Student Loan Glossary

Definition of Terms

The school year typically runs from the beginning of September through the end of May at most colleges and universities. The period, during which school is in session, consisting of at least 30 weeks of instructional time.

Accrual Date

This is the date on which interest charges begin to accrue.

ACT

The ACT is a college-entrance examination established in 1959 as a competitor to the College Board’s Scholastic Aptitude Test which is now known as the SAT. The ACT was formerly the American College Testing Program or American College Test and is now officially known as the ACT (pronounced A.C.T.). In contrast to the SAT, the ACT is based on knowledge content (facts), rather than vocabulary and analogies.

Adjusted Available Income

In the Federal Methodology, the Adjusted Available Income refers to the remaining income after the allowances (taxes and a basic living allowance) have been subtracted.

Advanced Placement (AP)

Each May, participating schools administer AP exams. They are an integral part of the program. With one exception, the exam combines multiple-choice questions with a free-response section in either essay or problem-solving form. The exception is Studio Art, where the exam is replaced by a portfolio assessment.

Each June, the free-response sections and the Studio Art portfolios are scored by thousands of university faculty and AP course teachers at a number of AP Readings in locations throughout the United States. These free response sections are scored according to grading rubrics designed for the specific questions. Before the readers arrive, a number of people from the Advanced Placement Program’s Reading Leadership randomly select a number of free response booklets and match these booklets against the preliminary question rubrics designed by the test development committee when they wrote the question. If, based on the sampling, the students did not perform as well as expected, the scoring rubric is made easier. If, based on the sampling, the students did better than expected, the scoring rubric is made more difficult. In addition, the Reading Leadership attempts to find what they believe epitomizes the best example of a free response that should be scored at each score level (usually the free responses are scored on a scale of 0 to 9) for purposes of training the readers. It usually takes about one week for the readers to score all of the free responses sections for one exam.

The exams themselves are not tests of the students’ mastery of the course material in a traditional sense. Rather, the students themselves set the grading rubrics and the scale for for the “AP Grades” of each exam. When the AP Reading is over for a particular exam, the free response scores are combined with the results of computer-scored multiple-choice questions based upon a previously announced weighting. The Chief Reader (a college or university faculty member selected by ETS and The College Board) then meets with members of ETS and sets the cutoff scores for each AP Grade. The Chief Reader’s decision is based upon what percentage of students earned each AP Grade over the previous three years, how students did on multiple-choice questions that are used on the test from year to year, how he or she viewed the overall quality of the answers to the free response questions, how university students who took the exam as part of experimental studies did, and how students performed on different parts of the exam. No one outside of ETS is allowed to find out a student’s raw score on an AP Exam and the cutoff scores for a particular exam are only released to the public if that particular exam is released in total (this happens on a staggered schedule and occurs approximately once every five years for each exam). The AP Grades that are reported to students, high schools, colleges, and universities in July are on AP’s five-point scale:

• 5: Extremely well-qualified

• 4: Well-qualified

• 3: Qualified

• 2: Possibly qualified

• 1: No recommendation

Many colleges and universities in the U.S. grant credits or advanced placement based on AP grades; those in over twenty other countries do likewise. Policies vary by institution. Most require at least a three to give a student credit. Others may only waive pre-requisites. Colleges may also take AP grades into account when deciding which students to accept, though this is not part of the official AP program.

Amortization

This is the gradual reduction of your debt by periodic payments large enough to meet your interest payments and to repay the principal at maturity. The loan is repaid through regular, monthly payments of principal and interest paid for a pre-determined amount of time. Amortization refers to the payments that you make to not only pay the interest rates, but to also pay down the principal on the loan you took out.

Assets

Assets are every form of property that the debtor owns. Assets also include intangible things such as: business goodwill; the right to sue someone; or stock options. When calculating the Expected Family Contribution (EFC), all assets are considered.

Asset Protection Allowance

The Asset Protection Allowance is a portion of the student’s parents’ assets that are not included in the calculation of the parent contribution. This allows for a safety net, so to speak, for parents by protecting their assets. The Asset Protection Allowance is in direct correlation with the age of the parents, so as parents get older the allowance gets bigger.

Assistantship

This is essentially an exchange program. In exchange for certain services including teaching or laboratory supervision as a student teacher or teaching assistant, a study grant of financial assistance is granted. Assistantships can also be awarded for services as a research assistant.

