A Federal Income Tax Return. Every person who has received income during the previous year
must file a Federal Income Tax return with the IRS by April 15.
The period during which school is in session, typically August through May.
Interest calculated daily on the unpaid principal balance of your loan.
If a recent credit report shows that
*Note that the absence of a credit history is not considered an adverse credit history.
See Private Loans
An item of value, such as a family's home, business, and farm equity, real estate, stocks,
bonds, mutual funds, cash, certificates of deposit (CDs), bank accounts, trust funds and
other property and investments
The portion of your parents' assets that are not included in the calculation of the parent
contribution part of the EFC as calculated on the FAFSA. The asset protection allowance
increases with the age of the parents.
An official document issued by a school's financial aid office that lists all of the financial
aid awarded to the student. The award letter provides details on the analysis of your
financial need and the breakdown of your financial aid package according to amount,
source and type of aid.
The academic year for which financial aid is requested (or received).
The tax year prior to the academic year (award year) for which financial aid is requested
(i.e. for the 2008-2009 FAFSA year, the base year is tax year 2007).
The person who receives the loan and is responsible for repaying the loan.
Financial aid programs that are administered by the university. Such programs include the
Perkins Loan, Supplemental Education Opportunity Grant and
Releasing a borrower from legal obligation to repay a loan, typically through death or permanent
disability unless you meet other criteria of service (i.e. teacher in shortage area or military
The addition of unpaid interest charges to the principal balance of a loan, thereby increasing
the balance of the loan. Interest is then charged on the new balance, including both the
unpaid principal and the accrued interest.
Property that is used to secure a loan. If the borrower defaults on the loan, the lender can
seize the collateral (i.e. home, or car).
A company often hired by the lender or guarantee agency to recover defaulted loans
Interest that is paid on both the principal balance of the loan and on any accrued (unpaid)
interest. Capitalizing the interest on an unsubsidized Stafford loan is a form of compounding
A loan that combines several student loans into one bigger loan from a single lender. The
consolidation loan funds are used to pay off the balances on the other loans
A second borrower on a loan - if the primary borrower stops making payments the co-signer
becomes liable for the outstanding balance of the loan
(Also known as the cost of education or "budget") The total amount it should cost the student to
attend a given year at a college institution including tuition and fees, room and board, books
and supplies as well as personal and incidental expenses. Loan fees, if applicable, may also
be included in the COA. Schools establish different standard cost of attendance amounts for
in-state and out-of state students as well as undergraduate and graduate students.
A part time job, also referred to as Federal Work Study.
The Federal government pays 60% of the wage and the employer pays the remaining 40% of the wage.
An agency that complies and distributes your personal and credit history information to lenders
when requested. Information may include personal demographics, payment habits, and number of
credit accounts, balances of credit accounts and length of credit.
When the borrower fails to pay several regular installments on time (i.e., payments overdue by
180 days) or otherwise fails to meet the terms and conditions of the loan. If you default on a
loan, the university, the holder of the loan, the state government and the federal government
can take legal action to recover the money, including garnishing your wages and withholding income
tax refunds. Defaulting on a government loan will make you ineligible for future federal aid
Occurs when a borrower is allowed to postpone repayment of a loan. If you have a subsidized loan,
the federal government pays the interest charges during the deferment period. If you have an
unsubsidized loan, you are responsible for the interest that accrues during the deferment period.
When a 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, the loan goes into default.
Determines to what degree a student has access to parent financial resources
Undergraduate student who receive more than half of their financial support from their parent.
The William D. Ford Federal Direct Loan Program (a.k.a the Direct Loan Program) is a federal
program where the school becomes the lending agency and manages the funds directly, with the
federal government providing the loan funds
The company that services and collects payments, deferments, forbearances etc., on the
Department of Education's MyEdAccount
(subsidized, unsubsidized Parent PLUS Loans and Graduate PLUS Loans).
The release of loan funds to the school for delivery to the borrower. 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 borrower.
Someone who is not a U.S. citizen but is eligible for Federal student aid. Eligible non-citizens
include U.S. permanent residents who are holders of valid green cards, U.S. nationals, holders of
form I-94 who have been granted refugee or asylum status and certain other non-citizens. Non-citizens
who hold a student visa or an exchange visitor visa are not eligible for Federal student aid.
When a child is released from the control of a parent or guardian. Declaring a child to be
legally emancipated is not sufficient to release the parents or legal guardians from being
responsible for providing for the child's education.
More information About Dependency
determining if a student is enrolled full-time or half-time.
