Glossary of Financial Aid Terms
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The college or career school meets certain minimum academic standards, as defined by an authorizing body recognized by the U.S. Department of Education. Schools must be accredited to be eligible to participate in federal student aid programs.
The interest that accumulates and is payable on the unpaid principal balance of a loan.
Adjusted Gross Income (AGI)
A figure based on tax return information that is used for determining eligibility for an Economic Hardship Deferment and Income-Driven Repayment (IDR). It would include taxable income such as:
- Income from employment
- Unemployment income
- Dividend income
- Interest income
It does not include untaxed income such as Supplemental Security Income, child support, or federal or state public assistance.
Payment allocation is how payments are distributed across each loan when a borrower has multiple loans.
Also called a private or private education loan, this is a non-federal student loan that is issued through a bank, credit union, school or an organization affiliated with the school. An alternative loan may have a variable interest rate, require a credit check or co-signer and it may not provide the same benefits as federal student loans.
Amount Past Due
The first day after you miss a student loan payment, your loan becomes past due or delinquent. This is the total amount that remains unpaid.
Payment application is the process of applying a payment to the interest, principal, and late fees (if applicable) on a loan. Not necessarily in that order. We cannot make a borrower payment satisfy principal only if outstanding interest exists.
A school official, such as a member of the registrar's office, who is authorized to provide certification of enrollment.
This individual is responsible for repaying a loan. The borrower has agreed to the loan's terms and conditions by signing a promissory note or credit agreement.
Also called the bursar's, student account, student aid, or comptroller's office, this office is usually responsible for the billing and collection of the school's charges.
This is the addition of unpaid accrued interest to the principal balance of a loan. Capitalization increases the outstanding principal amount due on the loan. After capitalization, interest accrues based on the increased balance which could add additional expense to the loan.
Through consolidation, you can combine numerous student loans into a single loan with a new first disbursement date, repayment schedule, and interest rate.
Consolidation Loan Group
Subsidized and unsubsidized portions of a federal consolidation loan may be assigned individual loan numbers. However, these subsidized and unsubsidized portions are serviced together and considered to be a single consolidation loan.
Any person who signs the promissory note agreeing to be jointly and separately responsible to repay the loan. This means the borrower and co-maker have equal rights and responsibilities for repayment of the loan.
The need for a co-signer varies by type of loan and lender. You may benefit from a creditworthy co-signer if you do not meet the minimum credit criteria. Having a co-signer may increase your chances that the loan will be approved and, perhaps, you may receive a better interest rate.
Cost of Attendance (COA)
The COA is the total cost of college, usually expressed as the amount for 1 academic year. Federal law determines what costs comprise the COA, such as tuition and fees, on-campus room and board (or a reasonable allowance for off-campus students), and allowances for books, supplies, transportation, loan fees, and, if applicable, dependent care. The COA also includes costs related to a disability and other personal expenses, such as an allowance for the documented rental or purchase of a personal computer.
Current Principal Balance
This is the remaining principal amount due on the loan, including any capitalized interest. This does not include accrued interest and unpaid fees (if applicable).
This is the total amount due for the billing cycle. The amount listed may include principal, accrued interest and any unpaid fees (if applicable). This should not be considered a pay off amount.
The date that a lender or U.S. Department of Education releases the loan funds to a student or school.
Default is the failure to repay a loan according to the terms agreed upon when signing the promissory note or credit agreement. Default occurs after a predetermined number of days of nonpayment that depends on lender and loan type.
This authorized temporary suspension of repayment is granted only under certain circumstances. For subsidized federal loans, the government pays the interest during a deferment. For all other loans, the borrower is responsible for paying the interest that accrues during a deferment.
Delinquency is the failure to make scheduled monthly loan payments when they are due. Also, see Amount Past Due.
When you sign up for Direct Debit, we automatically withdraw your student loan payments from your checking or savings account.
A loan that is part of the William D. Ford Federal Direct Loan Program (FDLP). Eligible students and parents borrow Direct Loans directly from the U.S. Department of Education. The FDLP includes subsidized and unsubsidized Stafford Loans, PLUS Loans to parents of dependent students, PLUS Loans to graduate and professional students, and Consolidation Loans.