Associate Degree

A degree granted by a college or university after the satisfactory completion of a two-year full-time program of study or its part-time equivalent. Types of degrees include the Associate of Arts (AA) or Associate of Science (AS), usually granted after the equivalent of the first two years of a four-year college curriculum, and the Associate in Applied Science (AAS), awarded upon completion of a technical or vocational program of study.

Auto Debit

This is an agreement between the lender and the borrower that authorizes their loan payment to be deducted automatically from a bank account (checking or savings). A payment schedule is arranged so that on a particular day each month your money is withdrawn.

Award Letter

This letter contains all the information about concerning loans each student is eligible. Students who are selected for verification will receive their Award Letter four weeks after submitting their complete file. Students that are not selected for verification will receive an award letter five to ten working days after completing their file. The first Award Letters are produced on July 1st of every year. The financial information from your Award Letter is based on a full-time student schedule; students can expect additional award letters throughout the school year per changes to the number of units they are taking.

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Bachelor’s Degree

The award designating the completion of an academic program requiring four to five years of full-time equivalent preparation.

Bursar’s Office

The college or university office responsible for billing and collections.

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Campus-based Aid

This is a government program that funds financial aid to schools to give to their students. Federal Work-Study, Pell Grants and Federal Supplemental Education Opportunity Grants (FSEOG) are all examples of Campus-based Aid. The federal government provides the university with a fixed annual allocation, which is awarded by the financial aid administrator to deserving students (determined by the college or university). Money is not guaranteed to every eligible student because there is one pool of money from which funds are drawn. Therefore, aid is granted based on need and allocated accordingly. This is a key difference between the Campus-based Loan programs and the Direct Loan Program.

Cancellation

In the unfortunate event of death or permanent disability of the borrower or upon full or in part service in a particular field or geographic area the balance of some student loans may be canceled.

Central Processing System (CPS)

The U.S. Department of Education’s computer system; matches and calculates the Expected Family Contribution (EFC) and delivers The Student Aid Report (SAR). The CPS is the Department’s processing facility for application data and is currently located in Illinois. The CPS receives student information from the application processors, calculates the student’s official EFC and returns the student’s information to the application processor who then mails a Student Aid Report to the student.

Citizen/Eligible Non-citizen

A person is generally considered a legal citizen if they are born in the U.S.A.. or the child of a U.S. Citizen, or pass the requirements of the laws and regulations to establish citizenship. A person is generally considered a legally eligible non-citizen he or she is 1) a U.S. permanent resident and has an Alien Registration Receipt Card (I-551); 2) a conditional permanent resident (I-551C); or 3) an other non-citizen with an Arrival-Departure Record (I-94) from the U.S. Immigration and Naturalization Service (INS) showing any one of the following designations: “Refugee,” “Asylum Granted,” “Indefinite Parole,” “Humanitarian Parole”, or “Cuban-Haitian Entrant.”

Commercial Lender

Banks, credit unions, mutual savings banks, savings and loan associations, stock savings banks, or trust companies are all examples of Commercial Lenders. A Commercial Lender offers loans backed by hard collateral such as real estate; but it can also factor in non-conforming assets, or other sources of collateral.

Commuting Student

A student that lives at home or off campus.

Compound Interest (Capitalization)

Interest earned on an investment at periodic intervals and added to the original amount of the investment. Future interest payments are then calculated and paid at the original rate but on the increased total of the investment. This is really interest paid on interest.

Consolidation Loan

A consolidation loan combines several loans into one bigger loan. This can often result in a lower interest rate, as when a consumer loan is used to pay off credit card balances. Such loans often reduce the size of the monthly payment by extending the term of the loan beyond the 10 year repayment plan that is standard with FFELP loans. Of course, extending the term of a loan increases the total amount of interest paid. Consolidation loans also simplify the repayment process by allowing a single payment instead of several, since they replace several loans with a single bigger loan

Cooperative Education (Co-op)

This is a program that allows a student to leave the college campus to work in industry, business, government or public service. It’s beneficial because it allows the student to gain resume building experience while still a college student. Under the plan, students leave campus for three to six months for the rigors and responsibilities of actual employment situations. The objective is to offer an additional option for learning and to give students a realistic education.

Co-signer (Co-applicant)

A Co-signer is an individual who co-signs on a loan; if the first borrower on a loan defaults, the co-signer (in most cases) is responsible for repayment on that loan.

