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Academic Year
The period during which school is in session, consisting
of at least 30 weeks of instructional time. The school
year typically runs from the beginning of September
through the end of May at most colleges and
universities.
Accrue
To accumulate.
Accrual Date
The date on which interest charges on an educational
loan begin to accrue. See also Subsidized Loans.
Adjusted Available Income
In the Federal Methodology, the remaining income after
the allowances (taxes and a basic living allowance) have
been subtracted.
Alternative Loans
See Private Loans.
Amortization
The process of gradually repaying a loan over an
extended period of time through periodic installments of
principal and interest.
Appeal
A formal request to have a financial aid administrator
review your aid eligibility and possibly use
Professional Judgment to adjust the figures. For
example, 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
circumstances), you should definitely make an appeal.
The financial aid administrator may require
documentation of the special circumstances or of other
information listed on your financial aid application.
Asset
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.
Award Letter
An official document issued by a school's financial aid
office that lists all of the financial aid awarded to
the student. This letter provides details on their
analysis of your financial need and the breakdown of
your financial aid package according to amount, source
and type of aid. The award letter will include the terms
and conditions for the financial aid and information
about the cost of attendance. You are required to sign a
copy of the letter, indicating whether you accept or
decline each source of aid, and return it to the
financial aid office. Some schools call the award letter
the "Financial Aid Notification (FAN)".
Award Year
The academic year for which financial aid is requested
(or received).
Bachelor's Degree
The undergraduate degree granted by four-year colleges
and universities.
Base Year
The tax year prior to the academic year (award year) for
which financial aid is requested. The base year runs
from January 1 of the junior year in high school through
December 31 of the senior year. Financial information
from this year is used to determine eligibility for
financial aid.
Borrower
The person who receives the loan.
Budget
See Cost of Attendance.
Bursar's Office
(Also called Student Accounts Office) The university
office that is responsible for the billing and
collection of university charges.
Campus-based Aid
Financial aid programs are administered by the
university. The federal government provides the
university with a fixed annual allocation, which is
awarded by the financial aid administrator to deserving
students. Such programs include the Perkins Loan,
Supplemental Education Opportunity Grant and Federal
Work-Study. 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. This is a key difference between the
campus-based loan programs and the Direct Loan Program.
Do not confuse the two, even though both loans are
issued through the schools.
Cancellation
Some loan programs provide for cancellation of the loan
under certain circumstances, such as death or permanent
disability of the borrower. Some of the Federal student
loan programs have additional cancellation provisions.
For example, if the student becomes a teacher in certain
national shortage areas, they may be eligible for
cancellation of all or part of the balance of their
educational loans. Repayment assistance is available if
you serve in the military; the military pays off a
portion of your loans for every year of service.
Capital Gain
An increase in the value of an asset such as stocks,
bonds, mutual funds and real estate between the time the
asset was purchased and the time the asset was sold.
Capitalization
The practice of adding unpaid interest charges to the
principal balance of an educational loan, thereby
increasing the size of the loan. Interest is then
charged on the new balance, including both the unpaid
principal and the accrued interest. Capitalizing the
interest increases the monthly payment and the amount of
money you will eventually have to repay. If you can
afford to pay the interest as it accrues, you are better
off not capitalizing it. Capitalization is sometimes
called compounding. See also Unsubsidized Loans.
College Work-Study (CWS)
College Work-Study is simply a part time job. This term
is sometimes erroneously used to refer to the Federal
Work-Study Program.
Commuter Student
A student who lives at home and commutes to school every
day.
Compounded Interest
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.
Consolidation Loan
(Also called Loan Consolidation) A loan that combines
several student loans into one bigger loan from a single
lender. The consolidation loan is used to pay off the
balances on the other loans.
Cosigner
A cosigner on a loan assumes responsibility for the loan
if the borrower should fail to repay it.
Cost of Attendance (COA)
(Also known as the cost of education or "budget") The
total amount it should cost the student to go to school,
including tuition and fees, room and board, allowances
for books and supplies, transportation, and personal and
incidental expenses. Loan fees, if applicable, may also
be included in the COA. Child care and expenses for
disabilities may also be included at the discretion of
the financial aid administrator. Schools establish
different standard budget amounts for students living
on-campus and off-campus, married and unmarried students
and in-state and out-of-state students.
