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GLOSSARY OF FINANCIAL AID TERMS ACADEMIC YEAR - A period of time defined for credit hour schools as a minimum of 30 weeks instructional time in which a full time student is expected to complete at least 24 semester or trimester hours, or 36 quarter hours. AGGREGATE LOAN LIMIT - The total amount of loan proceeds for which a borrower is eligible by loan and borrwer type throughout the student's academic career. ANNUAL LOAN LIMIT - The maximum loan amount that can be approved for a borrower during an academic year. BURSAR'S OFFICE - Bursar's office is the school office that is responsible for the billing and collection of student charges. CAMPUS-BASED AID - Federal financial aid programs that are administered by eligible schools. The federal government provides the school with a fixed annual allocation, which is awarded by the financial aid administrator to needy stduents. Such programs include the Perkins Loan, Supplemental Educational Opportunity Grant (SEOG) and Federal Work-Study. CAPITALIZATION - The process of adding unpaid interest to the principal loan amount, thereby increasing the balance that future interest accrues on, and the total amount to be repaid. To save money, pay interest before it is capitalized. CAPITALIZED INTEREST - Accrued interest added to the borrower's outstanding principal. CONSOLIDATION LOAN - A consolidation loan combines several student loans into one bigger loan from a single lender. The consolidation loan is used to pay off the balance on the other loans. COST OF ATTENDANCE (COA) - An estimate of the student's educational expenses for a period of enrollment. CREDIT BUREAU - Institution that tracks and reports the manner in which borrowers repay their loans. DEFAULT - Failure to repay your loan according to the terms of your promissory note. If you default, your school, the holder of your loan, and state and federal governments can all take action to recover the money. Plus, the default will be reported to national credit bureaus, which could jeopardize your ability to get credit in the future. DEFERMENT - An authorized period of time during which you may postpone payment on your loan. DISBURSEMENT - Loan funds delivered as a check or by electronic funds transfer to your school to sign over to you or deposit in your school account. Disbursements are normally made in equal multiple installments. DISCLOSURE STATEMENT - A document from your lender listing the principal amount of your loan, fees that have been deducted, the interest rate, and the total amount of indebtedness. ELIGIBLE NON-CITIZEN - Someone who is not a U. S. citizen but is nevertheless eligible for Federal student aid. Eligible non-citizens include U. S. permanent residents who are holders of valid green cards, U. S. nationals, holders of form I-94 who have been granted refugee or asylum status, and certain other non-citizens. Non-citizens who only hold a student visa or an exchange visitor visa are not eligible for Federal student aid. ENTRANCE INTERVIEW - A loan repayment and debt management session required by federal regulations, that is arranged by the school for students receiving their first federally guaranteed student loans associated with attendance at that school. The entrance interview must be conducted before the student can receive loan proceeds. EXIT INTERVIEW - A loan repayment and debt management counseling session required by federal regulation that is arragned by and conducted by the school for all graduating students or students who are leaving school. EXPECTED FAMILY CONTRIBUTION (EFC) - The formula used to calculate your EFC is established by federal regulations.It measures your family's financial strength on the basis of income and assets. The EFC is used to determine your eligibility for federal student aid. FEDERAL DEFAULT FEE - A fee charged by a guarantor for each loan it guarantees. In most cases, the lender reduces the amount of the loan proceeds by this amount, and the fee is remitted to the guarantor. The Higher Education Act limits this fee to one percent of the loan principal. Previously called the guarantee fee. FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFELP) - The FFELP includes Subsidized and Unsubsidized Federal Stafford Loans, Federal PLUS Loans for parents and graduate students and Federal Consolidation Loans. The loans are provided by private lenders, insured by guaranty agencies and backed by the federal government. FEDERAL GOVERNMENT - The government sponsors the Federal Family Education Loan Program and pays interest on your Subsidized Stafford loans during school and grace. FEDERAL PERKINS LOAN - A