Cost of Attendance (COA)

Cost of Attendance factors in all the expenses involved attending school: tuition and fees, room and board, allowances for books and supplies, transportation, and personal and incidental expenses. Loan fees, child care and expenses for disabilities may also be included at the discretion of the financial aid administrator. Cost of Attendance varies for students living on-campus and off-campus, married and unmarried students, and in-state and out-of-state students.

Credit Rating

A credit rating is an evaluation of the likelihood of a borrower to default on a loan. Credit Bureaus and Credit Reporting Agencies provide credit information to creditors, such as banks and businesses, to help them decide whether to issue a loan or extend credit. This information may include your payment history, a list of current and past credit accounts and their balances, employment and personal information, and a history of past credit problems. People who make all their payments on time are considered good credit risks. People who are frequently delinquent in making their payments are considered bad credit

CSS Profile

This is a form utilized for financial aide sponsored by the College Scholarship Service of the College Board. More than likely you will be asked to fill out this form (900 colleges require students requesting financial aide to fill out this form). This form is available free of charge at www.collegeboard.org.

Custodial Parent

If a student has parents that are either divorced or separated the parent which the student has lived with most of the course of previous 12 months. This parent is known as the Custodial Parent. The student’s financial need is based on financial information supplied by the custodial parent.

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Default

The borrower s failure to repay according to the terms agreed upon when the promissory note was signed. When a borrower defaults on a federal student loan all parties involved can take legal action including the school, the organization holding the loan, the guaranty agency, and the federal government. Default is distinguished as payments that are 270 or more days overdue and no arrangements for deferment or forbearance have been made by the two parties. When a borrower’s student loan goes into Default assets, including Internal Revenue Service (IRS) refunds and professional licenses, may be seized. The borrower’s credit record or history is negatively affected by a loan in Default. Student loan borrowers can get out of Default once they pay back their loan in full, sign new loan agreements, or reschedule their debt. Once a student loan goes into Default you are not eligible for any additional financial aid.

Deferment

This is a period of time, authorized by the lender, during which a student loan borrower may postpone making payments on the principal or the principal plus interest. Borrowers generally must file deferment forms with their lenders and be approved for deferments. Deferment status may be granted if borrowers are: enrolled in school at least half-time, enrolled in a graduate fellowship program or rehabilitation training program, disabled, serving in the military or the Peace Corps, volunteering full-time for a not-for-profit corporation, teaching full-time in a teacher shortage area, unemployed, or experiencing demonstrated economic hardship. The federal government makes interest payments on Subsidized Federal Stafford Loans during Deferment periods in lieu of the student.

Delinquent

This is when the student loan borrower fails to make a payment on time, the borrower is considered delinquent and late fees may be charged. If the borrower misses several payments or the payment is 270 days or more late, the loan goes into Default.

Dependency Status

All students are considered Dependents unless they are: 24 years of age as of January 1, married, graduate or professional students, responsible for a legal Dependent other than a spouse, Veterans of the U.S. Armed Forces, or orphans or wards of the court (currently or formerly). Students are considered dependent or independent based on the idea that students and their families (which may include parents or their spouse) have the primary responsibility to pay for educational expenses.

Dependent

Someone who depends on a family member or spouse for more than half of his or her financial support.

Direct Loans

Do not involve any banks or third parties; they are loans that go directly to the borrower from the federal government. Direct Stafford and PLUS loans have the same loan terms as Federal Stafford and PLUS Loans. Contact your school to determine whether they participate in Direct Lending.

Disbursement

Disbursement is when loan funds are released to the school for delivery to the borrower. The payment will be made co-payable to the student and the school. Loan funds are first credited to the student’s account for payment of tuition, fees, room and board, and other school charges. Any excess funds are then paid to the student in cash or by check. Unless the loan amount is under $500, the disbursement will be made in at least two installments.

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Eligible Program

A course of study that leads to a degree or certificate and meets the U.S. Department of Education’s requirements for an eligible program. To get federal financial aid, you must be enrolled in an eligible program, with two exceptions:

1. If a school has told you that you must take certain coursework to qualify for admission into one of its eligible programs, you can get a Direct Loan or a FFEL Program Loan (or your parents can get a PLUS Loan) for up to 12 consecutive months while you’re completing that coursework. You must be enrolled at least half time, and you must meet the usual student aid eligibility requirements.

