A period of time schools use to measure a quantity of study. For example, a school's academic year may consist of a fall and spring semester during which a full-time undergraduate student must complete 24 semester hours. Academic years vary from school to school and even from educational program to educational program at the same school.
The school must have accreditation from an accrediting body recognized by the U.S. Department of Education to be eligible to participate in the administration of federal student aid programs. Accreditation means that the school meets certain minimum academic standards, as defined by the accrediting body.
The process where interest accumulates on a loan. When "interest accrues on a loan," the interest due on the loan is accumulating
An award letter from a school states the type and amount of financial aid the school is able to provide if the student is accepted for admission and registers to take classes at that school.
Individual who signed and agreed to the terms in the promissory note and is responsible for repaying a loan.
An amount of money available for spending that is based on a plan for how it will be spent.
With certain loans, such as subsidized Federal Direct Loans, the U.S. Department of Education pays the interest that accrues on these loans while the student is enrolled at least half-time and during periods of deferment. However, with subsidized loans in forbearance, unsubsidized loans or PLUS Loans, the student or the student's parents and graduate or professional degree students are responsible for paying interest as it accrues on these loans. When the interest is not paid, it is capitalized, or added to the principal balance, which increases the outstanding principal amount due on this loan. Interest that is capitalized and, therefore, added to the original amount of the loan subsequently accrues interest, adding an additional expense to the loan. Essentially, you will be paying intereset on your interest accrued.
Closed-end Installment Loan
A loan or extension of credit in which the proceeds are dispersed in full when the loan closes and must be repaid, including any interest and finance charges, by a specified date. The loan may require periodic principal and interest payments, or may require the entire payment of principal at maturity.
The process of combining one or more loans into a single new loan.
Cost of Attendance (COA)
The total amount it will cost you to go to school usually expressed as a yearly figure. It's determined using rules established by law. The COA includes tuition and fees; on-campus room and board (or a housing and food allowance for off-campus students); and allowances for books, supplies, transportation, loan fees and, if applicable, dependent care. It also includes miscellaneous and personal expenses, including an allowance for the rental or purchase of a personal computer. Costs related to a disability are also covered. The COA includes reasonable costs for eligible study-abroad programs as well. For students attending less than half-time, the COA includes tuition and fees and an allowance for books, supplies, transportation and dependent care expenses; but can also include room and board for up to three semesters or the equivalent at the institution, but no more than two of those semesters or the equivalent may be consecutive. Talk to the financial aid administrator at the school you're planning to attend if you have any unusual expenses that might affect your cost of attendance.
The amount of credit that a financial institution extends to a client. Credit limit also refers to the maximum amount a credit card company will allow someone to borrow on a single card. Credit limits are usually determined based on information contained in the application of the person seeking credit, or that person's credit rating.
Your credit report contains your credit history as reported to the credit reporting agency by lenders who have extended credit to you. The information in your credit report is also used to generate credit scores such as your FICO Scores. (myfico.com)
A statistically-derived numeric expression of a person's creditworthiness that is used by lenders to access the likelihood that a person will repay his or her debts. A credit score is based on, among other things, a person's past credit history. It is a number between 300 and 850 - the higher the number, the more creditworthy the person is deemed to be.
An amount of money borrowed by one party from another. Many corporations/individuals use debt as a method for making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.
A personal finance measure that compares an individual's debt payment to his or her overall income. A debt-to-income ratio (DTI) is one way lenders, including mortgage lenders, measure an individual's ability to manage monthly payment and repay debts. DTI is calculated by dividing total recurring monthly debt by gross monthly income, and it is expressed as a percentage.
