Confused by any of the terminology you've encountered while paying for your Penn education or registering for courses? On this page you'll find an alphabetized list of some of the most common words and concepts we think you should know.  


 Penn’s academic year is made up of a fall and spring semester, during which a full-time undergraduate student is expected to complete at least 24 semester hours, usually called credits or credit hours, over the course of 30 weeks of instructional time.

(Automated Clearing House) provides the interbank clearing of electronic payments for participating depository financial institutions. It requires you to provide your bank information (account type, routing number and account number).

The process of gradually repaying a loan over an extended period of time through periodic installments of principal and interest.

The addition of unpaid interest to the principal balance of a loan. For unsubsidized loans, interest accrues during periods of in-school status, grace periods, deferment, or forbearance. This increases the outstanding principal amount due on the loan and may cause your monthly payment amount to increase. Interest is then charged on that higher principal balance, increasing the overall cost of the loan.

This provision of the College Cost Reduction Act allows cancellation of Federal Direct Loans for borrowers in certain public service employment. To be eligible for forgiveness, the borrower must work in an eligible public service position for ten years and will need to consolidate loans into a Direct Lender program.

The process of combining one or more loans into a single new loan with a new payment schedule and interest rate.

The cost of attending Penn for one academic year. The COA includes tuition and mandatory fees, room and board (or a housing and food allowance), and allowances for books, supplies, transportation, and personal expenses. You cannot receive financial aid funding (grants, loans, and outside funding sources) at a level greater than your cost of attendance.

Failure to repay a loan according to the terms agreed to in the promissory note. For most federal student loans, you will default if you have not made a payment in more than 270 days. You may experience serious legal consequences if you default.

A small percentage of the loan that is paid to the guarantee agency to insure the loan against default. The insurance fee is usually 1% of the loan amount and is usually deducted at the time the loan is disbursed.

An approved temporary suspension of loan payments based on certain permissible events or criteria, such as enrollment in school, unemployment, and economic hardship. Interest continues to accrue only on unsubsidized loans during deferment periods.

A loan is delinquent when loan payments are not received by the due date. A loan remains delinquent until the borrower makes up the missed payment(s) through payment, deferment, or forbearance. If the borrower is unable to make payments, he or she should contact his or her loan servicer to discuss options to keep the loan in good standing.

The electronic transfer of a payment directly from the account of the payer to the recipient's account.

The release of loan funds to the school for delivery to the borrower.  Loan funds are first credited to the student's account for payment of tuition, fees, room and board and other school charges. Disbursement is usually made in at least two equal installments.

A document outlining the specific terms and conditions of a loan, including  interest rate , fees,  amount borrowed, insurance, and  responsibilities of the borrower.

Used by some schools and lenders to wire loan funds directly to a student’s billing account instead of requiring an intermediate check for the student to endorse. Because the funds are transferred electronically instead of using paper, they are more readily available to the student.

A mandatory information session that explains a student’s rights and responsibilities as a student borrower.  Federal loans are not disbursed until Entrance Counseling is completed. 

A mandatory information session that explains the terms and conditions of your loans, your rights and responsibilities, repayment options, as well as numerous other pertinent topics. The session must be completed prior to graduation, or a student’s diploma can be withheld.

The EFC is a combination of a Parental Contribution and a Student Contribution. Students have both a federal EFC, based on the FAFSA, that determines eligibility for federal funds, and a Penn EFC, based on Penn’s financial aid application, that determines eligibility for Penn funds. A student’s EFC compared to their cost of attendance determines their financial need.


This aid application determines eligibility for federal financial aid, such as the Pell Grant, SEOG Grant, and federal Direct Loan Programs for students and parents.

A federal student aid program that provides part-time employment while you are enrolled in school to help pay your education expenses.

A loan made by the U.S. Department of Education for eligible undergraduate and graduate students. Eligibility is based on the FAFSA. These loans usually have the most favorable repayment benefits. See our Loans page for more information. See our Loans page for more information.

The difference between the cost of attendance (COA) at a school and a student’s Expected Family Contribution (EFC). 

Federal legislation that protects the privacy of students' personally identifiable information (PII). The act applies to all educational institutions that receive federal funds. See Penn’s Privacy website for details.

A period during which your monthly loan payments are temporarily suspended or reduced. Your lender may grant you a forbearance if you are willing but unable to make loan payments due to certain types of financial hardships. During forbearance, principal payments are postponed but interest continues to accrue. Unpaid interest that accrues during the forbearance will be added to the principal balance (capitalized) of your loan(s), increasing the total amount you owe.

A federal grant program for undergraduate students with high levels of need. Students who receive Federal Pell Grants and have the most financial need will receive FSEOGs first. FSEOGs are awarded by the student financial aid office.

A grant provided to low-income undergraduates and certain post-baccalaureate students. Named after U.S. Senator Claiborne Pell, it is considered the foundation of a financial aid packages for low-income students.

The formula used by the federal government to determine your Expected Family Contribution (EFC) and eligibility for federal financial aid programs administered by the U.S. Department of Education.

A loan made by the U.S. Department of Education to graduate or professional students who are enrolled at least half-time. Students must file a FAFSA. See our Loans page for more information. See our Loans page for more information.

