The date on which interest charges on an educational loan begin to accrue.
Interest on a loan that accumulates and is paid in installments at a later time (usually when the principal becomes due) rather than interest that is paid on a regular schedule from the time a loan is disbursed and interest begins. Accrued interest may be compound (interest computed on the sum of an original principal and accrued interest) or simple (interest computed on the original loan principal only).
Adjusted Gross Income (AGI)
Taxable income after all allowable deductions are made, such as IRA deductions, moving expenses, self-employment taxes and health insurance, Keogh retirement plans, and alimony paid.
Aggregate Loan Limit
The maximum Direct Stafford Loan amount, subsidized and unsubsidized, students attending a postsecondary educational institution are allowed to borrow throughout their educational careers.
Education loan programs established by private lenders to supplement the student and parent education loan programs available from federal and state governments.
A program established through the National and Community Service Trust Act of 1993 designed to reward individuals who provide community service with educational benefits. A college student can work before, during, or after postsecondary education, and can use the funds to pay current educational expenses or to repay federal student loans.
The process of gradually repaying a loan over an extended period of time through periodic installments of principal and interest.
Annual Loan Limit
The maximum loan amount, subsidized and unsubsidized, college students are allowed to borrow during a specified award year. The annual limit for a Direct loan is determined by a student’s grade level.
Annual Percentage Rate (APR)
The actual rate of simple interest (interest computed on the original loan principal only) paid by the borrower of a loan.
These are financial holdings such as cash on hand in checking and savings accounts, trust funds, stocks, bonds, other securities, real estate (but excluding the family home), income-producing property, business equipment, and business inventory. This is the property value and debt that must be reported on the FAFSA.
Award and Award Package
Financial assistance offered to a student to help reduce the cost of postsecondary education. Types of awards include scholarships, grants, loans or work programs, and are funded by federal, state, and private sources. The combination of all awards is often referred to as the financial aid award “package”.
An official document issued by a school’s financial aid office that lists the financial assistance being offered to the student. The award notification includes information on the types and amounts of aid being offered, specific loan programs, student responsibilities, and conditions that govern the awards. You are required to accept the Terms and Conditions of the aid being offered before disbursement can occur. You must also accept or decline any student loans awarded.
An individual who agrees to take on the obligation of repaying a loan and accepts the terms of the loan by signing a promissory note. For financial aid purposes, students are borrowers of the Direct Loan, subsidized and unsubsidized, and parents of legally dependent undergraduate students are the borrowers of the Direct PLUS Loan for Undergraduate Students (PLUS).
See Cost of Attendance.
The term commonly applied to federal student aid programs administered directly by financial aid offices at eligible postsecondary educational institutions. The federal government provides the university with a fixed annual allocation. These programs include Federal Work-Study (FWS) and Federal Supplemental Educational Opportunity Grant (FSEOG). Note that there is no guarantee that every eligible student will receive financial aid through these programs because the awards are made from a fixed pool of money.
The result of a borrower meeting specific requirements established by law that release the borrower from all obligation to repay a federal educational loan. Cancellation results in the principal and interest being paid by the federal government. Cancellation is not automatic, and the appropriate loan agency must be contacted for more information.
The process of deferring interest payments as they come due and adding the accrued interest to the principal amount of the loan. Although capitalizing is a way to postpone interest payments, it adds to the amount of the principal and, consequently, increases both the interest (based on the higher principal) and the overall amount that must eventually be repaid.
Central Processing System (CPS)
The computer system to which the Federal Processing Center, as contracted by the U.S. Department of Education, electronically transmits FAFSA need analysis data. The CPS performs computer database matches to ensure that a student meets certain eligibility requirements, calculates the official family contribution, and prints out the SAR and mails it to the student applicant.
You must be one of the following to receive federal student aid:
- U.S. Citizen; or
- U.S. National (includes natives of American Samoa or Swain’s Island); or
- U.S. permanent resident who has an I-151, I-551, or I-551C (Alien Registration Receipt Card).
If you’re not in one of these categories, you must have an Arrival-Departure Record (I-94) from the U.D. Immigration and Naturalization Service (INS) showing one of the following designations in order to be eligible:
- Asylum Granted
- Indefinite Parole and/or Humanitarian Parole
- Cuban-Haitian Entrant, Status Pending
- Conditional Entrant (valid only if issued before April 1, 1980)
If you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), you aren’t eligible for federal student aid.
