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Account Application
The account application is the form that you fill out to enroll in a college savings plan.
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Accreditation
A school that has accreditation meets certain academic standards and is recognized by the U.S. Department of Education. In order to receive federal financial aid, a student must attend a school that has accreditation.
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Accrue
The process by which the interest on a loan increases over time. When the interest "accrues" it is added to the amount owed on the loan and has to be repaid.
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Adjusted Available Income
The income that you are left with after taxes and certain living expenses have been deducted. The Adjusted Available Income is used when determining a student's financial aid.
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Administrative Fee
In the world of 529 plans, an administrative fee is a fee that is charged for the management of a 529 Plan, including such services as recordkeeping, auditing, and preparing and printing statements and reports. The amount of the Administrative Fee is based on a percentage of the assets in your Plan and is then subtracted from the funds in the account. The exact amount of this fee will vary from plan to plan. You can find information about the Administrative Fee in the Plan Description and Savings Trust Agreement.
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Advisor
A financial professional that helps individuals, families, or businesses with their financial goals and needs. A financial advisor assists people with investment choices, tax planning, retirement planning, college savings planning and other types of financial needs.
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Age Based Portfolio
An age based portfolio invests your 529 contributions according to the age of your child. For example if your child is young, the investments may consist of mostly stocks (to allow for aggressive growth over time). When your child is closer to college age, the investment mix may shift to become more "conservative," with the goal of preserving your savings.
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AGI (Adjusted Gross Income)
Adjusted Gross Income is a person's gross income minus allowable tax deductions, such as business expenses, medical expenses and retirement plan contributions. AGI is a term used on the IRS federal tax forms and is used to determine how much of a person's income is taxable.
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Alternative Minimum Tax (AMT)
The Alternative Minimum Tax is an extra federal tax that some high income earners have to pay in addition to their "regular" income tax. Depending on your income, there are different AMT tax deduction rules. Taxpayers calculate their AMT by completing a separate tax worksheet.
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Amortization
The process of paying off a debt, such as a loan, through regularly scheduled installment payments put towards both the principal and interest amounts. Payments are usually for the same dollar amount over a set period of time.
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Annual Rate Of Return
The profit or loss from investments over a one-year period. The amount of return is measured against the original price paid for the investment. It is usually presented as a percentage.
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Annuity
A type of investment that an individual makes with an insurance company, in which you contribute either a lump sum or a series of payments. If you are the beneficiary (or you can name someone else as beneficiary), you will receive periodic payments in return for the investment you made. Generally, the beneficiary will receive payments at an agreed-upon time in the future. An example of an annuity is a life insurance policy. Some annuities offer tax-deferred growth of earnings.
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Appeal
A formal request made to a financial aid administrator to review your financial aid eligibility. For example, if you believe that your financial aid eligibility was miscalculated or your financial situation has changed since filing the FAFSA form, then you can apply for an appeal. You may be asked to provide documentation to support your appeal.
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Appreciation
The increase in the value of an asset, such as real estate, stocks, bonds, etc. Appreciation means that the original value of the asset has grown over time.
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Asset
Anything that is owned and has monetary value (can be sold or exchanged for money), such as real estate, cash, equipment, investments, etc.
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Asset Allocation
In the world of mutual funds, asset allocation is an investment strategy that seeks to spread your money across different types of investments, such as small-cap funds, mid-cap funds, large-cap funds, bond funds, international funds, etc. This process is widely considered to be an important way to help manage risk in your portfolio, because it helps ensure that you don’t put all of your eggs in one basket.
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Asset Class
Types of investments that have similar characteristics. Stocks, bonds, real estate and cash are different types of asset classes.
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Asset Protection Allowance
A portion of parents' assets that is not included in the calculation of the parent contribution (Expected Family Contribution) towards their child's college education. The amount of the asset protection allowance depends on the age and the marital status of the parents.
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Automatic Investment Plan (AIP)
A type of investment program that allows you to contribute small amounts of money on a regular basis. The money is automatically taken from your checking/savings account or even your paycheck and then it is put in an investment plan of your choice, such as a retirement plan, mutual fund, or a 529 plan.
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Automatic Reinvestment
An arrangement in which you have the dividends (earnings) from an investment used to buy more shares in that investment. The investor chooses and agrees to this arrangement.
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Award Letter
The letter from a school that outlines the type (i.e., grants, loans, scholarships) and the amount of financial aid that a student will receive if they accept admission and attend the school.