Custodial Parent
If a student's parents are divorced or separated, the
custodial parent is the one with whom the student lived
the most during the past 12 months. The student's need
analysis is based on financial information supplied by
the custodial parent.
Default
A loan is in default 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 financial aid, unless a satisfactory repayment
schedule is arranged, and can affect your credit rating.
Deferment
Occurs when a borrower is allowed to postpone repaying
the 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. You can still postpone paying the
interest charges by capitalizing the interest, which
increases the size of the loan. Most federal loan
programs allow students to defer their loans while they
are in school at least half time. If you don't qualify
for a deferment, you may be able to get a forbearance.
You can't get a deferment if your loan is in default.
Delinquent
If the 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.
Dependency Status
Determines to what degree a student has access to parent
financial resources.
Dependent
For a child or other person to be considered your
dependent, they must live with you and you must provide
them with more than half of their support. Spouses do
not count as dependents in the Federal Methodology. You
and your spouse cannot both claim the same child as a
dependent. (See also Independent.)
Direct Loans
The William D. Ford Federal Direct Loan Program (aka 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. Not all schools currently participate in this
program. Benefits of the program include a faster
turnaround time and less bureaucracy than the old "bank
loan" program. The terms for Direct Loans are the same
as for the Stafford Loan program. For more information
about Direct Loans, contact the Direct Loan Servicing
Center at 1-800-848-0979.
Disbursement
The release of loan funds 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 equal installments.
Discharge
To release the borrower from his or her obligation to
repay the loan. See also Cancellation.
Disclosure Statement
Provides the borrower with information about the actual
cost of the loan, including the interest rate,
origination, insurance, loan fees and any other types of
finance charges. Lenders are required to provide the
borrower with a disclosure statement before issuing a
loan.
Due Diligence
If a borrower fails to make payments on their loan
according to the terms of the promissory note, the
federal government requires the lender, holder or
servicer of the loan to make frequent attempts to
contact the borrower (via telephone and mail) to
encourage him or her to repay the loan and make
arrangements to resolve the delinquency.
Eligible Non-Citizen
Someone who is not a US citizen but is nevertheless
eligible for Federal student aid. Eligible non-citizens
include US permanent residents who are holders of valid
green cards, US 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.
Emancipated
To release a child 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. If this were the case, then every parent
would "divorce" their children before sending them to
college. The criteria for a child to be found
independent are much stricter. See Dependency Status.
Enrollment Status
An indication of whether you are a full-time or
part-time student. Generally you must be enrolled at
least half-time (and in some cases full-time) to qualify
for financial aid.
Entitlement
Entitlement programs award funds to all qualified
applicants. The Pell Grant is an example of such a
program.
Entrance Interview
See Loan Interviews.
Exit Interview
See Loan Interviews.
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. If you have unusual financial
circumstances (such as high medical expenses, loss of
employment or death of a parent) that may affect your
ability to pay for your education, tell your financial
aid administrator (FAA). He or she can adjust the COA or
EFC to compensate. See Professional Judgment.
Federal Family Education
Loan Program (FFELP)
Includes the Federal Stafford Loan (Subsidized and
Unsubsidized), the Federal Perkins Loan and the Parent
Loan for Undergraduate Students (PLUS). 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 government.
Federal Methodology
The need analysis formula used to determine the EFC. The
Federal Methodology takes family size, the number of
family members in college, taxable and nontaxable income
and assets into account. Unlike most Institutional
Methodologies, however, the Federal Methodology does not
consider the net value of the family residence.
Federal Work-Study (FWS)
Program providing undergraduate and graduate students
with part-time employment during the school year. The
federal government pays a portion of the student's
salary, making it cheaper for departments and businesses
to hire the student. For this reason, work-study
students often find it easier to get a part-time job.
Eligibility for FWS is based on need. Money earned from
a FWS job is not counted as income for the subsequent
year's need analysis process.
Financial Aid
Money provided to the student and the family to help
them pay for the student's education. Major forms of
financial aid include gift aid (grants and scholarships)
and self-help aid (loans and work).
