Terms & Definitions
Academic Grade Level
Designation of the student as first-year (freshman), second-year (sophomore), etc., Used to determine annual loan limits.
Adjusted Gross Income (AGI)
An income figure taken from the federal income tax form that has been filed in compliance with the IRS regulations and guidelines.
Cash on hand in checking and savings accounts, trusts, stocks, bonds, other securities, real estate, home equity, income-producing property, business equipment, and business inventory. Considered in determining expected family contribution.
A means of notifying financial aid applicants of the assistance being offered. The award letter usually provides information on the types and amounts of aid offered.
A specific amount of financial assistance offered to a student through financial aid programs to pay for educational costs.
Cost of Attendance – See Cost of Education.
Cost of Education
The term cost of education is often used interchangeably with cost of attendance.
The failure of a borrower to make and installment payment when due, or to meet other terms of the promissory note or when it can be concluded that the borrower no longer intends to honor the obligation to repay.
Deferment of Loan
A period during which the repayment of the principal amount of the loan is suspended as a result of the borrower meeting one of a number of requirements established by the law.
A student who does not qualify as an independent student. See Independent Student. Dependents. Spouse, children, and other household members for whom the parent or aid applicant provides more than half support.
The process by which financial aid funds are made available to students for use in meeting educational and related living expenses.
A statement set to the borrow by the lender, as well as at, or prior to, the beginning of the repayment period.
Electronic Funds Transfer (EFT)
Commonly called EFT, is a method by which funds are electronically transferred from one person or organization to another.
A meeting prior to the beginning of an audit between the auditor and administrative officials involved in the audit. Operating rules, an agenda, and a schedule for the on-sit work are established. A similar interview is conducted by a federal official conducting a program review. Also used with students in relation to Stafford Loans to describe the terms and conditions of student loans.
Exit Counseling/Exit Interview
Includes a) general information on the average indebtedness of students at the institution; b)a repayment schedule projecting average monthly repayments at the student’s interest rate; and c) a review of options for repayment and management of the debt (loan consolidation, refinancing, etc.).
Expected Family Contribution (EFC)
The figure that indicates how much of a family’s financial resources should be available to help pay the expenses of post-secondary education. This figure is determined according to statutory formulas with data from the FAFSA.
Financial Aid Administrator
Federal Methodology (FM)
A statutory methodology established by Congress for use in determining a student’s expected family contribution for campus-based and Stafford Loan program purposes.
Federal PELL Grant
An entitlement program for undergraduate students who have not yet completed a first baccalaureate course of study.
Financial Aid Package
An offer by an educational institution to a student aid applicant of one or more forms of financial aids (loans, grants).
Financial Aid Transcript (FAT)
A form used by post-secondary institutions to collect data about any financial aid awards that a student received at other educational institutions.
The difference between the institution’s cost of attendance and the family’s ability to pay (the expected family contribution).
Permitting the temporary cessation of repayments of loans, allowing an extension of time for making loan payments, or accepting smaller loan payments than were previously scheduled.
Free Application for Federal Student Aid (FAFSA)
A free financial aid application, provided by the Department of Education, which gathers data to determine both Pell Grant eligibility and expected family contribution using the Federal Methodology.
Grade Point Average
The period of time that begins hen a loan recipient ceased to be at least half time and ends when the repayment period starts. Loan principal need not be paid and interest does not accrue during this period.
Gift aid programs that require neither repayment nor that work be performed.
A state agency or private, non-profit institution or organization which administers the Stafford Loan and PLUS programs.
An insurance fee charged by the guarantee agency and collected by the lender. The fee is usually passed on to the student or borrower. In most cases, the lender reduces the amount of the loan check by this amount.
A student who has attained age 24, or who has not attained age 24 but:
- is an orphan;
- is a ward of the court
- is a veteran;
- is married or is a graduate or professional student;
- has legal dependents (provides more than half of their support) other than a spouse;
- a student who has other unusual circumstances, in the professional judgment of the aid administrator.
US Immigration and Naturalization Service
Institutional Student Information Record
A commercial bank, savings and loan association credit union, stock savings bank, trust company, or mutual savings bank.
An advance of funds that is evidenced by a promissory note requiring the recipient to repay the specified amount(s) under prescribed conditions.
Banks and other organizations that purchase loans from the institution that originally provided the funds to make the loans.
Organizations with which lenders contract to disburse loans, coordinate repayment with borrowers and collect delinquent loans.
The period of enrollment for which a loan is approved for use in paying educational expenses incurred during that period of enrollment. Usually covers one academic year or a portion of the academic year.
All income received that is not reported to the Internal Revenue Service or is reported but excluded from taxation. Such income would include but not be limited to any untaxed portion of Social Security benefits, welfare payments, untaxed capital gains, interest on tax-free bonds, dividend exclusion, and military and other subsistence allowances.
A fee calculated on the amount borrowed for a Stafford Loan and charged to the student by the lender. This fee (like the guarantee fee) is usually subtracted form the amount of the student loan proceeds and offsets interest and special allowance payments made to the lender by the federal government.
The process of assembling one or more financial aid awards of loans, grants, and/or scholarships, and employment for students
Parent Loans for Undergraduate StudentsLong-term loans made available to parents of dependent undergraduate or graduate students. Interest rates are linked to 52-week Treasury bill rates, but may not exceed 10%. May be used to replace the EFC.
Principal and Interest
Principal refers to the loan amount borrowed; interest refers to the amount charged for the use of the money over a period of years. Interest is usually stated as a percent.
This gives the Department of Financial Aidr authority to adjust data elements, on a case-by-case basis.
The legal documents the borrower signs when obtaining a loan. It lists the conditions under which the loan is made and the terms under which the borrower agrees to pay back the loan.
Student Aid Report
Satisfactory Academic Progress
Satisfactory academic progress is a term used to describe a satisfactory rate of course completion. Regulations require that a student be making satisfactory academic progress to receive Title IV aid.
A form of financial assistance that does not require repayment or employment. A “merit-based” scholarship may be made to a student who demonstrates or shows potential for distinction, usually in academic performance, at the institution. The term is also frequently used to refer to need-based state grant(“state scholarship”) programs. Scholarships may require both academic proficiency and demonstrated financial need.
Stafford Loan Program
Long term, variable rate, low interest loans administered by the Department of Education through state guaranty agencies. Funds are borrowed from eligible lenders (banks, credit unions, etc.).
Student Financial Assistance
Social Security Number
Any interest paid by the federal government to the lender on behalf of an eligible student borrower under the Stafford Loan Program.
A loan supported with funds paid by the federal government to the lender. In the Stafford Loan program, the federal government makes interest payments on behalf of the student borrower during at least half-time enrollment and approved grace or deferment periods.
Income received that is not subject to income tax. Examples of such income are some Social Security benefits, welfare benefits, interest on tax-free bonds, military and other subsistence allowances.
This refers to a loan whose interest rate varies over the repayment term of the loan. For example, the interest rate for PLUS/SLS loans varies annually over the life of the loans.
The process of verifying information submitted on student aid applications through the comparison of specified documents to the data on applications for student aid.