If you’re in the United States on an F1 or F2 student visa only, or a J1 or J2 exchange visitor visa only, you can’t get federal student aid. Also, persons with G series visas (pertaining to international organizations) are not eligible for federal student aid.
Combining two or more loans into one new loan that has a longer repayment term and a single monthly payment that is smaller than the sum of previous monthly payments. By consolidating eligible federal student loans and extending the repayment term (up to 30 years, depending on the total loan amount), repayment can be easier. Note that while this may ease the borrower’s cash flow, consolidation can add significantly to the amount of overall interest that is paid over time.
A signer other than the borrower who agrees to assume responsibility for repayment in the event that the borrower fails to repay. This second party guarantees that the loan will be repaid if the borrower fails to make payments.
Cost of Attendance (COA)
The estimated cost of a student’s postsecondary education in a particular enrollment period. It includes the following components: average tuition and fees, allowances for room and board (either on or off campus), books and supplies, transportation, and miscellaneous personal expenses. Other expenses may be included depending on circumstances. Loan fees, if applicable, may also be included in the cost. The figure is used in a calculation to determine a student’s eligibility for financial assistance programs. Cost of attendance is also known as cost of education or budget.
Data Release Number (DRN)
The confidential four-digit number found on the Student Aid Report (SAR). A financial aid applicant needs to provide the DRN when communicating with the Federal Student Aid Information Center regarding Free Application for Federal Student Aid (FAFSA) and SAR processing.
The failure of a borrower to repay a loan according to the terms agreed to when the promissory note was signed. A borrower is considered to be “in default” when payments are 180 or more days overdue and no satisfactory arrangements for deferment or forbearance have been made. Defaults are recorded on the permanent credit record and can result in serious legal consequences for the borrower. Student loan borrowers cannot get out of default until they pay back their loan in full, sign new loan agreements, or reschedule their debt. They are also ineligible for additional federal student aid, including grants and loans.
Deferment (on a Stafford Loan)
A limited and specified period of time during which a borrower of a federal educational loan is not required to make regular monthly payments. To qualify for deferment, the borrower must meet one or more of a number of requirements established by law. Interest payments may or may not be postponed depending on the type of loan. Deferment is not automatic, and the appropriate loan agency must be contacted for more information.
The failure of a borrower to make a loan payment by the due date. If the borrower misses several payments, the loan goes into default.
A student who is regarded by federal regulations as being dependent on his/her parents for support. A dependent student should answer “No” to the following:
- Were you born before January 1, 1989?
- As of today, are you married?
- At the beginning of the 2012-13 school year will you be working on a master’s or doctorate program?
- Are you currently serving on active duty in the U.S. Armed Forces for purposes other than training?
- Are you a veteran of the U.S. Armed Forces?
- Do you have children who will receive more than half of their support from you between July 1, 2012 and June 30, 2013?
- Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now through June 30, 2013?
- At any time since you turned 13, were both your parents deceased, were you in foster care or were you a dependent or ward of the court?
- Are you or were you an emancipated minor as determined by a court in your state of legal residence?
- Are you or were you in legal guardianship as determined by a court in your state of legal residence?
- At any time on or after July 1, 2011, did your high school or school district homeless liaison determine that you were an unaccompanied youth who was homeless?
- At any time on or after July 1, 2011, did the director of an emergency shelter or transitional housing program funded by the U.S. Dept of Housing and Urban Development determine that you were an unaccompanied youth who was homeless?
- At any time on or after July 1, 2011, did the director of a runaway or homeless youth basic center or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless?
Direct Student Loan Direct Loans are low-interest loans for students and parents to help pay for the cost of a student’s education after high school. The lender is the U.S. Department of Education (the Department) rather than a bank or other financial institution.
Disbursement The process by which financial aid awards are made available to students for expenses related to the Cost of Attendance.
The document that provides information to a borrower about the terms of a loan and the consequences of default. It includes such items as the amount of the loan, the interest rate, fee charges, length of grace period (if any), the maximum length of the repayment period and the minimum annual repayment amount, deferment conditions, and the definition of loan default.
Expected Family Contribution (EFC)
The dollar amount the federal government expects that a student (and parents, if dependent, or spouse, if married) can contribute toward the student’s postsecondary educational expenses. The EFC is computed using the income and asset information reported on the FAFSA in a formula established by Congress as federal law. It is made up of two components: the Parent Contribution (if the student is dependent) and the Student Contribution. The EFC is used in a calculation by schools to determine a student’s eligibility for financial assistance programs.
