Financial Aid Terms and Definitions
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Academic Competitiveness Grant
Pell Grant eligible undergraduate students with less than 48 credit hours who have completed a “rigorous’ high school curriculum as defined by your state may qualify for these funds. A 3.0 cumulative college GPA is required for 2nd year students.
Academic Grade Level
Designation of the student as first-year (freshman), second-year (sophomore), etc., Used to determine annual loan limits.
Academic Year
The period of formal academic instruction, usually extending from August to May. Depending on the program of study and location, it may be divided into terms of varying lengths.
Adjusted Gross Income (AGI)
An income figure taken from the federal income tax form that has been filed in compliance with the IRS regulations and guidelines.
Assets
Cash on hand in checking and savings accounts, trusts, stocks, bonds, other securities, real estate, home equity, income-producing property, business equipment, and business inventory. Considered in determining expected family contribution.
Award Letter
A means of notifying financial aid applicants of the assistance being offered. The award letter usually provides information on the types and amounts of aid offered.
Award Packaging
See Packaging.
Award
A specific amount of financial assistance offered to a student through financial aid programs to pay for educational costs.
Capitalization
Interest is capitalized when it is added to the principal loan amount. Capitalized interest increases a loan amount and is subject to interest charges, thereby causing you to pay interest on interest.
COA
Cost of Attendance
Consolidation
Loans from various lenders can be consolidated in to a single loan.
Cost of Education
See Cost of Attendance. The term cost of education is often used interchangeably with cost of attendance.
Default
The failure of a borrower to make and installment payment when due, or to meet other terms of the promissory note or when it can be concluded that the borrower no longer intends to honor the obligation to repay.
Deferment of Loan
A period during which the repayment of the principal amount of the loan is suspended as a result of the borrower meeting one of a number of requirements established by the law.
Dependent Student
A student who does not qualify as an independent student as determined by answers provided on the FAFSA. Dependent students must provide parental information on the FAFSA and can borrow less in their own name than an independent student. Parents of dependent students are eligible to apply for a PLUS loan which provides a larger amount of funding.
Disbursement
The process by which financial aid funds are made available to students for use in meeting educational and related living expenses.
Disclosure Statement
A statement set to the borrow by the lender, as well as at, or prior to, the beginning of the repayment period.
Electronic Funds Transfer (EFT)
Commonly called EFT, is a method by which funds are electronically transferred from one person or organization to another.
Entrance Interview
A process whereby student loan terms and conditions are provided. This gives the student an opportunity to understand all of the rights and responsibilities of becoming a student loan borrower.
Exit Counseling/Exit Interview
Includes a) general information on the average indebtedness of students at the institution; b)a repayment schedule projecting average monthly repayments at the student's interest rate; and c) a review of options for repayment and management of the debt (loan consolidation, refinancing, etc.).
Expected Family Contribution (EFC)
The figure that indicates how much of a family's financial resources should be available to help pay the expenses of postsecondary education. This figure is determined according to statutory formulas with data from the FAFSA.
FAA
Financial Aid Administrator
Federal Methodology (FM)
A statutory methodology established by Congress for use in determining a student's expected family contribution for campus-based and Stafford Loan program purposes.
Federal PELL Grant
An need-based program for undergraduate students who have not yet completed a first baccalaureate course of study. The FAFSA is the application and the results determine the student’s eligibility.
Federal Work Study (FWS)
An need-based program providing students with part-time employment opportunities.
Financial Aid Package
An offer by an educational institution to a student aid applicant of one or more forms of financial aids (loans, grants).
Financial Aid Transcript (FAT)
A form used by postsecondary institutions to collect data about any financial aid awards that a student received at other educational institutions.
Financial Need
The difference between the institution's cost of attendance and the family's ability to pay (the expected family contribution).
Forbearance
Permitting the temporary cessation of repayments of loans, allowing an extension of time for making loan payments, or accepting smaller loan payments than were previously scheduled.
Free Application for Federal Student Aid (FAFSA)
A free financial aid application, provided by the Department of Education, which gathers data to determine both Pell Grant eligibility and expected family contribution using the Federal Methodology.
GPA
Grade Point Average
Grace Period
The period of time that begins hen a loan recipient ceased to be at least half time and ends when the repayment period starts. Loan principal need not be paid and interest does not accrue during this period.
Grant Program
Gift aid programs that require neither repayment nor that work be performed.
Guaranty Agency
A state agency or private, non-profit institution or organization which administers the Stafford Loan and PLUS programs.
Guaranty Fee
An insurance fee charged by the guarantee agency and collected by the lender. The fee is usually passed on to the student or borrower. In most cases, the lender reduces the amount of the loan check by this amount.
Independent Student
A student is determined to be independent for Financial Aid purposes by the answers provided to several questions on the FAFSA. An independent student does not need to provide any parental information on the FAFSA and typically can borrow more money in their own name than a dependent student.