2. 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 Perkins Loan, Federal Work-Study, a Direct or FFEL Stafford loan, (or your parents can get a PLUS Loan) while you’re enrolled in that program

Enrollment Status

A student’s enrollment status indicates whether the student attends school full- , half- , or part-time. Full-time refers to a minimum of 12 credit hours. Half time usually refers to at least six credit hours. In most cases, a student must be enrolled at least half-time to qualify for financial aid.

Exit Counseling (or Exit Interview)

Counseling when the student is scheduled to complete an academic program-commonly referred to as exit counseling. Prior to graduating withdrawing, or dropping below half-time enrollment, borrowers are required to complete exit counseling to help prepare them for repayment. Exit counseling provides valuable information about borrower’s rights and responsibilities, as well as helpful money-saving ideas.

Expected Family Contribution (EFC)

The amount of money that the family is expected to be able to contribute to the student’s education, as determined by the Federal Methodology need analysis formula approved by Congress. The EFC includes the parent contribution and the student contribution, and depends on the student’s dependency status, family size, number of family members in school, taxable and nontaxable income and assets. The difference between the COA and the EFC is the student’s financial need, and is used in determining the student’s eligibility for need-based financial aid.

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FAFSA (Free Application for Federal Student Aid)

The submission of the FAFSA is required to determine eligibility for virtually all forms of government financial aid. The FAFSA form is available from the U.S. Department of Education or any financial aid office. Find the FAFSA online by visiting the U.S. D.O.E. FAFSA Web site at http://www.fafsa.ed.gov.

Federal Family Education Loan Program (FFELP)

This federal program allows private lenders to offer federal loans including Federal Stafford Loans (Subsidized and Unsubsidized) and Parent Loans for Undergraduate Students (PLUS). Since FFELP loans are guaranteed against default by the federal government, they usually have low interest rates.

Federal Direct Student Loan Program (FDSLP)

The Federal Direct Student Loan Program (FDSLP) is similar to the Federal Family Education Loan Program (FFELP). The US government provides the funds for these loans directly to students and their parents through their schools. Benefits of the program include a faster turn-around time and less bureaucracy than the old “bank loan” program. The Federal Direct Student Loan Program (FDSLP) includes the Federal Direct Stafford Loan (Subsidized and Unsubsidized) and the Federal Direct Parent Loan for Undergraduate Students (PLUS).

Federal Loan

This is a loan guaranteed by the federal government.

Federal Stafford Loan

A low-interest federally guaranteed loan for students. Stafford Loans are either subsidized (need-based) or unsubsidized (non-need-based). The government pays the interest on a subsidized loan while a student is in school plus a six-month grace period after leaving school. Interest accrues on unsubsidized Stafford Loans from the disbursement date. A student can receive a subsidized loan and an unsubsidized loan for the same enrollment period.

Federal Supplemental Educational Opportunity Grant (FSEOG)

A grant for undergraduates with exceptional financial need. Federal Pell Grants recipients often get priority for a FSEOG, which has no repayment requirement.

Federal Work-Study

A federal program that provides jobs for undergraduate and graduate students with demonstrated financial need. The Federal Work-Study Program allows the student to earn money while encouraging community service work and often the employment relates to a student’s course of study.

Fellowship

A form of financial assistance usually awarded to a graduate student. Generally, no service is required of the student in return.

Financial Aid Administrator

This person is responsible for advising and counseling students regarding financial aid, and overseeing their financial aid packages.

Financial Aid Package

Federal and nonfederal aid such as grants, loans, college work study, and outside resources are combined in a “package” or a written notice of eligibility to help meet the student’s need. Financial need is the difference between the cost of attendance and the estimated family contribution. Fixed interest Rate of interest set at the time loan is negotiated that remains constant over the life of the loan.

Financial Need

The Cost of Attendance (COA) minus the Expected Family Contribution (EFC). The difference between what it costs to attend a particular college and the amount that a student and his/her family can afford to pay towards those expenses. Sometimes also referred to as “demonstrated financial need”. The amount that an applicant can be expected to contribute is measured according to standardized formulas. A student is generally eligible for aid equal to the amount of his/her financial needs, although an institution does not always have sufficient funds to meet full need.