Financial Aid Administrator (FAA)
A college or university employee who is involved in the
administration of financial aid. Some schools call FAAs
"Financial Aid Advisors" or "Financial Aid Counselors".
Financial Aid Office (FAO)
The college or university office that is responsible for
the determination of financial need and the awarding of
financial aid.
Financial Aid Package
The complete collection of grants, scholarships, loans
and work-study employment from all sources (federal,
state, institutional and private) offered to a student
to enable them to attend the college or university. Note
that unsubsidized Stafford loans and PLUS loans are not
considered part of the financial aid package, since
these financing options are available to the family to
help them meet the EFC.
Financial Need
See Need.
First-Time Borrower
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. First-time
borrowers may be subjected to a delay in the
disbursement of the loan funds. The first loan payment
is disbursed 30 days after the first day of the
enrollment period. If the student withdraws during the
first 30 days of classes, the loan is canceled and does
not need to be repaid. Borrowers with existing loan
balances aren't subject to this delay.
Fixed Interest
In a fixed interest loan, the interest rate stays the
same for the life of the loan.
Forbearance
During a forbearance 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. You can't receive a forbearance if your loan
is in default.
Free Application for Federal Student Aid
(FAFSA)
Form used to apply for Pell Grants and all other
need-based aid. As the name suggests, no fee is charged
to file a FAFSA.
Grace Period
A short time period after graduation during which the
borrower is not required to begin repaying his or her
student loans. The grace period may also kick in if the
borrower leaves school for a reason other than
graduation or drops below half-time enrollment.
Depending on the type of loan, you will have a grace
period of six months (Stafford Loans) or nine months
(Perkins Loans) before you must start making payments on
your student loans. The PLUS Loans do not have a grace
period.
Grade Point Average (GPA)
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 a C). Some
schools use a 5.0 scale for the GPA.
Graduated Repayment
A schedule where the monthly payments are smaller at the
start of the repayment period and gradually become
larger.
Grant
A type of financial aid based on financial need that the
student does not have to repay.
Gross Income
Income before taxes, deductions and allowances have been
subtracted.
Guarantee Agency or Guarantor
State agencies responsible for approving student loans
and insuring them against default. Guarantee agencies
also oversee the student loan process and enforce
federal and state rules regarding student loans.
Guarantee Fee
A small percentage of the loan that is paid to the
guarantee agency to insure the loan against default. The
insurance fee is usually 1% of the loan amount (and by
law cannot exceed 3% of the loan amount).
Half-Time
Most financial aid programs require that the student be
enrolled at least half-time to be eligible for aid. Some
programs require the student to be enrolled full-time.
Holder
The lender, institution or agency that holds legal title
to a loan. The holder may be the bank that issued the
loan, a secondary market that purchased the loan from
the bank or a guarantee agency if the borrower defaulted
on the loan.
Income
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).
Independent
An independent student is at least 24 years old as of
January 1 of the academic year, is married, is a
graduate or professional student, has a legal dependent
other than a spouse, is a veteran of the US Armed
Forces, or is an orphan or ward of the court (or was a
ward of the court until age 18). A parent refusing to
provide support for their child's education is not
sufficient for the child to be declared independent.
(See also Dependent.)
Interest
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.
The percentage rate may be fixed for the life of the
loan, or it may be variable, depending on the terms of
the loan. All federal loans issued since October, 1992
use variable interest rates that are pegged to the cost
of US Treasury Bills.
Internal Revenue Service (IRS)
Federal agency responsible for enforcing US tax laws and
collecting taxes.
Lender
A bank, credit union, savings & loan association, or
other financial institution that provides funds to the
student or parent for an educational loan. Note: Some
schools now participate in the Federal Direct Loan
program and no longer use a private lender, since loan
funds are provided by the US Government.
Line of Credit
Pre-approved loan that lets you borrow money up to a
pre-set credit limit, usually by writing checks. A line
of credit doesn't cost you anything until you write a
check, and then you begin repayment just like a regular
loan.
Loan
A type of financial aid which must be repaid, with
interest. The federal student loan programs (FFELP and
FDSLP) are a good method of financing the costs of your
college education. These loans are better than most
consumer loans because they have lower interest rates
and do not require a credit check or collateral. The
Stafford Loans and Perkins Loans also provide a variety
of deferment options and extended repayment terms.