Failure to repay a loan according to the terms agreed to when you signed a promissory note. For the Direct Loan programs, default is more specific it occurs if you fail to make a payment for 270 days if you repay monthly (or 330 days if your payments are due l ess frequently). The consequences of default are severe. Your school, the lender or agency that holds your loan, the state and the federal government may all take action to recover the money, including notifying national credit bureaus of your default. This may affect your credit rating for as long as seven years. For example, you might find it difficult to borrow money from a bank to buy a car or a house. In addition, the Internal Revenue Service can withhold your U.S. individual income tax refund and apply it to the amount you owe, or the agency holding your loan might ask your employer to deduct payments from your paycheck. Also, you may be liable for loan collection expenses. If you return to school, you're not entitled to receive additional federal student financial aid. Legal action also might be taken against you. In many cases, default can be avoided by submitting a request for a deferment, forbearance, discharge or cancellation, and by providing the required documentation.
A student who does not meet any of the criteria for an independent student. An independent student is one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court or someone with legal dependents other than a spouse.
Payment of loan proceeds by the lender. During consolidation, this term refers to sending payoffs to the loan holders of the underlying loans being consolidated.
You must be one of the following to receive federal student aid:
- U.S. citizen
- U.S. national (includes natives of American Samoa or Swain’s Island)
- U.S. permanent resident who has an I-151, I-551, or I-551C (Permanent Resident Card)
If you’re not in one of these categories, you must be an eligible non-citizen, and you must have an Arrival-Departure Record (I-94) from U.S. Citizenship and Immigration Services (USCIS) showing one of the following designations:
- "Asylum Granted
- "Cuban-Haitian Entrant, Status Pending"
- "Conditional Entrant" (valid only if issued before April 1, 1980)
- Victims of human trafficking, T-visa (T-2, T-3, or T-4, etc.) holder
- "Parolee" (You must be paroled into the United States for at least one year and you must be able to provide evidence from the USCIS that you are in the United States for other than a temporary purpose and that you intend to become a U.S. citizen or permanent resident.)
If you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), you aren’t eligible for federal student aid.
If you’re in the United States on certain visas, including an F1 or F2 student visa, or a J1 or J2 exchange visitor visa, you’re not eligible for federal student aid.
Also, persons with G series visas (pertaining to international organizations) are not eligible. For more information about other types of visas that are not acceptable, check with your school’s financial aid office.
Citizens and eligible non-citizens may receive loans from the FFEL Program at participating foreign schools. Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands and the Republic of Palau are eligible only for Federal Pell Grants, Federal Supplemental Educational Opportunity Grants or Federal Work-Study. These applicants should check with their schools’ financial aid offices for more information.
A program of organized instruction or study that leads to an academic, professional, or vocational degree or certificate, or other recognized educational credential. To receive federal student aid, you must be enrolled in an eligible program*, with two exceptions:
- If a school has told you that you must take certain course work to qualify for admission into one of its eligible programs, you can get a Stafford Loan for up to 12 consecutive months while you’re completing that preparatory course work. You must be enrolled at least half time*, and you must meet the usual student aid eligibility requirements.
- If you’re enrolled at least half time in a program to obtain a professional credential or certification required by a state for employment as an elementary or secondary school teacher, you can get a Federal Work-Study, Federal Perkins Loan, a Stafford Loan or your parents can get a PLUS Loan, while you’re enrolled in that program.
Federal Application for Federal Student Aid. (www.fafsa.gov)
Federal Direct Graduate PLUS Loan
PLUS loans are federal loans that graduate or professional degree students and parents of dependent undergraduate students can use to help pay education expenses. The U.S. Department of Education makes Direct PLUS Loans to eligible borrowers through schools participating in the Direct Loan Program. (studentaid.ed.gov)
Federal Direct Stafford Loan
Subsidized and unsubsidized loans are federal student loans for eligible students to help cover the cost of higher education at a four-year college or university, community college, trade, career or technical school. The U.S. Department of Education offers eligible students at participating schools Direct Subsidized Loans and Direct Unsubsidized Loans. Some people refer to these loans as Stafford Loans or Direct Stafford Loans. (studentaid.ed.gov)
Federal Student Loan
Loans made by the federal government, called federal student loans, usually offer borrowers lower interest rates and have more flexible repayment options than loans from banks or other private sources. (studentaid.ed.gov)
Fair Isaac Corporation (FICO)
Fair Isaac Corporation is an analytics software company. Their formula for determining consumers credit scores, FICO scores, are the most prominently used by lenders.