A loan made by the U.S. Department of Education to parents of dependent undergraduate students enrolled at least half-time. Students must file a FAFSA in order to determine eligibility. See our Loans page for more information.

A period of time after borrowers graduate, leave school, or drop below half-time enrollment when they are not required to make payments on certain federal student loans.

Financial aid that does not require repayment.

Financial aid packages for traditional, full-time undergraduates at Penn are “grant-based,” which means they consist entirely of grants and work-study funding. Penn does not package loans in financial aid packages, but students may still choose to borrow to meet all or a portion of their Expected Family Contribution. Penn is the nation’s largest university with a program that enables dependent undergraduates eligible for aid to receive grant-based financial aid packages for eight academic semesters.

The agency or institution that insures up-to-permissible limits against loss to lenders in the event of default.

Traditional undergraduates whose family incomes are $65,500 or less and who have Parent Contributions of $4,500 or less are considered Highly Aided and are eligible for additional financial support. Read more at SRFS’s Highly Aided page.

A repayment plan that caps required monthly payments on federal student loans to an amount based on income and family size. The program lowers monthly payments for borrowers who have high debt and modest incomes.

Penn’s formula to determine financial need for allocation of the school's own financial aid funds. Private schools often use their own IM to distribute their institutional financial aid funds.

A loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender.  The expense is calculated as a percentage of the unpaid principal amount of the loan. 

The percentage at which interest is calculated on your loan(s).


The organization that made the loan initially; the lender could be the borrower's school; a bank, credit union, or other lending institution; or the U.S. Department of Education.

A company that collects payments, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a federal student loan on behalf of a lender. If you're unsure of who your federal student loan servicer is, you can look it up in the National Student Loan Data System.

A binding legal document that students must sign when they borrow a federal student loan. The MPN can be used to make one or more loans for one or more academic years (up to 10 years). It lists the terms and conditions under which students agree to repay the loan and explains the borrower’s rights and responsibilities.  It’s important to read and save your MPN because you’ll need to refer to it later when you begin repaying your loan or at other times when you need information about provisions of the loan, such as deferments or forbearances. 

Financial aid that is based on calculation of a student’s and family’s financial ability to contribute to the cost of attendance.

A tool that allows current and prospective students, families, and other consumers to estimate the price of attending a particular college or career school.

Is paid to the lender to offset the costs of administering a loan. An origination fee is a percentage of the loan amount, and is usually deducted from the loan at the time the loan is disbursed.

Money awarded to students from external sources. Scholarships generally do not have to be repaid. See Penn’s policy on outside scholarships and how they affect financial aid packages.

A voluntary, interest-free payment program designed for families who prefer to pay all, or part of, their educational expenses monthly over several months each semester. The Plan is available in the fall and spring semesters and is not available for students enrolled in summer courses. All Penn students are eligible to participate.

The total sum of money borrowed plus any interest that has been capitalized (added back into principal).

The binding legal document that must be signed by the student borrower before loan funds are disbursed by the lender. The promissory note states the terms and conditions of the loan, including repayment schedule, interest rate, deferment policy and cancellations. The student should keep this document until the loan has been repaid.

Public service jobs include, among other positions, government, military service, public safety and law enforcement (police and fire), public health, public education, public early childhood education, public child care, social work in a public child or family service agency, public services for individuals with disabilities or the elderly, public interest legal services (including prosecutors, public defenders and legal advocacy in low-income communities), public librarians, school librarians and other school-based services, and employees of tax exempt 501(c)(3) organizations. Full-time faculty at tribal colleges and universities, as well as faculty teaching in high-need areas, also qualify.

The federal Public Service Loan Forgiveness Program provides partial forgiveness of federal loans for borrowers who work in eligible public service employment for 10 years after graduation. This program is available for Federal Direct Loans, or other federal loans that have been consolidated.

The period during which the borrower is required to make payments on his or her loans.

Successful progress toward completing your degree or certificate in a time period that complies with federal regulations and your institution’s standards.

An organization that bills, collects payments, answers borrower inquiries and performs other administrative tasks associated with maintaining a loan portfolio.

A summary of the information you submitted on your Free Application for Federal Student Aid (FAFSA). You receive this report (often called the SAR) via email a few days after your FAFSA has been processed or by mail within 7-10 days if you did not provide an email address. If there are no corrections or additional information you must provide, the SAR will contain your EFC (expected family contribution), which is the number that's used to determine your eligibility for federal student aid.

A loan based on financial need.  Interest is subsidized by the federal government during in-school, grace, deferment and forbearance periods.

A prepayment of tuition and fees at the current rate locks in tuition and mandatory fees, thus avoiding future increases. The plan can be used by students in all schools and also for study abroad. Unused prepaid funds due to early graduation or withdrawal will be refunded.

A loan for which the borrower is fully responsible for paying the interest. Interest begins to accrue after first disbursement. It may be paid while in school, or capitalized and added to the principal (amount borrowed) at the beginning of the repayment period.

A federally mandated process your school uses to confirm that the data reported on your FAFSA is accurate. Your school has the authority to contact you for documentation that supports income and other information that you reported. If the federal government selects you for verification, your federal aid cannot be disbursed until the process is completed.