Disbursement is the transfer of loan funds from a lender or U.S. Department of Education to a school or to a student.
The release of the obligation to repay a portion or all of your loans. For any portion of your loans that are discharged:
- You will no longer be required to repay the portion that was discharged
- You may be eligible for a refund of payments you have made
- We will report the discharge to all consumer reporting agencies
For the IBR plan, discretionary income is the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence.
An endorser is any person who agrees to repay a loan if the borrower does not repay it.
Expected Family Contribution (EFC)
Commonly referred to as the family's "ability to pay," the EFC is one component used to determine a student's need for federal student aid and/or school-based financial aid. The EFC is a dollar amount calculated using a formula established by the federal government. It is based on the information you provide on the FAFSA® (Free Application for Federal Student Aid).
FAFSA® (Free Application for Federal Student Aid)
FAFSA® is the form students must complete to apply for federal financial aid, for most state grants and scholarships, and for many school-based student financial aid programs.
FDLP (Federal Direct Loan Program)
Under FDLP, federal student loans are issued through the U.S. Department of Education or schools or contractors who work for the U.S. Department of Education. FDLP eliminates the middleman (the third-party lender) that was part of FFELP (Federal Family Education Loan Program). As of July 1, 2010, FDLP is the sole source of all federal educational loans for students and parents.
Federal Family Education Loan Program (FFELP)
This was a loan program where private lenders (banks, credit unions, savings, and loan associations) provided funds for FFELP Loans, and the federal government guaranteed them against default. FFELP included subsidized and unsubsidized Stafford Loans, PLUS Loans to parents of dependent students, PLUS Loans to graduate and professional students, and Consolidation Loans. The statutory authority for lenders to make new loans under FFELP ended as of July 1, 2010.
Financial Aid Office
This office is responsible for awarding aid and providing counseling.
Financial Aid Notice
A financial aid notice, also called an offer letter, is a way to notify applicants of the financial aid being offered, including the type (grants, scholarships, loans, and other programs) and amount of aid. It also provides specific program information and outlines student responsibilities and the conditions of the award.
Financial need is the difference between the school's cost of attendance and the student's expected family contribution (EFC).
Fixed Interest Rate
A fixed interest rate does not change during a defined period.
This authorized temporary reduction or suspension of repayment is granted only under certain circumstances. For both subsidized and unsubsidized federal loans, the borrower is responsible for paying the interest that accrues during forbearance. Unpaid interest may be capitalized (added to your loan principal balance) at the end of the forbearance period.
Grace is the period before the first payment on a loan is due. The grace period begins the day after the student graduates, leaves school, or drops below half-time status and ends the day before repayment begins. Not all loans include a grace period. For those that do, grace usually is 6 months, but it may be more or less than that depending on the type of loan.
Graduate PLUS Loan
This type of federal loan is available to graduate or professional students to pay for their education. Borrowers may need to be creditworthy to receive this loan. There is no grace period associated with this loan. Graduate PLUS loan borrowers used to be able to select their own lender, but as of July 1, 2010, graduate PLUS loans are disbursed only through the U.S. Department of Education.
This type of student is enrolled in a program or course of study above the baccalaureate level after having already completed the equivalent of at least 3 years of full-time study.
These financial aid awards are generally awarded based on financial need and typically do not have to be paid back.
A state or private nonprofit organization that has an agreement with the U.S. Department of Education to administer the FFELP loan guarantee program under the Higher Education Act. A guarantor insures FFELP loans by repaying the loan holder when a loan defaults, and then collects the defaulted loan from the borrower.
Interest is how much you must pay to borrow money from a lender or the U.S. Department of Education. The interest that accrues on a loan becomes payable on the loan's unpaid principal balance.
You receive an interest notice—instead of a bill—if your loan is in deferment, forbearance, or grace.
An interest notice differs from a bill because you're not required to make a payment. However, making payments on your interest notice can minimize the amount of interest that will capitalize when your account enters repayment.