See Free Application for Federal Student Aid.
FAFSA on the WEB
The electronic system available on the U.S. Department of Education web site where an individual can complete the FAFSA online and submit it via the Internet. Also see “Free Application for Federal Student Aid”.
Federal Pell Grant
The Federal Pell Grant is a federal grant awarded to undergraduate students with no prior bachelor’s or professional degree. The student must meet satisfactory academic progress standards and all eligibility requirements for admittance to the University. Eligibility for the Pell Grant is determined by the student’s Expected Family Contribution (EFC) and Cost of Attendance (COA). The amount of money awarded is prorated based on the number of hours enrolled. The EFC is determined by completing the Free Application for Federal Student Aid (FAFSA). The Pell Grant is gift aid that does not have to be repaid.
Federal PLUS Loan
The Parent PLUS Loan is a loan for parents to help pay the cost of education for dependent undergraduate students. Parents may borrow up to the full cost of attendance less any other financial assistance the student receives. Parents must be able to pass a credit check or obtain a ‘co-signer’ who is able to pass the credit check. Both the parent and student must meet general eligibility requirements for federal financial assistance.
Federal Processing Center (Also called Federal Processor or FAFSA Processor)
An organization contracted by the U.S. Department of Education to process a financial aid applicant’s completed FAFSA and electronically transmit the resulting need analysis data to the federal Central Processing System.
Federal Stafford Loans
Federal loans that come in two forms, subsidized and unsubsidized. Subsidized loans are based on need; unsubsidized loans are not. The interest on the subsidized Stafford Loan is paid by the federal government while the student is in school and during the 6 month grace period. The federal government does not pay the interest on the Unsubsidized Stafford Loan.
Federal Student Aid Information Center
The government agency to contact with general questions about the federal financial aid application process. The number is 1-800-433-3243. Some of the services provided by counselors at this number include assistance with completing the FAFSA, explanation of the SAR and how to make corrections, and assessment of the status of FAFSA and SAR processing.
Federal Supplemental Educational Opportunity Grant (FSEOG)
The SEOG is a federal grant available to undergraduate students with exceptional need. Students with the lowest Expected Family Contribution, who are also receiving a Federal Pell Grant, may be eligible to receive this grant. Not all recipients of the Federal Pell Grant will receive the Federal Supplemental Educational Opportunity Grant due to the availability of funds. The SEOG is gift aid that does not have to be repaid.
An employment program funded by the federal government and administered by postsecondary educational institutions that provides part-time jobs for students with financial need. “Work study” does not mean that a student is paid to study; students must apply for a job, and satisfy the employer’s requirements to be hired and maintain the job.
The general term that describes financial assistance offered to a student to help reduce the cost of postsecondary education. Programs can include scholarships, grants, loans or work programs, and are funded by federal, state, and private sources. They are meant to supplement what the student (and parents, if dependent, or spouse, if married) is expected to contribute toward educational expenses.
The difference between the cost of a student’s postsecondary education and the dollar amount the federal government determines from data reported on the FAFSA that a student (and parents, if dependent, or spouse, if married) can contribute toward those costs. Eligibility for need-based financial aid programs is determined using the resulting figure.
Forbearance (of a Federal Loan)
A limited and specified period of time during which a borrower of a federal educational loan, because of hardship, is permitted to postpone or reduce loan payments. Also, forbearance may be given for circumstances that are not covered by deferment. To qualify for forbearance, the borrower must meet one or more of a number of requirements established by law. Usually the borrower is charged for the interest that accrues on the loan during the forbearance period. Forbearance is not automatic, and the appropriate loan agency must be contacted for more information.
Free Application for Federal Student Aid (FAFSA)
The application form published by the U.S. Department of Education which is used to apply for federal and state student aid, including TOPS. This form must be completed each academic year to be considered for financial aid. The FAFSA collects income and asset data that allows for a determination of the family contribution figure. Once the applicant submits the FAFSA to the federal government’s processing center, the data is prepared for release to the schools and state agencies listed on the application. A student might be permitted to file the Renewal FAFSA if a FAFSA was filed in the previous academic year. The renewal form contains both preprinted data with responses from the prior year FAFSA, as well as other items that must be updated with current information. If a student qualifies to use the renewal FAFSA, the federal government will notify the student in the months of December or January for the following academic year.
Gift Aid or Gift Assistance
Funding for postsecondary education, such as grants or scholarships, that does not require repayment or a work obligation.