Loan Consolidation
See Consolidation Loan.
Loan Forgiveness
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).
Loan Interviews
Students with educational loans are required to meet
with a financial aid administrator before they receive
their first loan disbursement and again before they
graduate or otherwise leave school. During these
counseling sessions, called entrance and exit
interviews, the FAA reviews the repayment terms of the
loan and the repayment schedule with the student.
Matriculate
A student matriculates in college when he or she enrolls
in college for the first time. A student who just
started the freshman year in high school will
matriculate in four years. A newborn baby will
matriculate in approximately 17 years.
Maturity Date
The date when a loan comes due and must be repaid in
full.
Merit-based
Financial aid that is merit-based depends on your
academic, artistic or athletic merit or some other
criteria, and does not depend on the existence of
financial need. Merit-based awards use your grades, test
scores, hobbies and special talents to determine your
eligibility for scholarships.
Need
The difference between the COA and the EFC 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. The process of determining a student's
need is known as need analysis.
Need Analysis
The process of determining a student's financial need by
analyzing the financial information provided by the
student and his or her parents (and spouse, if any) on a
financial aid form. The student must submit a need
analysis form to apply for need-based aid. Need analysis
forms include the Free Application for Federal Student
Aid (FAFSA) and the Financial Aid PROFILE.
Need-Based
Financial aid that is need-based depends on your
financial situation. Most government sources of
financial aid are need-based.
Need-Sensitive
Under need-sensitive admissions, the school does take
the student's financial situation into account when
deciding whether to admit him or her. Some schools use
need-sensitive admissions when deciding to accept a
borderline student or to pull a student off of the
waiting list.
Net Income
This is income after taxes, deductions and allowances
have been subtracted.
New Borrower
See First-Time Borrower.
Origination Fee
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, and typically run to 3% of the
amount disbursed. A portion of this fee is paid to
federal government to offset the administrative costs of
the loan.
Outside Resource
Aid or benefits available because a student is in school
and is counted after need is determined. Outside
scholarships, prepaid tuition plans and VA educational
benefits are examples of outside resources.
Outside Scholarship
A scholarship that comes from sources other than the
school and the federal or state government.
Packaging
The process of assembling a financial aid package.
Parent Contribution (PC)
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
contribution.
Parent Loans for Undergraduate Students
(PLUS)
Federal loans available to parents of dependent
undergraduate students to help finance the child's
education. Parents may borrow up to the full cost of
their children's education, less the amount of any other
financial aid received. PLUS Loans may be used to pay
the EFC. There is a minimal credit check required for
the PLUS loan, so a good credit history is required.
Check with your local bank to see if they participate in
the PLUS loan program. If your application for a PLUS
loan is turned down, your child may be eligible to
borrow additional money under the Unsubsidized Stafford
Loan program.
Pell Grant
A federal grant that provides funds of up to $4,050
based on the student's financial need.
Perkins Loan
Formerly the National Direct Student Loan Program, the
Perkins Loan allows students to borrow up to $4,000/year
for undergraduate school (maximum of $20,000 as an
undergraduate) and $6,000/year for graduate school
(maximum of $40,000, including undergraduate loans). The
Perkins Loan has one of the lowest interest rates and is
awarded by the financial aid administrator to students
with exceptional financial need. The student must have
applied for a Pell Grant to be eligible. The interest on
the Perkins Loan is subsidized while the student is in
school.
Prepayment
Paying off all or part of a loan before it is due.
Principal
The amount of money borrowed or remaining unpaid on a
loan. Interest is charged as a percentage of the
principal. Insurance and origination fees will be
deducted from this amount before disbursement.
Private Loans
Education loan programs established by private lenders
to supplement the student and parent education loan
programs available from federal and state governments.
Professional Judgment (PJ)
For need-based federal aid programs, the financial aid
administrator can adjust the EFC, adjust the COA, or
change the dependency status (with documentation) when
extenuating circumstances exist. For example, if a
parent becomes unemployed, disabled or deceased, the FAA
can decide to use estimated income information for the
award year instead of the actual income figures from the
base year. This delegation of authority from the federal
government to the financial aid administrator is called
Professional Judgment (PJ).
