Glossary of Financial Aid Terms - Henderson State University

A
Academic scholarships − funding awarded for academic
achievement or class rank.
Academic transcript − an official report that lists all courses taken
and grades earned during high school or college.
Annual percentage rate (APR) − a percentage calculation
reflecting total annual cost of a loan (interest plus all fees).
Asset − any property with monetary value. Common types are
cash, bank accounts, homes, land, stocks, bonds, and other
investments. Cars, boats, jewelry, etc. may also be considered.
College financial aid offices consider family assets in determining
financial aid eligibility.
Athletic scholarship − funding based on athletic achievement,
awarded to student athletes who compete on school sports teams.
Award letter − a notice outlining the amount and type of financial
aid awarded and any conditions attached. Review this document
carefully.
Award year − varies by school, usually includes fall through spring
semesters/quarters. Funding for Federal Pell Grant and campus based
programs is provided on the basis of the award year. A
student receives funding for a particular award year.
B
Borrower − anyone who obtains funds in loan form. A signed
promissory note serves as the formal, legal promise to repay.
Budget − a spending plan developed for a specified period.
Bursar − the university office responsible for money management.
The bursar or business office processes education loan checks and
electronic funds transfer (EFT) transactions.
C
Campus-based program − government funding that is
administered and awarded to students by college financial aid
offices, in accordance with federal guidelines. Examples include
the Federal Perkins Loan, Federal Supplemental Educational
Opportunity Grant (SEOG) and Federal Work-Study.
Capitalization − interest that accumulated while you were in school,
and which is added to the amount borrowed at periodic intervals.
Citizen/eligible non-citizen status − to receive federal student aid
a student (or parent if a PLUS borrower) must be a:
• U.S. citizen (or)
• U.S. national including Samoa or Swain’s Island natives (or)
• U.S. permanent resident holding an I-141, I-551, or I-551C Alien
Registration Receipt Card.
Collection agency − a business organization that agrees, for a fee,
to collect on loan accounts that are delinquent or in default.
Commuter student − a student who does not reside in on-campus
housing, or who attends a college that does not offer housing.
Consolidation − the combination of several loans into a single
new loan. Though consolidation can reduce monthly payments by
extending repayment terms, total interest cost may be greater over
the life of the loan. To consolidate loans, the borrower must already
be in repayment or a grace period.
Cosigner − a person who enters a loan or credit agreement to
enable another borrower lacking sufficient credit history to qualify.
Both parties become legally responsible for repayment.
Cost of Attendance (COA) − the total amount needed to cover
education expenses including tuition, fees, room, board, books and
supplies, transportation, and personal expenses. Also known as
Cost of Education.
Credit bureau − an agency that compiles and reports financial
information to lenders and other creditors. Information may include
a borrower’s payment habits, number of credit accounts, account
balances, place and length of employment, and records of financial
transactions.
Credit history − a credit bureau report showing a borrower’s
financial records over time.
D
Death or disability − in the event of death or permanent and total
disability of a Federal Family Education Loan Program (FFELP)
student loan or parent PLUS borrower, the loan may be canceled.
Debt − an amount of money owed.
Default − failure to repay a loan according to the terms of a
promissory note. Defaults are recorded on your permanent credit
record and can have long-term adverse consequences.
Deferment − as approved by your lender, postponement of
repayment of principal and/or interest, or temporary postponement
of payments for specific circumstances. You must apply to your
lender and qualify under specific guidelines.
Delinquency − failure to make payments when due.
Department of Education (DOE) − the U.S. government agency that
ensures equal access to education and promotes education
excellence for all Americans.
Dependency status − based on U.S. Department of Education
criteria, a student is deemed either dependent or independent.
Dependent student − a student who relies on parents for
financial support or who does not meet the criteria set by the DOE to
be considered independent.
Disbursement date − the date on which a lender issues a loan
check and sends it to your college.
Disclosure statement − lender’s statement of total amount and
cost of a borrower’s approved loan, including amount, interest
rate, any additional finance charges and repayment rights and
responsibilities.
Discretionary income − money available after fixed expenses
(such as food, clothing, housing, utilities, insurance,
car payment, etc.).
E
Electronic funds transfer (EFT) − moving money between
entities electronically (in the case of student loans, the electronic
disbursement of funds to a borrower’s college or university).
Eligible institution − an institution of higher education, vocational
school, post secondary vocational institution, or proprietary
institution of higher education that meets all criteria for participation
in student loan programs.
Eligible program − a program of study that requires a specified
minimum number of instruction hours, and which leads to a degree
or certificate.
Enrollment status − a student’s standing as a full- or part-time
undergraduate, graduate, or professional student.
