ACADEMIC YEAR

A period of time schools use to measure a quantity of study. A school's academic year may consist of at least 30 weeks of instructional time during which a full-time student is expected to complete at least 24 semester or trimester hours, or at least 36 quarter hours, at an institution that measures program length in credit hours; or at least 900 clock hours at an institution that measures program length in clock hours.

ACCRUAL DATE

The day interest charges on an educational loan begin to accrue.

AWARD LETTER

The official document, issued by the financial aid office, which states the type and amount of financial aid the school is willing to provide should you accept admission and register to take classes at that school.

BUDGET

See: Cost of Attendance (COA)

CAPITALIZATION

The process of adding unpaid interest to the principal balance of a subsidized loan in forbearance, unsubsidized loans or PLUS loans, thereby increasing the total amount to be repaid.

CITIZEN/ELIGIBLE NON CITIZEN

You must be one of the following to receive federal student aid:

If you're not in one of these categories, you must have an Arrival Departure Record (I-94) from the U.S. Immigration and Naturalization Service (INS) showing one of the following designations:

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. You are NOT eligible for federal financial aid if you only have a Notice of Approval to Apply for Permanent Residence (I-171 or I-464A), or if you are in the U.S. on an F1, F2, J1, J2, or G series visa.

CONSOLIDATION

A loan program that allows a borrower to combine multiple federal student loans with various repayment schedules into one loan. With a consolidation loan the monthly payment might be lower, repayment can be extended up to 25 years, and the interest rate is fixed.

COST OF ATTENDANCE (COA)

The total amount it will cost you to go to school which is usually expressed as a yearly figure. The COA is determined by law (Higher Education Act, Sec. 472) and is not subject to regulation by the Department of Education. The COA is also known as the Cost of Education or the Student Budget. 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.

DEFAULT

Failure to repay a student loan according to the terms agreed to when you signed a promissory note. For the FFEL and 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 less 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. 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, or discharge or cancellation and by providing the required documentation.

DEFERMENT

A period of time during which no loan payments are required and interest does not accrue, unless you have an unsubsidized Stafford Loan. The most common loan deferment conditions are enrollment in school at least half-time, inability to find full-time employment (for up to three years) and economic hardship (for up to three years).

DEPENDENCY STATUS

When you apply for federal student aid, your answers to questions in Step 3 of the paper FAFSA, or in Step 2 of the electronic online FAFSA will determine whether you are considered dependent or independent. All dependent students must report parental income and assets as well as their own. If you're considered a dependent student, your parents are expected to contribute toward the cost of your education. Federal student aid programs are based on the concept that a dependent student's parents have the primary responsibility for paying for their child's education. You may be considered independent for federal programs if you meet one of the following conditions:

If none of these conditions apply to you, you are a dependent student.

DISBURSEMENT

The process by which financial aid funds are released and applied directly to a student's account.

ELIGIBLE PROGRAM

A program of organized instruction or study that leads to an academic, professional or vocational degree or certificate, or other recognized educational credential.

ENTRANCE LOAN COUNSELING

Direct or FFELP Stafford Loans first-time borrowers must complete a counseling session prior to the first loan disbursement. This session provides you with a budget for managing your educational expenses and helps you to understand your loan responsibilities.

EXIT INTERVIEWS

For most federal student loans, you must complete a counseling session before leaving school to make sure that you understand your rights and responsibilities as a borrower. You will receive information regarding repayment and your loan provider will notify you of the date loan repayment begins (typically six months after you graduate, leave school or drop below half-time enrollment).

EXPECTED FAMILY CONTRIBUTION (EFC)

The measure of a family's financial strength which indicates how much of your and your family's financial resources (for dependent students) should be available to help pay for your education. The EFC is calculated from the information your report on the FAFSA. The EFC is calculated according to a formula established by law. Your EFC is report
ed to you on the Student Aid Report (SAR) you receive after you file your FAFSA.

FREE APPLICATION FOR FEDERAL STUDENT AID (FAFSA)

The FAFSA is the only application that all students must complete to apply for federal student aid.

FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFELP)

Education loans provided by private lenders and guaranteed by the federal government. Subsidized and Unsubsidized Federal Stafford Loans and Parent PLUS and Graduate PLUS loans are included in this program.

FEDERAL METHODOLOGY (FM)

The formulas used to determine a student's eligibility for federal Title IV funds. The formulas take into account income, some assets, expenses, family size and other factors. FM is written by Congress rather than a peer community assessment and is not updated regularly.

FINANCIAL AID COUNSELOR

A representative of the Financial Aid Office that reviews a student's application and awards aid, and helps the student in all aspects of the financial aid process.

FINANCIAL AID PACKAGE OR FINANCIAL AID AWARD

The total financial aid a student receives. Federal and non-federal aid such as grants, loans, work-study, and scholarships are combined in a "package" to help meet the student's need.

FINANCIAL NEED

The difference between what it costs to attend a particular college and the amount it has been determined that a student and her/his family can afford to pay toward those expenses. The term "demonstrated financial need" is typically used to describe an assessment based on Institutional Methodology for undergraduate need-based, institutional funding. The amount that an applicant can be expected to contribute is measured according to standardized formulas. These standardized formulas include the federal and institutional methodologies, and the 568 Consensus Approach.

FORBEARANCE

An authorized period of time during which the lender agrees to temporarily postpone a borrower's principal repayment obligation. Interest continues to accrue and usually must be paid during the forbearance period. Forbearance may be granted at the lender's discretion when a borrower is willing to repay their loan but is unable to do so.

GRANT

A form of financial aid award based on need or merit that is not repaid by the student.

