Glossary of Financial Aid Terms

"P" Terms

Parent Contribution (PC)

The amount, as determined by aid formulas and a review of individual circumstances as provided by the family, that a dependent student's parents can reasonably be expected to contribute toward that child's educational expenses.

Principal

The original amount borrowed. Origination and guaranty fees are deducted from this amount before disbursement, and interest is computed as a percentage of principal. For example, if a student borrows $2,500 a year for four years of college, the principal would be $10,000. The borrower pays interest on the outstanding (or remaining) principal each month until the entire loan is paid off.

Professional Judgment

While the method for determining a student's need for federal student aid is defined legally, the law does give the financial aid administrator the opportunity to use his or her professional judgment in some limited circumstances.

Promissory Note

The legal document a borrower signs. The promissory note includes the conditions under which the money is borrowed, interest rates and other terms. Borrowers should retain copies of all promissory notes until the loans are fully paid.