Entrance counseling − a loan repayment and debt management
counseling session, required by federal regulations, which each
student must complete prior to the disbursement of an education loan.
Exit counseling − a loan repayment and debt management
counseling session, required by federal regulations, which each
student must complete prior to graduating from or leaving school.

Expected Family Contribution* (EFC) − based on federal criteria,
the amount a family is expected to pay toward education.
Expenses − incurred costs on which money is spent. Student
expenses include tuition, room and board, and other living costs.
F
Federal consolidation loan − a federal program that permits
multiple education loans taken by a student to be combined into a
single new loan.
Federal Direct Student Loan* (FDSL) − a program that allows
students and parents to obtain education loans funded directly
by the federal government, rather than by traditional lenders. Also
known as the William D. Ford Federal Direct Loan Program.
Federal Family Education Loan Program* − Federal Stafford,
Federal Unsubsidized Stafford and Federal PLUS loan programs
funded by private lenders and guaranteed by the federal
government.
Federal Pell Grants − the largest federal grant program. It awards
funds to millions of lower-income students each year.
Federal PLUS Loan* − a federal loan for parents of dependent
undergraduates, which is not based on financial need. A parent
can borrow as much as the cost of education minus financial aid.
Repayment begins immediately.
Federal Subsidized Stafford Loan* − a federal student loan
program with eligibility requirements based on financial need. The
federal government pays (subsidizes) interest incurred by student
borrowers during in-school, authorized deferment, and grace
periods. The college financial aid office determines loan amounts,
subject to program limits. Repayment is deferred until six months
after graduation.
Federal Supplemental Educational Opportunity Grant* (FSEOG) −
a need-based federal grant that can be used to supplement the
Federal Pell Grant. Maximum award depends on college policy,
availability of funds, total cost of education and amount of other
financial aid awarded.
Federal Unsubsidized Stafford Loan − a federal student loan
program that is not based on need. Students are responsible for all
loan interest, and may pay it during in-school, deferment and grace
periods, or have it added to the loan balance. The financial aid office
determines loan amounts, subject to program limits. Repayment is
deferred until six months after graduation.
Federal work-study program − part-time employment for students
who need assistance to pay postsecondary education costs. A
combination of federal and college or agency funds pays at least the
federal minimum wage to eligible student employees.
Fellowship − a grant for postgraduate study that may require
teaching or research.
Finance charge − a fee charged for the use of money over time,
such as fees resulting from carrying an unpaid balance on a credit
card.
Financial aid − funding that is granted students to assist with
educational expenses.
Financial Aid Administrator (FAA) − an individual who prepares
and communicates information, supervises functions, and
provides advice regarding student loans, grants, scholarships,
and employment programs. Responsibilities include interpreting,
announcing, and implementing federal, state, and institutional
policies and regulations, and responding to student and employee
needs.
Financial aid package − the total amount of financial aid a student
receives. To help meet need, federal and non-federal aid such as
grants, loans, or work-study assistance are combined in a package.
The school’s Financial Aid Administrator uses available resources to
give each student the best-possible aid package.
Financial aid transcript − an official report listing all financial aid
and loans received during your college enrollment.
Financial need − the cost of attendance (COA) minus expected
family contribution (EFC), as determined by federal criteria.
Fixed interest rate − an interest rate that is not subject to change.
Free Application for Federal Student Aid (FAFSA) − the form
used to determine financial aid eligibility for federal programs.
Forbearance − a period of time during which a lender agrees to
permit a borrower to temporarily postpone monthly payments,
or temporarily reduce the monthly payment amount, based on
hardship.
G
Garnishment of wages − the deduction of a portion of a borrower’s
pay, with or without the borrower’s consent. A lender or the
government may take this action to force repayment of a
defaulted loan.
Gift aid − financial aid not requiring repayment (e.g., scholarships
and grants).
Grace period − the period of time granted by a lender before the
borrower is required to begin debt repayment. Interest may continue
to accrue during this period.
Graduate school − higher education beyond the baccalaureate level.
Graduated repayment − a plan that offers lower monthly payments
at the beginning of the repayment term, with gradual increases in
the monthly payment amount over time.
Grant − a form of gift aid requiring no repayment.
Guarantee fee − a percentage of the loan principal that is charged
to a borrower as an insurance premium and deducted from loan
proceeds.
Guaranty agency − a government agency or non-profit institution
that manages student loan insurance programs to protect lenders
against losses resulting from borrower default, death, disability or
bankruptcy.
H
Hardship − a period of financial difficulty during which the lender
allows the borrower to delay repayment or decrease monthly
payments.
Holder − the institution that owns your loan.
