Financial Aid Glossary

When it comes to financial aid, there are lots of terms and abbreviations that may be new to you! We've provided this glossary to help you better understand what all these new words, phrases, and abbreviations mean.

Glossary

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Accrued Interest: Interest that accumulates on the unpaid principal balance of a loan

Anticipated Graduation Date (AGD): The date the school/lender anticipates the student will graduate..

Award Letter: A document issued by a school's Financial Aid Office listing the types of financial aid for which a student is eligible. It also includes information about the cost of attendance and the terms of the offer.



Bankruptcy:A legal process that applies to a person who cannot meet their financial obligations. The person's remaining assets and property is administered for their creditors or is distributed among them.

Borrower:The person who applies for a loan and receives the proceeds of a loan.

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Campus-Based Aid: Financial aid programs administered by the university, including the Perkins Loan Program, theFederal Supplemental Educational Opportunity Grant, and the Federal Work-Study Program.

Cancellation: The release of a borrower's obligation to repay a loan.

Capitalization: Addition of unpaid interest to the principal balance of a loan, which increases the total repayment amount.

Consolidation: Combination of student loans from multiple lenders into one loan with a fixed interest rate. While this can help reduce the monthly payment amount and increase the repayment term, it can also increase the amount of interest paid over time.

Cost of Attendance (COA): The total cost of attending a college or university for one academic year, including tuition, fees, room, board, books, supplies, transportation, and personal needs.

Credit Report:A report includes information about your borrowing history, used in determining eligibility for loans. A copy of your credit report can be attained from the Credit Reporting Agencies

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Default: Failure to repay a loan according to the terms agreed upon by the borrower.

Deferment:A period during which a borrower who meets certain criteria may postpone loan payments. The student is responsible for paying the interest on unsubsidized loans during this period.

Delinquency: Failure to make monthly loan payments by their due date.

Dependent: A dependent student is not married, is under 24 years of age, has no legal dependents, is not an orphan or ward of the court, nor a veteran of the U.S. Armed Forces. Parents of a dependent student must submit parental information on the FAFSA for their son or daughter to be considered for financial aid.

Disbursement: The release of loan funds to the school/borrower.

Discharge: The release of a borrower from the obligation to repay a loan.

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E-Signature (Electronic Signature): Online consent form and application that has the same legal validity as a written signature.

Expected Family Contribution (EFC): The amount that a family is expected to pay toward college expenses. This is calculated by using a formula to analyze information submitted on the Free Application for Federal Student Aid (FASFA).

Electronic Funds Transfer (EFT): A transfer of funds that is completed using computers or data transmitters, as opposed to issuing a paper check.

Endorser: A person who signs the promissory note in addition to the borrower and is responsible if the borrower does not repay.

Enrollment Status: An indication of whether a student is attending school full-time or part-time.

Entrance Counseling: A requirement for borrowers of federal educational loans, during which the borrower's rights and responsibilities are discussed. This must be completed before funds are disbursed.

Exit Counseling: A requirement for borrowers of federal educational loans who are graduating or withdrawing from school. The borrower's rights and responsibilities are reviewed.

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Financial Aid Administrator (FAA): An employee of a college or university who is involved in the distribution of financial aid awards.

Free Application for Federal Student Aid (FAFSA): Form that must be completed to apply for federal student loans, grants, and work-study.

Financial Aid: Financial assistance in the form of scholarships, grants, work-study, and loans for educational purposes.

Financial Aid Transcript : A record of all financial aid received by a student at each school attended.

Financial Need: The difference between the cost of attendance and the expected family contribution, minus other aid. Financial need determines the loan amount for which a student qualifies.

Fixed Interest: A loan in which the interest rate remains the same for the entire life of the loan.

Forbearance: Temporary postponement of student loan payments, or a temporary reduction in the minimum monthly payment.


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Grace Period: Period of time between the date that the borrower graduates or withdraws from school and the date that repayment begins, typically six months.

Guarantor or Guarantee Agency: A state or private organization that insures student loans for lenders.

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Holder: The institution that owns a loan.

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Independent Student: A student who is either married, over the age of 24, enrolled in a graduate program, has legal dependents other than a spouse, is an orphan, or a war veteran of the U.S. Armed Forces.

In-School Status: Period during which a borrower is attending school at least half-time.

Insurance Premium: Fee charged for default insurance on guaranteed student loans.

Interest: A fee charged for borrowing money. Interest is calculated as a percentage of the principal loan amount.

Interest-Only Payment: A payment that covers only the interest on a loan and none of the principal balance.

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Lender:A financial institution that provides funds for student loans.

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Master Promissory Note (MPN): A legally binding contract that a student signs when taking out a Subsidized Stafford, Unsubsidized Stafford, or PLUS loan. It includes the terms and conditions under which the borrower promises to repay the student loan, along with their rights and responsibilities.

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Origination: The processing of the student loan application and disbursement of loan proceeds performed by the lender or a servicing agency.

Origination Fee: Fee paid to the federal government (or for private loans, to the originator of the loan) and deducted from loan proceeds to offset the costs of administering student loans.

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Parent Loans for Undergraduate Students (PLUS): Loans insured by the federal government for parents of dependent students. Credit check is required. These loans are not insured.

Pell Grant Program: The largest federal grant program. Eligibility and award amounts are determined by the college using federal guidelines.

Perkins Loan: Federally-insured loan with a low interest rate and an extended repayment period. These are funded by the federal government and awarded by the school.

Prepayment: Payment by a borrower for more than the minimum amount due.

Prime Rate: The prime rate is the lending interest rate banks charge their most steady, credit-worthy customers [usually large, conservatively financed businesses]. The prime rate is the same for almost all major banks.

Principal: The amount borrowed or remaining unpaid.

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Repayment:Period during which a borrower is obligated to pay back a student loan.

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Satisfactory Academic Progress: To be eligible to receive federal student aid, a student must maintain satisfactory academic progress, based on the school's written standard, toward a degree or certificate.

Scholarships: Funds used to pay for higher education, usually based on criteria such as academics, achievements, hobbies, talents, membership in various groups, or career goals. Scholarships do not have to be repaid.

Secondary Market: An organization that buys loans from lenders, providing them with funds to make new loans.

Servicer: An organization that performs the administrative tasks involved with loans, such as collecting payments.

Stafford Loans: Loans, both subsidized (need-based) and unsubsidized (non need-based), guaranteed by the federal government to fund education.

Student Aid Report (SAR): A federal document summarizing the information reported in the FAFSA. The student's eligibility for aid is indicated by the Expected Family Contribution (EFC), which is printed on the front of the SAR.

Subsidized Stafford Loan: Need-based loan in which interest is paid by the federal government while the student is in school and during grace or deferment periods.

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T-Bills: Stands for Treasury Bills, which are securities sold to the public to raise funds needed by the Federal Government. New T-Bill rates are set throughout the year. Every year Student Loan interest rates are set in June based on the current T-Bill rate.

Term: A length of time in which to repay a loan.

Tuition: The cost to attend classes and use facilities at a college or university.

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Unsubsidized Stafford Loan: Non need-based loan on which the federal government does not pay interest.

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Disclosures:

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