Glossary

A

Academic Competitiveness Grant (ACG)
A grant awarded to full-time, eligible, undergraduates, who receive Federal Pell Grants and are U.S. citizens. They must also have completed a secondary school program of study and be enrolled in at least a two-year program acceptable for full credit toward a bachelor’s degree or enrolled in a graduate degree program that includes three academic years of undergraduate education.

Automated Clearing House (ACH)
A secure, private electronic payment transfer network that connects all U.S. financial institutions. This network enables electronic payments, such as automatic payroll deposits and debit card purchases or payments, to be handled and processed.

Auxiliary Loan to Assist Students (ALAS)
A type of federally insured student loan for independent undergraduate, graduate and professional students. The Higher Education Amendments of 1986 repealed the ALAS program and authorized two separate loan programs in its place—Supplemental Loans for Students (SLS) for graduate students, professional students and independent undergraduates, and PLUS loans for parents of dependent students.

Award Letter
See Financial Aid Package

B

Bridge Loans
Bridge loans provide short-term financing for tuition payments, books, and supplies while the student is waiting to receive their college financial aid. Contact your college’s financial aid office to obtain more info on bridge loan options.

Bursar
The campus office where student tuition and fee payments are made.

C

Capitalization / Capitalized Interest
Adding unpaid accrued interest to the principal balance of a loan, thereby increasing the total debt outstanding. This accrued interest will generally be included in the monthly payment of the loan.

Co-maker
An individual other than the borrower who signs a promissory note and/or other loan documents and assumes equal responsibility to pay the loan if the borrower defaults or becomes delinquent. See also Cosigner.

Consolidation Loan
Refinancing one or more education loans into a new loan with a new payment term and interest rate. Consolidation loans typically reduce the monthly payment obligations and extends the term of the loan.

Cosigner
An individual other than the borrower who signs a promissory note and/or other loan documents and assumes equal responsibility to pay the loan if the borrower defaults or becomes delinquent. See also Co-maker.

Cost of Attendance (COA)
A student’s total cost to attend college. This amount 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 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 only tuition and fees and an allowance for books, supplies, transportation, and dependent care expenses. Students should talk to their financial aid office if they have any unusual expenses that might affect their cost of attendance.

D

Default
The failure to repay a loan in accordance with the terms of the promissory note and other loan documents. Default occurs if payment has not been made within 270 days after the due date on an account for Title IV loan program loans. Default usually means your loan will be reported to credit bureaus and various steps will be taken to collect your debt. To prevent a default status, consult with your lender to discuss deferment or forbearance options.

Deferment
An approved temporary suspension of loan payments based on certain events and criteria. (Interest continues to accrue during the deferment period on any unsubsidized loans).

Delinquency
The failure to make a scheduled monthly loan payment when it is due.

Dependent
Someone who depends on another for more than half of his or her financial support.

Direct Loans
See Federal Direct Student Loan Program.

Disbursement
The release of loan funds by a lender to a borrower or school. For Stafford and PLUS loans, the school schedules the disbursement based on academic year and federal regulations. For a consolidation loan, disbursement is when the consolidating lender transfers funds to the current holder of the loan being consolidated.

Discharge
The release of a borrower from the obligation to pay all or a portion of the loan. To qualify, a borrower must meet specific conditions and obtain approval from the holder of the loan. For example, if the borrower dies or becomes disabled, then the loan can be discharged.

Disclosure Statement
A statement sent by the lender to the borrower (when the loan is made) detailing the total loan amount, any finance charges, interest rates and expected monthly payment.

E

Electronic Signature (E-Sig)
A paperless way to sign a document that may include using your FAFSA pin number, or some other password protected process set up to eliminate the need for an actual signature.

Extended Repayment Plan
Repayment plan available to FFELP borrowers who received their first loan on or after October 7, 1998 and whose loans total over $30,000. Under this plan, payments can be made over a payment period of 25 years.