This is the rate at which interest accrues on your student loan. Interest accrues daily from when a loan is first disbursed unless there is a period when the federal government subsidizes or pays the interest.
Last Payment Received
This is the date we received the last payment you made to us.
Late Fees Assessed
Total amount of late fees assessed as of the billing date.
A lender is the bank or other institution that provides the money for your student loan. In the case of federal Direct Loans, the lender is the U.S. Department of Education.
The loan type that determines eligibility for repayment plans, deferments, forbearances, etc.
Number used to reference a specific loan.
Master Promissory Note (MPN)
A legal and binding contract that contains the loan's terms and conditions, including the borrower's responsibilities for repaying the loan.
The scheduled installment amount due each month.
Total amount for all disbursements when there are multiple disbursements for the same loan. This amount excludes interest and fees.
The amount of interest that has not yet capitalized (been added to your principal balance).
Paid Ahead/Partially Paid Ahead
If you make a payment larger than the current monthly installment amount, and satisfy a full future installment, it may result in a "Paid Ahead" status on the loan. As a result, the total amount due on your next bill may reflect $0.
If the additional amount covers a portion of your next monthly installment, it will result in a "Partially Paid Ahead" status on the loan. As a result, the total amount due on your next bill may be the amount not already satisfied.
Paperless Billing (eBilling) is a convenient alternative to paper-based billing statements. Get a monthly email payment reminder with a link to your online account. Simply sign in and pay or view your bill.
For purposes of federal loan eligibility, a “parent” means your legal (biological or adoptive) parent or stepparent, or a person that the state has determined to be your legal parent. The following people are not your parents unless they have adopted you:
- Foster parents
- Legal guardians
- Siblings, and/or
- Other close relatives
Parent PLUS Loan
This type of federal loan is available to parents of dependent undergraduate students. Parent PLUS loan borrowers used to be able to select their own lender, but as of July 1, 2010, parent PLUS loans are disbursed only through the U.S. Department of Education.
Total amount unpaid since your last bill (also called Amount Past Due).
Power of Attorney
Power of attorney is a legal document granting authority to a person or entity to act for another in private, legal, or financial matters.
The principal balance on your billing statement includes the original amount you borrowed, plus any applicable loan fees, less any principal payments. It does not include accrued interest but may include interest that was capitalized when your loans entered repayment.
See the definition for Alternative Loan.
This type of student is enrolled in a professional degree program after having already completed the equivalent of at least 3 years of full-time study.
Promissory Note / Credit Agreement
This legal and binding contract contains a loan's terms and conditions, including the borrower's responsibilities for repaying the loan.
An amount related to part of a whole number.
Example: If you have 5 loans for $1,000 each, your total balance is $5,000. Then one loan is 20% of the total portion of your loan balance.
Your loan servicer will send you a Repayment Disclosure when it's time to start repaying your loan. The Repayment Disclosure will detail the amount of your monthly payment, the projected amount of interest, the principal balance, and more.
This type of financial award usually does not have to be paid back. It is given to students who demonstrate high achievement in areas such as academics, athletics, music, art, or other disciplines.
The servicer is the party who communicates most with you and oversees all loan administration, including processing payments and managing deferments, etc. A servicer can be the original lender, a new lender who has purchased the loan from the original lender, or a 3rd party who administers the loan program on behalf of a lender.
This is a common type of federal loan for students. Although Stafford borrowers used to be able to select their own lender, as of July 1, 2010, all Stafford loans are now disbursed through the U.S. Department of Education.
For this type of federal loan, the government typically pays the interest during in-school, grace, and authorized deferment periods.
Title IV Loan
A category of federal education loans established under the Higher Education Act of 1965, as amended. Title IV loans include loans made under the FFELP, FDLP, and Perkins loan program.
The sum of the current due, late fees, and any prior amount past due.
This type of postsecondary student is enrolled in an undergraduate course that usually does not exceed 5 years.
For this type of federal loan, the borrower is responsible for paying the interest that accrues from the date of disbursement until the date the borrower pays the loan in full.