Forbearance

During forbearance the lender allows the borrower a period of time in which the principal does not have to be paid, however the interest DOES continue to accrue, even on subsidized loans. During the forbearance period the borrower MUST pay the interest. Forbearances are granted by the lender at their discretion. Forbearance is usually allowed when a borrower is not eligible for deferment and has an extreme financial hardship or other unusual circumstances. A student is not eligible to receive forbearance if your loan is in default.

Free Application for Federal Student Aid (FAFSA)

The FAFSA form must be submitted because it is required to determine eligibility for virtually all forms of Federal Aid. The FAFSA form is available from the U.S. Department of Education or from any campus financial aid office and can also be found on www.realstudentloans.com. The federal government uses as its instrument for calculating need-based aid. To ensure your form is received you should send in your completed FAFSA form as close to January 2 nd as possible.

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Grace Period

This is the time a lender allows the borrower between the completion or graduation of courses and the beginning of loan repayments. The grace period is generally between six and nine months, but check with your lender.

Graduated Repayment

This payment schedule begins with lower payments and gradually raises them as time passes. This allows for a student that is new to the work force to pay a smaller monthly payment. Once the borrower has had time to raise their income their monthly payments also raise. This is not always a benefit so make sure you check the schedule of your lender’s graduated repayment.

Grant

Grants are financial aid given to students based on financial needs that never have to be repaid. Make sure to check with your high school guidance counselor, as well as your college counselor to see what grants you might be eligible for.

Guarantee Fee

This is a premium deducted from the proceeds of a Stafford Loan prior to disbursement and paid to the guarantor. A guarantee fee is also known as an insurance fee. This fee is deducted from the loan principal prior to the release of funds to the borrower. It is no more than 1% of the principal.

Guaranty Agency or Guarantor

This is the agency that actually administers the financial aid programs of the Federal Family Education Loan Program. They are state agencies or a private, nonprofit institution or organizations. Their main function is to insure Federal Family Education Loans. The federal government reimburses them for all or part of the insurance claims they pay to lenders.

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Half-Time Enrollment

This indicates whether a student’s enrollment status is at full- , half- , or part-time. Full-time students are usually enrolled in 12 credit hours. Half time usually refers to at least six credit hours. Make sure that you are always enrolled in at least half-time status because most financial aid requires at least this status.

HEAL

Health Education Assistance Loans are federally backed loans to students in approved health education programs. New loans to students were discontinued in 1998.

Home Equity

A mortgage’s unpaid principal subtracted from the home’s current market value.

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In-School Interest Rate

This is the rate at which interest accrues on Federal Stafford Loans while a student is still enrolled in at least half-time status. This rate is lower than the rate at which interest accrues when the loan is in repayment. The borrower is therefore not accruing interest at a high rate while they are receiving their loan.

Income-sensitive Repayment

This payment plan adjusts the borrower’s monthly payment each year based upon their expected total gross monthly income. With income-sensitive repayment your monthly payments are adjusted annually to meet your income.

Independent Status

A student is considered an Independent by the following criteria: is 24 years or older (as of 12/31 of the award year), is a graduate or professional student, is married, has legal Dependents, is an orphan or ward of the court; or is a veteran of the U.S. Armed Forces.

Institutional Methodology

Formulas used by many colleges, universities, graduate and professional schools, and private scholarship programs to determine an applicant’s need and eligibility for their own private, non federal student aid funds. While similar in some respects to the Federal Methodology (see above), the Institutional Methodology differs in others. For example, the IM takes home equity into account and includes a minimum expected contribution from the student, but also permits more generous treatment of medical/dental expenses, elementary, and secondary school tuition paid, and child support paid.

Interest

The amount of money charged for borrowing from a lender. Interest charges are usually included in each month’s payments. The interest of a loan can change based upon your payment plan or payment schedule. Income-sensitive repayment allows for the interest to be adjusted based upon the borrower’s expected gross monthly income. In-School Interest Rate alters the interest rate for when a student is enrolled and when they have completed coursework.

Interest period

This is the contractual time period during which interest accrues or is charged.

Interest rate

The percentage of a sum of money charged to the borrower for using that sum of money.

Internships

Internships are supervised work experiences, usually related to a student’s major field and lasting for only a short period of time. In exchange for this work the student receives course credit and gets the added benefit of work experience. The work can be full- or part-time, on- or off-campus, paid or unpaid. Examples of internships include, but are not limited to student teaching and apprenticeships.

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Lender

Any institution that loans money, such as banks, credit unions, savings and loans associations, organizations like NextStudent, and schools (under the Federal Direct Loan Program.)