Electronic Fund Transfer (EFT)
Any electronic transfer of funds from a bank to a school.

Entrance/Exit Interview
Counseling of a borrower, provided by the school, as required by the federal government. Generally the Entrance Interview is required prior to Federal Stafford Loan funds being transmitted to the student while the Exit Interview is completed when the student graduates or withdraws from school. The Exit Interview typically advises the borrower about rights, responsibilities and repayment options regarding the loan. Student signatures are required on both Entrance and Exit documents to certify that the student has completed the interviews; this is a federal regulation and required of all students with federal student loans.

Expected Family Contribution (EFC)
The dollar amount that a family is expected to pay toward a student’s educational costs. The federal calculation is based on family earnings, assets, number of students in college, and family size.

Extended Repayment Plan
Repayment plan available to FFELP borrowers who received their first loan on or after October 7, 1998 and whose loans total over $30,000. Under this plan, payments can be made over a payment period of 25 years.

F

Federal Direct Student Loan Program (FDSLP)
Education loans made directly by the federal government rather than private lenders. Also known as the William D. Ford Direct Loan Program. If your school is a "Direct" school, you must borrow Stafford loans and PLUS loans from the governement directly. Contact your college Financial Aid office for more information about this.

Federal Family Education Loan Program (FFELP)
Education loans financed by private lenders, guaranteed by state or private nonprofit guaranty agencies, and reinsured by the federal government.

Federal Stafford Loan
A loan made to a student to cover tuition costs. Federal Stafford Loans are made available to students by the Department of Education (through the Direct Loan Program) and by private lenders (through the Federal Family Education Loan Program). Stafford loans do not have to be repaid until the student ceases (at least part time) enrollment at an eligible post secondary institution. These are low-interest rate loans; the rate is determined by the federal government and can change in July of each year. There is no bottom percentage rate. However, there is an interest rate cap of 8.25%.

Federal Supplemental Educational Opportunity Grant (FSEOG)
A grant awarded to undergraduate students with exceptional financial need (those with the lowest Expected Family Contribution numbers)

Financial Aid
Grants, scholarships, work study and federal loans (such as Stafford, Grad PLUS and PLUS loans).

Financial Aid Package
A letter sent by colleges that indicates the total financial aid a student is offered by the school. Also known as the award letter.

Financial Need
The Cost of Attendance (COA) minus the Expected Family Contribution (EFC).

Fixed Interest Rate
An interest rate that remains the same for the life of the loan.

Forbearance
If you are temporarily unable to meet your repayment schedule, and not eligible for a deferment, you may be granted a forbearance for a limited and specified period. Forbearance is a period of time during which principal payments are suspended and only interest accrues. This interest can either be paid or included in the repayment terms when the forbearance expires. Forbearance is generally granted in up-to-12-months renewable increments. If you are still unable to meet interest-only payments during forbearance, you may go into default status.

Forgiveness
Enabling the borrower to obtain a reduction in the loan amount owed due to a qualifying teaching service or child care service as authorized by Title IV, Part B of the Higher Education Act. Borrower must obtain approval from the holder of the loan.

Free Application for Federal Student Aid (FAFSA)
The FAFSA is a comprehensive form used to determine the borrower's eligibility for federal, state and some institutional aid programs. The FAFSA requires information about the student’s and family’s income, income taxes, assets, student school enrollment and more.

G

Grace Period
Specified period of time between the date a student graduates or drops below half-time status and the date loan repayment begins. On Stafford Loans the grace period is 6 months. On Perkins Loans the grace period is 9 months. PLUS Loans and FFELP Consolidation Loans do not have a grace period. Interest continues to accrue during the grace period only on unsubsidized loans.