Financial Aid Administrator (FAA)
An individual who works at a college or career school and is responsible for preparing and communicating information on student loans, grants or scholarships and employment programs. The FAA and staff help students apply for and receive student aid. The FAA is also capable of analyzing student needs and making professional judgment changes when necessary.
Financial Aid Package
The total amount of financial aid (federal and nonfederal) a student is offered by the school. The financial aid administrator at a postsecondary institution combines various forms of aid into a package to help meet a students education costs. Using available resources to give each student the best possible package of aid is one of the aid administrators major responsibilities. Because funds are often limited, an aid package might fall short of the amount a student needs to cover the full cost of attendance. Also, the amount of federal student aid in a package is affected by other sources of aid received (scholarships, state aid, etc.).
An interest rate that does not change through the course of a loan.
General Education Development (GED) Certificate
This is a certificate students receive if they've passed a specific, approved high school equivalency test. Students who have a GED may still qualify for federal student aid. A school that admits students without a high school diploma must make available a GED program in the vicinity of the school and must inform students about the program.
After borrowers graduate, leave school, or drop below half-time enrollment, loans that were made for that period of study have several months before payments are due. This period is called the "grace period." During the grace period, no interest accrues on subsidized loans. Interest accrues on unsubsidized loans during grace periods, and this interest is capitalized when borrowers' loans enter repayment.
Financial aid, often based on financial need, that does not need to be repaid (unless, for example, you withdraw from school and owe a refund). (studentaid.ed.gov)
At schools measuring progress in credit hours and semesters, trimesters or quarters, half-time is at least six semester hours or quarter hours per term for an undergraduate program. At schools measuring progress by credit hours but not using semesters, trimesters or quarters, half-time is at least 12 semester hours or 18 quarter hours per year. At schools measuring progress by clock hours, half-time is at least 12 hours per week. Note that schools may choose to set higher minimums than these. You must be attending school at least half-time to be eligible for a Stafford Loan. Half-time enrollment is not a requirement to receive aid from the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study and Federal Perkins Loan programs.
An independent student is one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court or someone with legal dependents other than a spouse.
A loan expense charged by the lender and paid by the borrower for the use of borrowed money. The expense is calculated as a percentage of the unpaid principal amount (loan amount) borrowed.
The amount charged expressed as a percentage of principal by a lender to a borrower for the use of assets. Interest rates are typically noted on an annual basis known as the Annual Percentage Rate.
An internship is a temporary position with an emphasis on on-the-job training rather than merely employment, and it can be paid or unpaid.
An arrangement in which a lender gives money or property to a borrower, and the borrower agrees to return the property or repay the money, usually along with interest, at some future point(s) in time. Usually, there is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the borrower may not repay a loan.
The practice of buying and holding a security, portfolio or investment strategy for a term of longer than one year. The exact number of years varies according to the usage.
National Student Loan Data System (NSLDS)
NSLDS is the database for federal student financial aid where you can find out about the aid you've received. If you've only just applied for aid, you won t find any information on NSLDS yet. NSLDS receives data from schools and U.S. Department of Education programs. The NSLDS Web site is generally available 24 hours a day, seven days a week. By using your FSA ID, you can get information on federal loan and Pell Grant amounts, outstanding balances, the status of your loans and disbursements made. You can access NSLDS at www.nslds.ed.gov.
The process of analyzing a students financial need, known as need analysis, focuses on determining how much the family reasonably can be expected to contribute towards the student's education. Traditionally, determination of an applicant's need is achieved by collecting information about the family's income, assets and living expenses. For the federal student aid programs, the law specifies a need analysis formula that produces the Expected Family Contribution (EFC). The EFC and the college's cost of attendance are used by the postsecondary school to establish the student's need as well as to award grants, campus-based aid, and subsidized loans. The college might ask you to complete other paperwork to determine your need for non-federal aid.
