Award Letter - Issued by the college Financial Aid Office,
this official document lists all of the financial aid awarded to a student.
Capitalization - If you choose to defer paying interest on your loan while in
school, the interest is capitalized or added to the principal.
Co-signer - A signer of a Promissory Note who is secondarily liable for a loan
obligation.
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Cost of Attendance - The total amount it will cost a student to attend. This
includes tuition and fees, room and board, books, supplies, transportation costs and
personal expenses.
Dependent Student - An undergraduate student whose parents provide more than
half of their financial support, is not married, is under 24 years of age, has no legal
dependents, is not an orphan or ward of the court, and not a veteran of the United States
Armed Forces.
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Expected Family Contribution (EFC) - The amount the federal government, via the
FAFSA process, estimates that a family should contribute to the cost of a college
education, based on income, assets and other circumstances.
Free Application for Federal Student Aid (FAFSA) - The federal form which
determines eligibility for all federal financial aid programs.
Federal Family Education Loan Program (FFELP) - A loan program authorized by the
federal government in the Higher Education Act. This program includes Federal Stafford,
PLUS and Consolidation Loans. These loans are funded by banks, guaranteed by guaranty
agencies and ultimately insured by the federal government.
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Financial Aid Eligibility - The difference between the total cost of attendance
and the Expected Family Contribution (EFC).
Financial Aid Package - The total amount of financial assistance a student
received, including grants, scholarships, work-study and loans, as listed in the college's
financial aid award letter.
Grace Period - The amount of time allowed before principal repayment of loan
must begin after the student graduates, leaves school or drops below half-time status.
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Grants - A form of financial aid, similar to scholarships, that does not have to
be repaid.
Guarantee Fee - A fee paid to the guaranty agency to insure the loan. The amount
of the fee is deducted from the dollar amount of the loan.
Guaranty Agency - An agency that insures the student loans made by lenders.
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Independent Student - A student who meets one or more of the following criteria:
24 years of age or older, married, a graduate or professional student, has legal
dependents other than a spouse, is an orphan or veteran of the United States Armed Forces.
Interest - The fee charged to borrow money, usually a percent of the outstanding
loan amount, which accrues and is paid over the life of the loan.
Loan - A sum of money borrowed (principal) usually for a specific reason (e.g.
to obtain an education). The bank lending the money usually charges interest for use of
the money. The amount borrowed is typically repaid with interest over a period of time.
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Monthly Payment - This is the amount that you must pay each month on your loan
during repayment.
Origination Fee - The fee charged by the government to offset the cost of
processing the loan. The amount of the fee is deducted from the dollar amount of the loan.
Payment Schedule - A summary of the terms of a loan, which includes the total
principal amount, the date payment begins and the interest rate.
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Perkins Loan - A campus-based, low interest loan for graduate and undergraduate
students. The college acts as the lender using a limited pool of funds provided by the
federal government. These loans are awarded based on exceptional financial need.
Parent Loan for Undergraduate Student (PLUS) - These are loans under the FFELP
and are for parents of dependent undergraduate students. They require a credit check. The
interest rate is low and repayment begins 60 days after disbursement.
Principal - The amount of the loan that must be repaid upon maturity, and the
amount upon which interest will be charged.
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Promissory Note - The binding document that a borrower signs before receiving
the loan proceeds. The note includes information about the terms and conditions of the
loan and the borrower's promise to pay.
Student Aid Report (SAR) - This report is sent to you by the government about
4-6 weeks after you submit your FAFSA. This report will inform you of your EFC (Expected
Family Contribution).
Scholarships - Scholarships, like grants, do not have to be repaid. These are
available from many sources including community groups, schools and private corporations.
Scholarships can be awarded based on a variety of criteria including scholastic
achievement, hobbies and majors.
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Stafford Loan - Loans under the FFELP awarded on the basis of financial need.
The Federal Stafford Loan can be either subsidized or unsubsidized or a combination of
both. These loans can be made from a bank, credit union or other eligible lender.
Subsidized Federal Stafford Loan - The government pays the interest for the
student while in school at least half-time and during periods of grace and deferment.
Unsubsidized Federal Stafford Loan - The student is responsible for paying the
interest on the loan while in school, and during periods of grace and deferment.
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Variable Interest - Interest rates that change periodically (e.g. quarterly,
annually). The interest rates for Federal Stafford and PLUS Loans are set by the
government each year and change annually on the first of July.
Work-Study - Part of the Federal Student Financial Assistance Program,
work-study provides part-time employment for students who need income to help meet
education costs.