The number that's used to determine your eligibility for federal student financial aid. This
number results from the financial information you provided in your FAFSA
application and is impacted by the student and parents' assets, income, the number in the
household, the number in college and the age of the older parent.
The funds for these loans are provided by private lenders, such as banks, credit unions and
savings & loan associations. These loans are guaranteed against default by the federal
A limited funding grant from the Federal Government to high need students
The organization that processes the information submitted on the FAFSA and
uses it to compute eligibility for federal student aid.
A form of aid given to graduate students to help support their education.
Money provided to the student and the family to help them pay for the student's education.
Financial aid includes grants, scholarships,
work-study, and student and parent loans.
The complete collection of grants, scholarships, loans and work-study employment from all sources
(federal, state, institutional and private) offered to a student to assist them in paying for their
The difference between the cost of attendance and the expected family contribution is the student's
financial need -- the gap between the cost of attending the school and the student's resources. The
financial aid package is based on the amount of financial need.
(Cost of Attendance - Expected Family Contribution = Financial Need)
A first-year undergraduate student who has no unpaid loan balances outstanding on the date he or
she signs a promissory note for an educational loan.
The interest rate stays the same for the life of the loan.
A time when the lender allows the borrower to temporarily postpone repaying the principal, but
the interest charges continue to accrue, even on subsidized loans. The borrower must continue
paying the interest charges during the forbearance period. Forbearances are granted at the
lender's discretion, usually in cases of extreme financial hardship or other unusual circumstances
when the borrower does not qualify for a deferment.
Federal application to apply for grants, work study and Federal Loan programs. The application
is free and needs to be completed every year. FAFSA deadlines can vary
Official FAFSA Website (http://www.fafsa.gov)
Financial aid, such as grants and scholarships,
which does not need to be repaid.
A short time period after graduation or withdrawal during which the borrower is not required to
begin repaying his or her student loans. The grace period may also begin if the student drops
below half-time enrollment.
An average of a student's grades, converted to a 4.0 scale (4.0 is an A, 3.0 is a B, and 2.0 is
There are two types of graduate assistantships: teaching assistantships (TA) and research
assistantships (RA). TAs and RAs receive a full or partial tuition waiver and a small
A federal loan for graduate or professional students to supplement their Stafford Loans.
A repayment schedule where the monthly payments are smaller at the start of the repayment period
and gradually become larger.
A type of financial aid based on financial need that the student does not have to repay.
Income before taxes, deductions and allowances have been subtracted
Undergraduate students need to be enrolled in 6 credits to be considered half-time and graduate
students need to be enrolled in 5 credits to be considered half-time.
A low interest loan administered by the U.S. Department of
Health and Human Services (HHS) for students studying to become a health profession.
A student who has met the legal residency requirements for the state, and is eligible for
in-state student tuition at public colleges and universities in the state.
The amount of money received from employment (salary, wages, tips), profit from financial instruments
(interest, dividends, capital gains), or other sources (welfare, disability, child support,
Social Security and pensions).
The size of the monthly payment depends on the income earned by the borrower. As the borrower's
income increases, so do the payments. Monthly payments are capped at 20% of discretionary income.
A student who can meet one of the following criteria: at least 24 years old as of January 1 of
the academic year, is married when the FAFSA is completed, is a graduate or professional student,
has a legal dependent other than a spouse, is a veteran of the U.S. Armed Forces, or is an
orphan or ward of the court. A parent refusing to provide support for their child's education
is not sufficient for the child to be declared independent.
The amount charged to the borrower for the privilege of using the lender's money. Interest is
usually calculated as a percentage of the principal balance of the loan.
A bank, credit union, savings & loan association, or other financial institution that
provides funds to the student or parent for an educational loan.
An interest rate that banks charge one another for a loan. The rate is officially fixed once
a day by a group of large London banks and can impact financial markets and rates around the
world. Private loan interest rates may be based on the LIBOR with an additional percentage
added on based on the borrower's credit and the lender's choice.
A type of financial aid which must be repaid, with interest
The federal government cancels all or part of an educational loan because the borrower
meets certain criteria (e.g., is performing military or volunteer service).
The date when a loan comes due and must be repaid in full.
Financial aid that is awarded based on academic, artistic or athletic merit or some other
criteria, and does not depend on the existence of financial need
Financial aid that depends on your financial situation. Most government sources of financial
aid are need-based.
Income after taxes, deductions and allowances have been subtracted.
Fee paid to the bank to compensate them for the cost of administering the loan. The origination
fees are charged as the loan is disbursed
A scholarship that comes from sources other than the school and the federal or state government.
