A low debt-to-income ratio is more desirable.


Direct Costs

Expenses the student/family pays to the college.


Direct Loans

See William D. Ford Federal Direct Loan (Direct Loan) Program.



A portion of a loan that is paid out from the school to the borrower by applying the funds to the student's account at the school or paying the borrower directly. Loans are paid out in one or more disbursements.


Educational Loan

A form of financial aid that is repaid with interest.  These loans have varying interest rates and repayment terms.  Examples include: Federal Direct Student Loan, Federal Perkins Loan, Private Loan.


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).



Free Application for Federal Student Aid. The FAFSA is a form that must be completed annually to help determine your eligibility for federal student aid. For more information, or to complete a FAFSA online for free, visit FAFSA on the Web.


Federal Direct Student Loans

Loan funds provided to the student by the U.S. Department of Education, through the school.  Repayment of principal begins six months after borrower cease to be a student on at least a half-time basis.  There are two types of Federal Direct Student Loans: subsidized and unsubsidized. 


Federal Perkins Loan

A loan made under the Federal Perkins Loan Program for students with exceptional financial need. Perkins Loans are administered by the school.


Federal Work-Study

A program that provides part-time employment to students attending institutions of higher education who need the earnings to help meet their costs.


Financial Aid Package

The types and amounts of financial aid (federal and nonfederal) a student is offered by the school to help pay educational costs.


Financial Need

The cost of attendance minus your expected family contribution (EFC).


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 ends on the day before the repayment period begins. A borrower is not required to make payments during the grace period. Grace periods occur for:

  • subsidized and unsubsidized loans made under the Direct Loan and FFEL programs (six-month grace period); and
  • loans made under the Perkins loan program (generally nine-month grace period).



Student grants are monetary gifts to people who are pursuing higher education. Unlike student loans, grants do not require repayment.


Indirect Costs

Expenses the student/family may pay to a third party other than the college.


Loan Fee (Origination Fee)

A charge that occurs each time money is disbursed (paid out) to the borrower. The loan fee is charged as a percentage of the disbursement (gross), and reduces the actual amount received (net).


Loan Servicers

A company that collects payments on a loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a loan holder.


Master Promissory Note (MPN)

A binding legal document in which you promise to repay your loans and any accrued interest and fees. It also explains the terms and conditions of your loans. An MPN can be used to make one or more loans for one or more academic years, for up to 10 years, except in certain circumstances.


National Student Loan Data System (NSLDS)

The central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other federal student aid programs.


Net Price

Difference between cost of attendance and all gift aid.


Out-of-Pocket Costs

Difference between cost of attendance and all gift aid



Direct PLUS Loans are loans for eligible parents of dependent undergraduate students to help pay for the cost of the student's education at participating schools.


Student Aid Report (SAR)

A summary of the information you submit on your Free Application for Federal Student Aid (FAFSA) that provides you with your Expected Family Contribution (EFC).


Student Loan

Money you borrow for school and must repay with interest.


Subsidized Loan

A federal student loan for which in some cases, a borrower is not responsible for paying the interest while in an in-school, grace, or deferment period. Includes Direct Subsidized Loans and Subsidized Federal Stafford Loans.


Unsubsidized Loan

A federal student loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Includes Direct Unsubsidized Loans and Unsubsidized Federal Stafford Loans.