The time period that begins the day a borrower no longer qualifies for loan deferment at a postsecondary educational institution: the date of graduation, or the last day of attendance, or the date a student’s enrollment drops to below half-time status. The grace period is six months for Federal Direct Stafford Loans, subsidized and unsubsidized loans. During the grace period, repayment of loan principal (and, in some cases, interest) is not required.
Funding for postsecondary education, usually awarded on the basis of need, that does not require repayment or a work obligation. Federal Title IV grant programs include Pell Grant, Supplemental Educational Opportunity Grant (SEOG), and Teacher Education Assistance for College and Higher Education Grant (TEACH).
Higher Education Act (HEA) of 1965
Landmark national higher education legislation passed by Congress and signed by President Lyndon B. Johnson in 1965. Title IV of the HEA authorizes the majority of the nation’s federal postsecondary financial aid programs and mandates that they be regulated and administered by the U.S. Secretary of Education. The HEA is effective for approximately five years, requiring Congress to reauthorize it, that is, review and then renew, terminate, or amend existing programs. The statute’s most current version, as amended, always stands as the official version of the law.
Hope Tax Credit (also called the American Opportunity Tax Credit)
An income tax credit available to taxpayers financing a student’s postsecondary education. The credit is based on a student’s college tuition and fee charges, minus grants and scholarships, and other tax-free educational assistance. For more information, visit www.irs.gov
A student who is regarded by federal regulations as not being dependent on his/her parents for support. For federal student aid purposes, an independent student should be able to answer “yes” to at least one question in step 3 of the FAFSA. * For a list of questions, see Dependent Student.
Interest on a Loan
The fee a lender charges a borrower for using money. In regard to federal student loans, the interest that is accruing while the borrower is enrolled at least half time, during the grace period and during any other approved deferment period is paid by the federal government on the borrower’s behalf for the Federal Stafford Subsidized Loan, or billed to the student for the Federal Stafford Unsubsidized Loan. For all loan programs, once repayment of loan principal begins, interest is charged.
The organization that furnishes loan funds, whether it be a bank, college, the government, or another establishment.
Lifetime Learning Credit
An income tax credit available to taxpayers financing a student’s postsecondary education. The credit is based on a student’s college tuition and fee charges, minus grants and scholarships, and other tax-free educational assistance. For more information visit www.irs.gov
With respect to financial aid, a sum of money (principal) borrowed to assist with the financing of a student’s postsecondary education. By signing a promissory note, the borrower promises to repay a specified amount under prescribed conditions. The lender usually charges interest for use of the money, and the amount borrowed is typically repaid with interest over a period of time.
The time frame covered by an educational loan, generally two semesters in length, beginning at the start of the one semester and running through the last day of the next consecutive semester. However, a loan period can also be only one semester in length.
The agent designated to track and collect a loan on behalf of a lending institution.
National Student Loan Database Service (NSLDS)
A system of the federal government which houses a student’s federal educational loan borrowing history. All lenders are required to report a student’s loan information to this database system.
Any form of monetary assistance awarded by a postsecondary educational institution on the basis of a student’s demonstrated financial need. Need is established by subtracting the family contribution figure, as calculated from the FAFSA data, from the average cost of attendance figure. If a positive amount remains, the student may be eligible for a number of need-based aid programs. Also see “Financial Need”.
The average yearly price actually charged full-time, first-year undergraduate students receiving student aid at an institution of higher education – calculated by subtracting the average need-based and merit based grant from the cost of attendance.
Fee paid to the bank to compensate them for the cost of administering the loan. The charge is subtracted from each loan disbursement before the student receives the funds. However, the student is responsible to repay the 100% gross amount of the loan.
A situation that occurs when a student’s family contribution plus any financial aid awarded exceeds the cost of attendance at a given college. Overawards result most often when additional resources (such as a private scholarship) become available to a student.
Postsecondary Educational Institution
An institution providing education beyond the high school level. The term is used to refer to community colleges and to four-year colleges and universities, as well as trade and technical schools.
The amount of money borrowed through a loan, excluding interest or other charges (unless they are capitalized).
The legal authority of financial aid administrators to change data elements used in determining financial aid eligibility for a student attending a postsecondary educational institution based on the special circumstances of a student.
The contract between a lender and a borrower that contains the terms and conditions governing the loan program, including the repayment obligations. It becomes legally binding when signed (executed) by the borrower. The borrower promises to repay the loan, with interest, in periodic installments. Borrowers should retain copies of all promissory notes until the loans are fully paid.