A student who has not met the legal residency requirements for the state, and is often charged
a higher tuition rate at public colleges and universities in the state.
When a student receives more financial aid than their cost of attendance
The process of assembling a financial aid package.
An estimate of the portion of your educational expenses that the federal government believes
your parents can afford. It is based on their income, the number of parents earning income,
assets, family size, the number of family members currently attending a university and other
relevant factors. Students who qualify as independent are not expected to have a parent
Federal loans available to parents of dependent undergraduate students to help finance the child's
education. There is a minimal credit check required for the PLUS loan.
Federal grant based off of the EFC determined by the FAFSA and awarded
to high need students
A federal loan in the name of the student that is awarded to high need students. It is
subsidized while the student is enrolled at least half-time.
A college savings plan that is guaranteed to rise in value at the same rate as college tuition.
An amount paid on a loan when nothing is required or an amount paid in excess of what is
The interest rate that banks charge their most credit worthy customers and is driven from
the Federal Funds Rate set by the Federal Reserve. Private loan interest rate may be
based on the prime rate with an additional percentage added based on the borrower's credit and
the lender's choice.
The amount of money borrowed or remaining unpaid on a loan. Interest is charged as a percentage
of the principal
Education loan programs established by private lenders to supplement the student and parent
education loan programs available from federal and state governments.
Allows the financial aid administrator to adjust the EFC, adjust the COA, or change the dependency
status (with documentation) when extenuating circumstances exist. Also see Special Conditions.
The binding legal document that must be signed by the borrower before loan funds are disbursed by
the lender. The promissory note states the terms and conditions of the loan, including repayment
schedule, interest rate, deferment policy and cancellations.
Discloses the monthly payment, interest rate, total repayment obligation, payment due dates
and the term of the loan.
The length of time given to pay off a loan, typically listed in months.
Federal regulations require the Office of Student Financial Aid to monitor the academic progress
of students receiving financial aid to ensure they are making progress towards obtaining a degree.
A formal request to have a financial aid administrator review your aid eligibility and possibly
use Professional Judgment to adjust the figures on your FAFSA if you
believe the financial information on your financial aid application does not reflect your
family's current ability to pay (e.g., because of death of a parent, unemployment or other unusual
More information About Extenuating Circumstances
A form of financial aid given to undergraduate students to help pay for their education,
typically awarded on the basis of academic merit or financial need. Scholarships can be
awarded by your university, college, department or an outside source. Scholarships do not
need to be repaid.
Registration for the military draft. Male students who are US 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.
Financial aid in the form of loans and student employment.
A company designated to track and collect information and payments on a loan on behalf of a
Federal student loans that come in two forms, subsidized and unsubsidized.
Summary of the information submitted on the FAFSA.
A loan that the government pays the interest on while the student is in school enrolled half-time, during the six-month grace period and during any deferment periods. Subsidized loans are
awarded based on financial need
A form of financial aid awarded to graduate students to help support their education. Teaching
assistantships usually provide the graduate student with a waiver of all or part of tuition,
plus a small stipend for living expenses
A federal loan that is accrues 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. Unsubsidized loans are not based on financial need
Government agency that administers several federal student financial aid programs, including
the Federal Pell Grant, the Federal Work-Study Program,
the Federal Perkins Loans, the Federal Stafford Loans
and the Federal PLUS Loans.
The interest rate changes periodically
A review process in which the FAO determines the accuracy of the information provided on the
student's financial aid application. During the verification process the student and parent will
be required to submit documentation for the amounts listed (or not listed) on the financial aid
application. Such documentation may include signed copies of the most recent Federal and State
income tax returns for you, your spouse (if any) and your parents, proof of citizenship, proof
of registration with Selective Service, and copies of Social Security benefit statements and
W2 and 1099 forms, among other things. Financial aid applications are randomly selected by
the Federal processor for verification, with most schools verifying at least 1/3 of all
applications. If you refuse to submit the required documentation, your financial aid package will
be cancelled and no aid awarded
For Federal financial aid purposes such as determining dependency status, a veteran is a
former member of the US Armed Forces (Army, Navy, Air Force, Marines or Coast Guard) who
served on active duty and was discharged other than dishonorably (i.e., received an
honorable or medical discharge). You are a veteran even if you serve just one day on
active duty - not active duty for training - before receiving your DD-214 and formal
discharge papers. ROTC students, members of the National Guard, and most reservists are
not considered veterans.
The form listing an employee's wages and tax withheld.
Someone under the protection of the courts.