LIBOR

LIBOR or London Interbank Offered Rate. The LIBOR is a financial index used to determine most private loan interest rates.

Line of Credit

A line of credit is a source of credit that has a predetermined limit and can serve as a loan. Once qualified, the borrower may borrow up to that predetermined limit. Once the borrower writes a check against his/her line of credit that line of credit is activated.

Loan

The temporary use of money provided by a lender.

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Maturity Date

This is the date when a loan reaches its maximum payment period and must be paid in full.

Merit-based Aid

This is financial aid based on an individual’s special talent or ability instead of financial need. Money for education awarded through contests, competitions, or certain scholarships is an example of merit-based aid.

National College Fair

A free program that allow students to interact with admission representatives from a wide range of postsecondary institutions to discuss course offerings, admission and financial aid requirements, college life in general, and other information pertinent to the college selection process. National College Fairs are held in the spring and in the fall each year.

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Need

Cost of Attendance (COA) – The Expected Family Contribution (EFC) = Need

Needs Analysis

Need analysis is the amount a student or a student’s family can afford to pay towards the student’s college education. Need analysis is determined by the financial resources reported on the FAFSA form.

Need-based Aid

Is calculated by the cost of education compared to a student’s (or a student’s family’s) ability to meet those costs.

Need-blind Admissions

An admissions policy in which the student’s ability or inability to pay college costs is not considered when determining whether or not the student is eligible for admission.

Non-portable Funding

This is college funding/aid that is for a specific university or for specific universities and can’t be transferred to another college or university. For example, many colleges have scholarship funds that are specific to that particular college. If a student leaves or transfers, the money remains at that particular school.

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Origination Fee

A fee paid by the borrower to the lender to cover administrative fees for his or her loan.

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Parental Contribution

This is an estimate of a parent’s ability to contribute to a student’s educational expenses.

Pell Grant

Need-based financial aid awarded to undergraduate students completing a four-year bachelor’s degree. Repayment of these grants is not required. Find out if you are eligible for a Pell Grant, as you will not need to repay these funds.

Perkins Loan

A Perkins Loan is a low-interest federal loan available to both undergraduate and graduate-level students who show extreme financial need. To apply for the Perkins Loan, you must have already applied for the Federal Pell Grant. Perkins Loans are administered by financial aid offices; make sure you check with your financial aid office to see if you are eligible for a Perkins Loan.

PLUS Loan (Parent Loan for Undergraduate Students)

A federal loan made available to parents of Dependent undergraduate students. The parent may borrow up to the cost of education less the student’s financial aid package to cover the student’s total educational expenses.

Portable Funding

In contrast to non-portable funding, this is college funding that can be used at any college or university. If a student were to transfer to another school this funding would still be accepted by the new college or university.

Prepaid Tuition Plan

The Prepaid Tuition Plan is a savings plan that guarantees the same rate of increase on a student’s savings as college costs increase. If a college or university’s costs increase a Prepaid Tuition Plan ensures that the student will have enough money to cover the cost of their education.

Prepayment

Prepayment is loan repayment ahead of schedule. Even though you have a payment schedule you may pay more than the require amount per month.

Principal

The principal is the unpaid or original dollar amount on a loan.

Private Loan

Also known as Alternative Loans, Private Loans are non-government loans offered by banks, credit unions and other lenders. These loans are not based on financial need, but rather on your creditworthiness and ability to repay. Private loan are designed to supplement federal loan programs. Private Loans can be used for a wide range of education purposes, including tuition, books, living expenses and computers.

Professional Judgment

This is when a financial aid administrator adjusts the EFC, COA, or dependency status of a student or a family. It typically occurs only in the event of extreme changes in the student’s personal situation. A death in the family, unemployment, disability, etc.; are all examples of extreme circumstances that would warrant a financial aid administrator to provide Professional Judgment.

Promissory Note

The legal, binding contract the borrower signs. It states the terms, details, and obligations of the borrower to repay the lender.

PSAT

The Preliminary SAT is a standardized test administered to high school juniors and seniors each October. The PSAT has the same format as the SAT, and serves as a rough predictor for SAT performance. PSAT scores from the junior year count toward National Merit Scholarship.

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Renewable Scholarships

Scholarships awarded over more than one year. Some renewable scholarships are automatically renewed, which means a student need not resubmit paperwork. Other scholarships, however, are not automatically renewed so make sure you know the renewal status of your scholarships.