See Free Application for Federal Student Aid.
Repayment (of a Federal loan)
The process of paying back an educational loan to the U.S. Department of Education in periodic (usually monthly) installments of principal and interest. A choice of repayment plans or consolidation may be available. A federal educational loan must be repaid even if the student doesn’t complete a school’s program of study, doesn’t like the school or the program of study, or doesn’t obtain employment after completing the program of study.
Special repayment features may be offered at the discretion of the lender. Some are designed to reward timely payment. Other programs are designed to make payment both more convenient and less expensive.
Description of the borrower’s monthly payment, interest rate, total repayment obligation, due dates, and length of time for repaying the loan.
See Student Aid Report.
Satisfactory Academic Progress (SAP)
The level of academic achievement expected of a student in order to continue to receive financial aid. By law, postsecondary educational institutions whose students receive federal Title IV funds must create policies for monitoring a financial aid recipient’s level of academic progress toward a degree or certificate within a given period of time.
A form of educational financial assistance that does not require repayment or a work obligation. A “merit-based” scholarship is awarded to a student who demonstrates potential for distinction, usually in academic performance. A “need-based” scholarship is awarded to a student who demonstrates financial need. Some scholarships may require both academic proficiency and demonstrated financial need.
For financial aid purposes, the federal ID number assigned to postsecondary educational institutions by the U.S. Department of Education. Nicholls’ school code, also known as the Title IV Code or Federal School Code, is 002005.
Registration for the military draft. Male students who are U.S. citizens and have reached the age of 18 and were born after December 31, 1959, must be registered with Selective Service to be eligible for federal financial aid. If the student did not register and is past the age of doing so (18-25), and the school determines that the failure to register was knowing and willful, the student is ineligible for all federal student financial aid programs. The school’s decision as to whether the failure to register was willful is not subject to appeal.
Financial aid loan programs or employment opportunity programs awarded to a student by a postsecondary institution as a form of educational financial assistance.
Statement of Educational Purpose
A statement on the Free Application for Federal Student Aid (FAFSA), that all students must sign in order to receive federal student aid. By signing you agree that:
- You are to use your student aid only for education-related expenses.
- You have complied with Selective Service requirements by registering with the Selective Service or indicating the reason why you are not required to register.
Student Aid Report (SAR)
The official notification from the federal government that summarizes the information submitted on the Free Application for Federal Student Aid (FAFSA). The document is sent directly to a college student from the federal Central Processing System and displays the calculated Expected Family Contribution (EFC) figure and special messages related to the student’s application. It is to be reviewed carefully for mistakes that could have been made by the student when the FAFSA was completed, or by the federal government when the FAFSA was processed. If the SAR data does not require corrections, the student may keep the document with personal records. If corrections are needed, contact your Financial Aid Office.
The Subsidized Stafford Loan is awarded to undergraduate and graduate students on the basis of financial need determined by the Free Application for Federal Student Aid (FAFSA). Lending institutions, such as banks or credit unions, provide the funds for this loan. The federal government pays the interest on this loan until you begin repayment. Repayment of this loan will begin six months after you graduate, leave school, or drop below half-time enrollment (6 hours). This loan must be repaid.
Title IV Funds
Federal financial aid programs authorized under Title IV of the Higher Education Act of 1965, as amended, and regulated and administered by the U.S. Department of Education.
A loan for which the government does not pay the interest. The borrower is responsible for the interest on an unsubsidized loan from the date the loan is disbursed, even while the student is still in school. Students may avoid paying the interest while they are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need and may be used to finance the family contribution.
Income (earnings) or resources that are not reported to the Internal Revenue Service and therefore not subject to federal tax, or are reported but excluded from taxation. Examples of untaxed income are welfare benefits, child support, interest on tax-free bonds, some Social Security benefits, certain unemployment compensation, and military and other subsistence and quarters allowances. Refer to the Free Application for Federal Student Aid (FAFSA).
U.S. Department of Education (ED or DOE)
The branch of the federal government that administers the federal financial assistance programs for students attending postsecondary educational institutions. These programs include: Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), Federal Stafford Loans, and Federal Consolidation Loans.
The rate of interest that changes periodically (i.e., quarterly, annually, etc.) during the life of a loan on a regular basis and is generally tied to an index. Some student and parent loan programs have variable interest rates that change annually based on the one-year Treasury Bill rate.
The process by which a postsecondary institution confirms an individual student’s application data.