INS
US Immigration and Naturalization Service
ISIR
Institutional Student Information Record. This is the schools copy of the Student Aid Report (SAR) generated from the FAFSA.
Lender
The US Government in the case of Direct Loans, or a commercial bank, savings and loan association credit union, stock savings bank, trust company, or mutual savings bank for other types of student loan loans.
Loan
Loans are an advance of funds that is evidenced by a promissory note requiring the recipient to repay the specified amount(s) under prescribed conditions. Loans must by repaid with interest. The federal student loan programs (FFELP, Perkins and FDSLP) are a good method of financing the costs of a college education.
Loan Holder
Banks and other organizations that purchase loans from the institution that originally provided the funds to make the loans.
Loan Servicer
Organizations with which lenders contract to disburse loans, coordinate repayment with borrowers and collect delinquent loans.
Loan Terms
The period of enrollment for which a loan is approved for use in paying educational expenses incurred during that period of enrollment. Usually covers one academic year or a portion of the academic year.
MPN (Master Promissory Note)
The legal documents the borrower signs when obtaining a loan. It lists the conditions under which the loan is made and the terms under which the borrower agrees to pay back the loan. MPN’s are good for 10 years and is the borrowers promise to repay all loans made under that note.
Nontaxable Income
All income received that is not reported to the Internal Revenue Service or is reported but excluded from taxation. Such income would include but not be limited to any untaxed portion of Social Security benefits, welfare payments, untaxed capital gains, interest on tax-free bonds, dividend exclusion, and military and other subsistence allowances.
NSLDS (National Student Loan Data System)
A federal website (www.nslds.ed.gov) that contains all of the students federal loan information.
Origination Fee
A fee calculated on the amount borrowed for a Stafford Loan and charged to the student by the lender. This fee (like the guarantee fee) is usually subtracted form the amount of the student loan proceeds and offsets interest and special allowance payments made to the lender by the federal government.
Packaging
The process of assembling one or more financial aid awards of loans, grants, and/or scholarships, and employment for students
PLUS- Parent Loans for Undergraduate Students
Long-term loans made available to parents of dependent undergraduate or graduate students. Interest rates are linked to 52-week Treasury bill rates, but may not exceed 10%. May be used to replace the EFC.
Principal and Interest
Principal refers to the loan amount borrowed; interest refers to the amount charged for the use of the money over a period of years. Interest is usually stated as a percent.
Professional Judgment
This gives the Department of Financial Aidr authority to adjust data elements, on a case-by-case basis.
Promissory Note
See MPN
SAR (Student Aid Report)
The students copy of the results from the FAFSA.
Satisfactory Academic Progress
Satisfactory academic progress is a term used to describe a satisfactory rate of course completion. Regulations require that a student be making satisfactory academic progress to receive Title IV aid as determined by the course completion percentage and GPA.
Scholarship
A form of financial assistance that does not require repayment or employment. A "merit-based" scholarship may be made to a student who demonstrates or shows potential for distinction, usually in academic performance, at the institution. The term is also frequently used to refer to need-based state grant("state scholarship") programs. Scholarships may require both academic proficiency and demonstrated financial need.
SMART Grant
Pell Grant eligible 3rd and 4th year undergraduate students with a 3.0 GPA in selected majors may qualify for these funds.
Stafford Loan Program
Long term, variable rate, low interest loans administered by the Department of Education through state guaranty agencies. Funds are borrowed from eligible lenders (banks, credit unions, etc.).
SFA
Student Financial Assistance
SSN
Social Security Number
Subsidized Interest
Any interest paid by the federal government to the lender on behalf of an eligible student borrower under the Stafford Loan Program.
Subsidized Loan
A loan supported with funds paid by the federal government to the lender. In the Subsidized Stafford Loan program, the federal government makes interest payments on behalf of the student borrower during at least half-time enrollment and approved grace or deferment periods.
TEACH Grant
A Federal Grant program available to students who will teach in low income schools in a high need field. Additional criteria exist and these funds can convert to a Direct Unsubsidized Loan if all of the terms are not met. Interested students should contact their Financial Aid Administrator for more information.
Unsubsidized Loan
Interest accrued in the Unsubsidized Stafford Loan program is paid by the student. The interest payments can be made while the student is still in school (recommended) or it can be capitalized and repaid when the student enters repayment.
Untaxed Income
Income received that is not subject to income tax. Examples of such income are some Social Security benefits, welfare benefits, interest on tax-free bonds, military and other subsistence allowances.
VA (Veterans Administration)
The government agency responsible for administering the various Veteran’s Benefits available to students.
Variable Rate
This refers to a loan whose interest rate varies over the repayment term of the loan
Verification
The process of verifying information submitted on student aid applications through the comparison of specified documents to the data on applications for student aid.