GRACE PERIOD

The period between the time a borrower leaves school or drops below half-time and the time they are obligated to begin repaying their loans - usually six or nine months, depending on the type of loan.

GUARANTY AGENCY

The organization that administers the Federal Stafford Loan and Federal Plus Loan programs in your state. The federal government sets loan limits and interest rates, but each state is free to set its own additional limitations, within federal guidelines. This agency is the best source of information on Stafford and PLUS loans in your state. To find the name, address, and telephone number of the guaranty agency in your state, as well as information about borrowing, call the Federal Student Aid Information Center at 1-(800)4-FEDAID (1-800-433-3243).

GUARANTY FEE

An insurance premium deducted from the borrower's loan proceeds prior to disbursement and paid to the guaranty agency that insures the loan. By law the fee cannot exceed 3% of the loan amount.

INSTITUTIONAL STUDENT INFORMATION REPORT

The Institutional Student Information Report (ISIR) is the name for the electronic version of SAR's delivered to schools by the FAFSA processors.

INTEREST

A fee charged for the use of borrowed money. Interest is calculated as a percentage of the principal loan amount. The rate may be constant throughout the life of the loan (fixed rate) or it may change at specified times (variable rate). As of October 1, 1992, all federal education loans made to new borrowers have variable interest rates.

LENDER

A financial institution (bank, savings and loan, or credit union) that provides the funds for students and parents to borrow educational loans. Some schools are also lenders.

MERIT-BASED AID

Financial aid that is awarded based on a student's academic, leadership or artistic merit, or some other criteria, and does not depend on financial need. Merit-based awards may look at a student's grades, test scores, special talents, or extracurricular activities to determine eligibility.

NEED-BASED AID

Financial aid that is awarded based on a student's financial circumstance. Need-based aid can be awarded in the form of grants, loans, or work-study. Students who believe their families will need help in supporting their educational costs are encouraged to apply for need-based aid at the time they apply for admission to the College.

NEEDS ANALYSIS

A process of reviewing a student's aid application to determine the amount of financial aid a student is eligible for. Completing a needs analysis form is the required first step in applying for most types of financial aid.

NEW BORROWER

A borrower who has no outstanding (unpaid) loan balances on the date he/she signs the promissory note for a specific educational loan. New borrowers may be subject to different regulations than borrowers who have existing loan balances.

NATIONAL STUDENT LOAN DATA SYSTEM (NSLDS)

The National Student Loan Data System (NSLDS) is the national database of information about loans and grants awarded to students under Title IV of the Higher Education Act (HEA) of 1965. NSLDS provides a centralized, integrated view of Title IV loans and grants during their complete life cycle, from aid approval through disbursement, repayment, delinquency and closure.

ORIGINATION FEE

A fee charged by the federal government and deducted from loan proceeds before disbursement to partially offset administrative costs of the Federal Family Education Loan Program (FFELP).

PARENT CONTRIBUTION

A portion of the expected family contribution that is derived from the parents' family income, assets, state and federal taxes, an allowance for family living expenses, and the costs of other family members in college.

PELL GRANT

For undergraduate students, first baccalaureate degree only. Eligibility is based on federal methodology. The amount of the award ranges from $400 to $4,310 subject to Congressional appropriations, and will be reduced for students who enroll less than full time.

PERKINS LOAN

Perkins Loans are for graduates and undergraduates who are enrolled at least half-time. Awards are based on financial need as demonstrated by the information provided on your aid application and on the availability of funds. Preference is given to students with exceptional need and meet filing deadlines.

PRINCIPAL

The amount borrowed. Interest is charged on this amount, and guaranty and origination fees will be deducted prior to disbursement.

PROMISSORY NOTE

The legal document borrowers sign when they get an education loan. It lists conditions under which the money is borrowed and the terms under which borrowers agree to repay the loan with interest. Borrowers should keep the borrower copy of their promissory notes until the loans are fully repaid.

REPAYMENT SCHEDULE

Discloses the borrower's monthly payment, interest rate, total repayment obligation, due dates and length of time for repaying the loan.

SELF HELP

Financial aid self help awards are available via programs that require the student to either repay the assistance or work for the assistance. Loans and Work-Study are examples of self help awards.

SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT (SEOG)

Supplemental Educational Opportunity Grant for undergraduate students, first baccalaureate degree only. Federal grant awarded based on a federal formula using data provided in your aid application. Priority is given to students who are eligible for Federal Pell Grants.

STUDENT CONTRIBUTION

In addition to the amount parents are asked to contribute, students are also expected to help meet a portion of their own educational costs each year. A student's minimum contribution may come from prior year earnings, summer employment, savings, and educational benefits.

STUDENT AID REPORT (SAR)

A form sent to the student after submitting the FAFSA to the federal processor. The SAR shows the information that was processed and indicates Pell Grant Eligibility.

SUBSIDIZED LOAN

The government pays the interest on the loan while the student is in school, during the six-month grace period after the student leaves school, and during any deferment periods. Subsidized loans are awarded based on financial need and may not be used to finance the family contribution. The Perkins Loan and the Subsidized Stafford Loans are subsidized loans.

UNSUBSIDIZED LOAN

With this loan, the government does not pay the interest while the student is enrolled. The student has the option to either pay the accruing interest monthly or allow the interest to capitalize (to be added to the principal). Either way, required payments do not begin until 6 months after graduation or 6 months after the student drops below half-time enrollment. Unsubsidized Stafford Loans are not based on financial need and therefore may be used to finance the family contribution.

VERIFICATION

A process of review to determine the accuracy of the information on a student's financial aid application. Students are selected for verification by the federal Central Processing System (CPS) when their FAFSA applications are processed.