A short-term loan, generally for $500 or less, that is typically due on your next payday.
The amount of money borrowed by the student. Interest is charged on this amount.
Private Student Loan
These loans are nonfederal loans, made by a lender such as a bank, credit union, state agency or a school. (studentaid.ed.gov)
A promissory note is a binding legal document you sign when you get a student loan. It lists the conditions under which you're borrowing and the terms under which you agree to pay back the loan. It will include information on how interest is calculated and what deferment and cancellation provisions are available to the borrower. It's very important to read and save this document because you'll need to refer to it later when you begin repaying your loan or at other times when you need information about provisions of the loan, such as deferments or forbearances.
A regular student is one who is enrolled or accepted for enrollment at an institution for the purpose of obtaining a degree, certificate or other recognized education credential offered by that institution. Generally, to receive federal student financial aid from the programs discussed in this guide, you must be a regular student. There are exceptions to this requirement for some programs.
The act of paying back money previously borrowed from a lender. Repayment usually takes the form of periodic payments that normally include part principal and part interest in each payment.
Arrangement which allows for the loan amount to be withdrawn, repaid and redrawn again in any manner and any number of times until the arrangement expires. Credit cards, loans and overdrafts are revolving loans.
Satisfactory Academic Progress
To be eligible to receive federal student financial aid, you must meet and maintain your school's standards of satisfactory academic progress toward a degree or certificate offered by that institution. Check with your school to find out its standards.
Money awarded to students based on academic or other achievements to help pay for education expenses. This money does not have to be repaid. (studentaid.ed.gov)
Selective Service Registration
In order to be eligible for federal student aid you must register with the Selective Service if:
- You are a male born on or after Jan. 1, 1960, and
- You are at least 18 years old, and
- You are not currently on active duty in the U.S. Armed Forces.
Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands or the Republic of Palau are exempt from registering.
A share certificate is a written document signed on behalf of a corporation, and serves as legal proof of ownership of the number of shares indicated. Also referred to as a "stock certificate".
Student Aid Report
Your Student Aid Report (SAR) summarizes the information you submit on your Free Application for Federal Student Aid (FAFSA) and provides you with your Expected Family Contribution (EFC). After you apply for federal student financial aid, you'll get your FAFSA results in an e-mail report within a few days after your FAFSA has been processed or by mail in a few weeks. This report is called a Student Aid Report or SAR. Your SAR details all the information you provided on your FAFSA. If there are no corrections or additional information you must provide, the SAR will contain your Expected Family Contribution (EFC), which is the number that's used to determine your eligibility for federal student aid. Whether you applied online or by paper, we will automatically send your data electronically to the schools you listed on your FAFSA.
A loan for which a borrower is not responsible for the interest while in an in-school, grace, or deferment status. Subsidized loans include Direct Subsidized, Direct Subsidized Consolidation Loans, Federal Subsidized Stafford Loans and Federal Subsidized Consolidation Loans.
Investment earnings such as interest, dividends or capital gains that accumulate tax-free until the investor withdraws and takes possession of them. The most common types of tax-deferred investments include those in individual retirement accounts (IRAs) and deferred annuities.
The charge or fee for instruction as at a private school or college or university.
A loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan. Unsubsidized loans include: Direct Unsubsidized Loans, Direct PLUS Loans, Direct Unsubsidized Consolidation Loans, Federal Unsubsidized Stafford Loans, Federal PLUS Loans and Federal Unsubsidized Consolidation Loans.
An interest rate on a loan or security that fluctuates over time because it is based on an underlying benchmark interest rate or index that changes periodically.
Verification is a process where your school confirms the data reported on your FAFSA. Your school has the authority to contact you for documentation that supports income and other information that you reported.
A Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the student's course of study.