Repayment Schedule

The Repayment Schedule is the designated term and payment amounts for a loan which include interest rates, monthly payments, and payment due dates. The repayment schedule will be clearly outlined in the promissory note.

Research Assistantship

A form of college funding typically reserved for graduate-level students that allows participants to perform research duties for their supervisors or professors. In exchange, students are usually awarded tuition reductions. These positions are administered by colleges.

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Satisfactory Academic Progress

Almost all forms of federal aid have stipulations regarding satisfactory academic progress. In other words a student must maintain a specific grade point average set forth by the institution. If the student does not show satisfactory academic progress, they run the risk of losing their federal aid.

SAT

The SAT is the standardized test that colleges and universities use as a tool to predict how well a student might do at their college, and therefore base a large portion of that’s student acceptance to their university on their SAT score. The SAT tests math and verbal reasoning abilities. The scores from a student’s test are then compared to those of other college bound students.

Scholarships

Scholarships are free aid granted to students based upon merit. Corporations, organizations, foundations, etc., award scholarships to students based on their aptitude in the following criteria: grades, community involvement, extracurricular activities, athletics, and arts.

Secondary Market

This is when the original lender sells an education loan to another lender. The purchaser of this educational loan is defined as the secondary market. The terms of the loan do not change in the secondary market. The borrower must be notified by their original lender whenever a sale has occurred.

Secured Loan

A secured loan is a loan that is secured by collateral. Collateral such as houses, cars, or other assets can be used to secure a loan. If the borrower defaults on this type of loan, the lender has the right to confiscate or sell the collateral used in acquiring the loan.

Servicer

The servicer is a third party paid by the lender to oversee the status of a loan, distribute funds, collect payments, and handle deferments, forbearances, and other related issues.

Simple Interest

Simple Interest is the interest charged on the principal balance of a loan, not the interest charged on interest that has accrued over time.

State Student Incentive Grants

State Student Incentive Grants are matching funds that are provided by the federal government to state governments. State Student Incentive Grants help state residents with financial aid.

Stipend

A stipend can be awarded to a student with a fellowship, scholarship or grant. A stipend is fixed or regular pay that helps a student with their everyday expenses.

Student Aid Report (SAR)

Once the government has determined a student’s need analysis, an official summary of eligibility is sent off to the student for their review.

Subsidized Loan

A subsidized loan s a need-based loan that’s interest is paid by the federal government while the student is in school. A subsidized loan is also paid by the federal government during the grace period and during authorized periods of deferment.

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Teaching Assistantship (TA)

Usually only awarded to graduate-level students, a teaching assistantship is a form of college funding that provides a partial/full tuition waiver and awards the student teacher a small stipend to supplement the cost of living.

Term of a Loan

This is the length of time allotted for repayment of the loan.

Title IV Programs

Programs created by Title IV of the Higher Education Act of 1965 (as amended), including Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOGs), Federal Work-Study, Federal Perkins Loans, Federal Stafford Loans, Federal PLUS Loans, Direct Stafford Loans, and Direct PLUS Loans.

Tuition

Tuition is the enrollment fee charged by an educational institution.

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Undergraduate Student

Undergraduate Students make up the majority of the collegiate student population. Undergraduate Students are students studying towards a four-year baccalaureate degree.

Unmet Need

Funding needed in addition to scholarships, grants, loans, or other financial aid awards, to cover a student’s total cost of attendance.

Unsecured Loan

An Unsecured Loans is a loan that does not require the borrower to provide the lender with collateral. Unsecured Loans typically carry higher interest rates and usually require a co-signer.

Unsubsidized Loan

With an unsubsidized Loan the student is responsible for paying the interest on an while attending school or while the loan is in deferment.

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Variable Interest

Variable Interest is interest that can fluctuate. Variable-interest loans have an annual or maximum cap. This cap prevents interest rates from exceeding a specified amount within a specified period of time. So although the interest can fluctuate it is capped so it cannot grow out of control within a short period of time.

Verification

Verification is proper documentation that must be submitted to a financial aid officer in order to verify the accuracy of information reported on a student’s financial aid application.

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Weighted GPA

A weighted GPA takes into account the credit hours of a class so such that an A in a 3-credit hour class counts more toward the total GPA than does an A in a 1-credit course.