Grad PLUS Loan
A Federal PLUS Loan designed for Graduate Students; PLUS loans may be issued by private lenders under the FFELP or by the U.S. Department of Education under the Direct Loan Program to parents in order to help cover the student’s cost of education. In order to qualify for a Grad PLUS Loan, the student must first complete the FAFSA and qualify for Stafford Loans. As long as the student qualifies for Stafford Loans, he or she may decline them and accept the Grad PLUS Loan instead, if requested. The Grad PLUS Loan is also a variable rate loan and repayment begins immediately following disbursement of the funds.

Graduate Student
A student who is enrolled in a program or course of studies above the baccalaureate level at an institution of higher education.

Graduated Repayment Schedule
Repayment option in which monthly payments are lower initially then gradually increase over the repayment term. Generally, you are given three graduated repayment levels, where the first level covers only the interest accrual on the loan.

Grant
A type of financial aid that does not have to be repaid. The award amount is based on need, college cost, and enrollment status.

Guarantee Disclosure
A document that the guarantor uses as evidence that a specified loan has been guaranteed by the guarantor against loss due to the borrower’s default, death, disability, bankruptcy, or the school's false certification of the loan application, or due to the closing of the school while the borrower was enrolled. This document includes loan data, such as loan amount, interest rate and fees. Also known as Notice of Guarantee (NOG).

Guarantor/Guarantee Agency
An agency designated by the Federal Government to guarantee FFELP education loans for lenders and monitor their handling of such loans.

H

Health Education Assistance Loan (HEAL)
Loans made by private lenders to graduate health professions students. HEAL loans were discontinued September 30, 1998.

Health Professions Student Loan (HPSL)
Low-interest rate loans provided to students who are pursuing pharmacy, dentistry, optometry, podiatry, or veterinary medicine degrees. The loan is awarded based on the financial need of the student.

I

Income Sensitive Repayment Schedule
Repayment option in which the monthly payment amount is adjusted annually based on the borrower’s income. Loan must be paid off by end of the original loan term.

Interest
The dollar amount charged to borrow money. Also known as a finance charge.

Interest Rate
The percentage rate charged on a loan which determines the amount of interest the borrower will pay.

J

(none)

K

(none)

L

Lender
The institution that provides the money for an education loan.

Loan
Borrowed money from a lender that must be repaid with interest. Undergraduate students, graduate students, and parents may borrow money to pay education expenses.

Loan for Disadvantaged Students (LDS)
A low-interest rate loan for full-time students from disadvantaged backgrounds who pursue a degree in allopathic medicine, osteopathic medicine, dentistry, optometry, podiatric medicine, pharmacy or veterinary medicine. This loan is awarded based on financial need.

Loan Verification Certificate (LVC)
A document sent by the lender of a consolidation loan to obtain information from the holder of the loans being consolidated. The consolidating lender will use the LVC to determine the eligibility of loans for inclusion in the consolidation and the payoff amount due to each existing lender.

M

Master Promissory Note (MPN)
An agreement made between the lender and the borrower that authorizes the lender to disburse multiple loans during the multi-year term of the MPN upon the borrower's request and upon the school’s certification of the borrower’s loan eligibility. Subsequent loans may be made under the MPN for the same or subsequent periods of enrollment at the school.

N

National Student Loan Data System (NSLDS)
Federal database of student borrowers, including a list of the federal loans they’ve borrowed. If a student borrower wants access to information about his/her student loans, he/she can use the NSLDS Financial Aid Review service, operated by the U.S. Department of Education, to review this information.

National Science and Mathematics Access to Retain Talent (National SMART) Grant
A grant awarded to full-time, eligible undergraduates who are enrolled in the third or fourth academic year of an eligible program who receive Federal Pell grants and are U.S. citizens.

Notice of Guarantee (NOG)
See Guarantee Disclosure.

Nursing Student Loan
Low-interest rate federal loans that are provided to students pursuing nursing degrees. Loan is awarded based on financial need.

O

P

Pell Grant
A type of federal aid that is given on a need-basis to eligible undergraduate students and certain students enrolled in post-baccalaureate teacher certification or licensing programs. These grants are limited and awarded to the neediest students. Eligibility is determined by the data provided on the Free Application For Student Aid.