loan funded by the federal government and awarded by the school to students with proven financial need. FEDERAL GRADUATE PLUS LOAN - A loan for graduate student's educational expenses. FEDERAL PARENT PLUS LOAN - A loan for parents to fund a child's education. FEDERAL PROCESSOR - Is a third-party contractor organization that processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and uses it to compute eligiblity for federal student aid. FINANCIAL AID - Financial assistance in the form of scholarships, grants, employment opportunities and education loans. FINANCIAL NEED - The difference between the cost of attendance and your expected family contribution. The amount you are eligible to borrow is determined by your financial need minus other financial aid you have been awarded. FORBEARANCE - Authorized period of time during which the holder of your loan allows you to postpone repayment because of financial difficulty. GIFT AID - Financial aid, such as scholarships and grants, that do not have to be repaid. GRACE PERIOD - The period between the time you leave school or drop below half time and the time you're obligated to begin repayment. GUARANTY AGENCY - State agency or private non-profit corporation that insures student loans for lenders and helps administer the FFELP. HALF TIME STATUS - The minimum number of hours (6 credit hours) a student must be enrolled to be eligible for financial aid. HOLDER - The institution with legal title to your loan. It could be your original lender, a secondary market, or in the event of default, a guaranty agency. INTEREST - A fee charged in exchange for borrowing money. The Federal Stafford Loan variable interest rate is adjusted annually but cannot exceed 8.25 percent. LENDER - An institution that provides money for loans. MASTER PROMISSORY NOTE (MPN) - A promissory note under which the borrower may receive loans for either a single period of enrollment or multiple periods of enrollment. NEEDS ANALYSIS - A standardized assessment of the ability of a student and/or a student's family to contribute toward education expenses. NOTIFICATION OF LOAN TRANSFER - If your loan is sold, this document provides the name, address, and phone number of your new servicer or holder. ORIGINATION FEE - A percentage of the gross disbursement amount charged by the U. S. Department of Education to offset the government's cost of administering the Federal Family Education Loan Program. The fee is deducted from loan proceeds prior to disbursement. PREPAYMENT - Paying off a loan, in whole or in part, before it is due. PRINCIPAL - The amount borrowed. Interest is charged on this amount. PRIVATE LOAN - Private loans are education loan programs established by private lenders to supplement the student and parent education loan programs available from federal and state governments. PROMISSORY NOTE - A legally binding agreement the borrower signs to obtain a loan under the FFELP, in which the borrower promises to repay the loan, with interest, in periodic installments. REPAYMENT SCHEDULE - Document detailing the loan balance, the estimated total amount of interest owed, the amount of each monthly payment, the total number of payments to be made, and the date the first payment is due. SATISFACTORY ACADEMIC PROGRESS - The academic progress required of a student in order to receive financial aid. Each school must establish a standard for evaluating a stduent's efforts to achieve an educational goal within a given period of time. SECONDARY MARKET - An organization that purchases education loans from lenders, which enables lenders to make new loans. SELECTIVE SERVICE - Selective Service is registration for the military draft. Male students who have reached the age of 18 and were born after December 31, 1959, must register with Selective Service to be eligible for federal financial aid. SERVICER - An organization that administers and collects education loan payments on behalf of the lender. STUDENT LOAN OMBUDSMAN'S OFFICE - An office established by the Department of Education to help borrowers resolve problems with guarantors, lenders, servicers, and/or schools. Visit www.sfahelp.ed.gov or call toll free (877) 557-2575 SUBSIDIZED STAFFORD LOAN - A loan for students on which interest is paid by the federal government while the borrower is in school and during grace and other deferment periods. To qualify, you must prove financial need. TITLE IV - A section of the Higher Education Act that authorizes federal loan, work and grant education financial assistance programs. UNSUBSIDIZED STAFFORD LOAN - A student loan for which the borrower is responsible for all interest from the date the loan is disbursed. |