I
Income-sensitive repayment − a loan repayment option with
payments set at a percentage of your income and reviewed
annually. To qualify, you must provide your lender with income
documentation, including tax returns, each year.
Independent student − for financial aid purposes, students
meeting the federal definition must be: 24 years old or older, or
married, or a veteran, or an orphan or a ward of the court, or
have a legal dependent other than a spouse or be a graduate
or professional student.
Installment loan − a loan that requires scheduled payments over a
specified period. Examples include education loans, auto loans, and
personal loans.
Institutional grant − a form of gift aid funded by the college or
university.

Insurance premium − also known as guarantee fee, a fee charged
to the borrower by guarantor that is calculated as a percentage of
principal.
Interest − the cost paid over time to use a lender’s money.
Internship − work experience, paid or unpaid, acquired while in
college.
L
Lender − a bank, savings and loan, credit union, or other financial
institution that provides money through loans.
Lender code − a number assigned to a lender by the U.S.
Department of Education to designate a lender’s participation in the
Federal Education Loan Programs.
Liabilities − money owed to others.
Loan application − the form prospective borrowers must complete
to initiate a loan request.
Loan fee − an amount that is calculated as a percentage of
principal and deducted from loan proceeds.
Loan forgiveness – loan is forgiven due to death, disability, or other
approved causes.
Loan period − the academic year, or portion thereof, in which an
applicant is enrolled and seeking education loans.
M
Maker − the borrower.
Master promissory note (MPN) − created to replace Federal
Stafford Subsidized and Unsubsidized loan notes, the MPN
simplifies the yearly borrowing process for students by allowing
them to take advantage of a multi-use feature. Depending on the
type of institution attended (either 2-year or 4-year); a student may
be able to re-use a note to request additional funds on either a
yearly or multi-year basis.
Merit-based assistance − financial aid based on a student’s
academic or creative achievements and abilities.
Military scholarship − Reserve Officer Training Corps (ROTC)
scholarships are available for the Air Force, Army, and Navy at many
colleges and universities throughout the United States. In addition to
covering tuition and fees, books and supplies, military scholarships
include a subsistence allowance.
N
Need analysis − a method used to determine Expected Family
Contribution (EFC) and financial aid eligibility.
Notice of guarantee − a disclosure statement specifying the terms
of a borrower’s approved Stafford or PLUS loan and provided
before the initial loan disbursement. It lists the amount
approved, interest rate, fees, and date the loan funds will be
disbursed.
O
Origination fee − a processing fee calculated as a percentage of
principal and deducted from the loan upon each disbursement.
P
Principal − the total amount borrowed.
Promissory note − a written promise to repay a loan, signed by the
borrower and cosigner (if applicable). This legal document describes
loan conditions and repayment terms. Federal Stafford Loans
require the use of a Master Promissory Note.
Proprietary school − a for-profit educational institution usually
offering training for specific occupations.
R
Repayment schedule − statement of repayment terms sent to the
borrower before first payment is due.
Repayment period − the period during which you make payments
on the loan.
Restricted scholarship − gift aid limited to applicants meeting
specific, limited criteria.
S
Satisfactory academic progress − the level of academic progress
required of a student by the Higher Education Act in order to receive
federal aid, including Federal Stafford and PLUS loans. Each
school must establish a standard for evaluating a student’s efforts.
In making this evaluation, the school must establish a normal
timeframe for completion of the course of study in which the student
is enrolled, and a method, such as work projects completed, to
measure the quality of the student’s performance.
Scholarship − a form of gift aid based on academic, athletic,
creative, or other achievement, and does not require repayment.
Secondary market − a lender, agency, or institution that buys
education loans from originating lenders. Funds gained enable
lenders to make new loans.
Self-help − a form of financial aid including employment and loans.
Servicer − a company that handles billing, collections, deferments,
and other administrative duties for the lender or holder. Many
education loan accounts are assigned to servicers.
State grant − state funding usually based on financial need and
reserved for students attending college in their home states.
Student aid report* (SAR) − based on information student provided
on the FAFSA, the report verifying submitted data, reporting the
Expected Family Contribution(EFC), and informing the student of
eligibility for the Federal Pell Grant, if applicable.
T
Term − the number of months or years provided to pay back a loan.
Terms − loan conditions as specified in the promissory note,
generally including items such as interest rate, applicable fees, and
monthly payment amount.
Tuition − cost to enroll in classes.
Tuition reimbursement − a benefit provided to employees by
employers that covers full or partial costs of college courses.
V
Variable interest rate − an interest rate that can change
periodically, as specified in the promissory note.
Verification – the process in which a financial aid office uses a
students and parents financial documents to verify the information
input on the FAFSA as required by the US DOE.