Perkins Loans
Loans offered by participating schools to provide students with low-interest loans. Loans are awarded based on financial need.

Personal Identification Number (PIN)
Serves as a student (or parent) electronic signature and gives them access to their personal student aid records with the Department of Education.

PLUS Loan
Federal Parent Loan for Undergraduate Students program; PLUS loans may be issued by private lenders under the FFELP or by the U.S. Department of Education under the Direct Loan Program to parents in order to help cover the student’s cost of education. This loan is issued in the parent’s name and requires a credit check. The school certifies the maximum loan limit. This is a variable rate loan and repayment begins immediately following disbursement of the funds.

Prepayment
Paying off all or part of a loan before the scheduled due date(s) or before the repayment term expires.

Private Loan
An education loan made by a bank, financial institution, or school without any backing by the Federal Government. Private loans can provide money to supplement federal financial aid. Generally, these are credit-based loans.

Promissory Note
Loan document that details the terms of the loan, including the terms of repayment. See Master Promissory Note.

Q

(none)

R

Refinance
Revising the repayment term and sometimes the interest rate for a pre-existing debt. For FFELP loans, refinancing is usually accomplished through a consolidation loan.

Rehabilitation
The process of restoring a defaulted or delinquent loan to current status by making a number of timely payments.

Repayment
Repaying a student loan as agreed upon in the promissory note.

Repayment Period
The period during which a loan must be repaid.

S

Scholarships
A type of award that typically does not have to be paid back. Scholarships are awarded to students who demonstrate or show promise of high achievement in areas such as academics, athletics, music, art or other disciplines. The FAFSA screens students for federal, state and some college-based scholarship programs. Private scholarship programs exist and must be researched and applied by the student. Qualifications for private scholarships vary and are not part of the FAFSA application screening process.

Secondary Market
An organization that purchases loans from lenders and becomes the holder of the loans. The rights and responsibilities of the borrower do not change.

Servicer
A third party organization that administers and collects loan payments for loan holders.

Single Lender Rule
The Single Holder Rule was repealed by the Senate and made effective on June 15, 2006. It originally stated that a borrower who applies for a Federal Consolidation Loan from a lender that is not the borrower’s sole FFELP loan holder generally must certify that he/she sought and was unable to obtain a Federal Consolidation Loan through the holder of the his/her FFELP loans or that the holder declined to provide a loan with an acceptable income-sensitive repayment schedule.

Spousal Consolidation Loan
Loan made available to married couples by combining their loans into one joint consolidation loan.

Stafford Loans
See Federal Stafford Loan.

Standard Repayment Schedule
Repayment option in which monthly payments are fixed. Federal Consolidation Loans will have a repayment term up to 30 years. Federal Stafford Loans allot up to 10 years for the repayment term.

Student Aid Report (SAR)
A report that summarizes the information reported on the FAFSA. The colleges listed on the FAFSA will receive electronic copies of the SAR and use the information to determine a student’s eligibility for federal financial aid.

Subsidized Loans
Stafford loans on which the federal government pays the accrued interest for the borrower during in-school, grace and deferment periods.

T

(none)

U

Undergraduate Student
A student who is attending an institution of higher education and is studying towards a bachelor’s degree, associate’s degree or certificate.

Unsubsidized Loan
A Stafford loan on which the borrower is responsible for making interest payments from the date of disbursement until the loan is paid in full, regardless of enrollment or deferment status.

V

Variable Interest Rate
Any interest rate that may change on a periodic basis according to a set formula. For FFELP loans, this rate is based on a formula tied to Federal T-Bills and may change yearly on July 1st.

W

William D. Ford Direct Loan Program
See Federal Direct Student Loan Program.

Work Study
A form of financial aid that is granted after completing the FAFSA. Money generated by work study paid by the college in return for on-campus or community-based work.

X, Y, Z

(none)