Promissory Note
The binding legal document that must be signed by the
student 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. The
student should keep this document until the loan has
been repaid.
Renewable Scholarships
A scholarship that is awarded for more than one year.
Usually the student must maintain certain academic
standards to be eligible for subsequent years of the
award. Some renewable scholarships will require the
student to reapply for the scholarship each year; others
will just require a report on the student's progress to
a degree.
Repayment Schedule
The repayment schedule discloses the monthly payment,
interest rate, total repayment obligation, payment due
dates and the term of the loan.
Repayment Term
The term of a loan is the period during which the
borrower is required to make payments on his or her
loans. When the payments are made monthly, the term is
usually given as a number of payments or years.
Satisfactory Academic
Progress (SAP)
A student must make this in order to continue receiving
federal aid. If a student fails to maintain an academic
standing consistent with the school's SAP policy, they
are unlikely to meet the school's graduation
requirements.
Scholarship
A form of financial aid given to undergraduate students
to help pay for their education. Most scholarships are
restricted to paying all or part of tuition expenses,
though some scholarships also cover room and board.
Scholarships are a form of gift aid and do not have to
be repaid. Many scholarships are restricted to students
in specific courses of study or with academic, athletic
or artistic talent.
Secured Loan
A loan backed by collateral. If you fail to repay the
loan, the lender may seize the collateral and sell it to
repay the loan. Auto loans and home mortgages are
examples of secured loans. Educational loans are
generally not secured.
Selective Service
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. 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. Students needing help resolving problems
concerning their Selective Service registration should
call 1-847-688-6888.
Self Help Aid
Financial aid in the form of loans and student
employment. If every financial aid package is required
to include a minimum amount of self-help aid before any
gift aid is granted, that level is known as the
self-help level. For example, the self-help level will
be $8,150 at MIT in 1995-96 (The Tech, March 7, 1995,
Vol. 115, No. 9, Page 1). MIT has one of the highest
self-help levels of private colleges and universities,
with an average self-help level of around $5,500 at the
more expensive schools.
Servicer
An organization that collects payments on a loan and
performs other administrative tasks associated with
maintaining a loan portfolio. Loan servicers disburse
loans funds, monitor loans while the borrowers are in
school, collect payments, process deferments and
forbearances, respond to borrower inquiries and ensure
that the loans are administered in compliance with
federal regulations and guarantee agency requirements.
Stafford Loans
Federal loans that come in two forms, subsidized and
unsubsidized. Subsidized loans are based on need;
unsubsidized loans aren't. 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 Subsidized Stafford Loan was
formerly known as the Guaranteed Student Loan (GSL). The
Unsubsidized Stafford Loan may be used to pay the EFC.
Undergraduates may borrow up to $23,000
($2,625 during the freshman year, $3,500 during the
sophomore year and $5,500 during the third, fourth and
fifth years) and graduate students up to $65,500
including any undergraduate Stafford loans ($8,500 per
year). These limits are for subsidized and unsubsidized
loans combined. The difference between the subsidized
loan amount and the limit may be borrowed by the student
as an unsubsidized loan.
Higher unsubsidized Stafford loan limits
are available to independent students, dependent
students whose parents were unable to obtain a PLUS Loan
and graduate/professional students. Undergraduates may
borrow up to $46,000 ($6,625 during the freshman year,
$7,500 during the sophomore year and $10,500 during each
subsequent year) and graduate students up to $138,500
including any undergraduate Stafford loans ($18,500 per
year). These limits are for subsidized and unsubsidized
loans combined. The amounts of any subsidized loans are
still subject to the lower limits.
Student Accounts Office
See Bursar's Office.
Student Aid Report (SAR)
Report that summarizes the information included in the
FAFSA and must be provided to your school's FAO. The SAR
will also indicate the amount of Pell Grant eligibility,
if any, and the Expected Family Contribution (EFC). You
should receive a copy of your SAR four to six weeks
after you file your FAFSA. Review your SAR and correct
any errors on part 2 of the SAR. Keep a photocopy of the
SAR for your records. To request a duplicate copy of
your SAR, call 1-319-337-5665.
Student Contribution
The amount of money the federal government expects the
student to contribute to his or her education and is
included as part of the EFC. The SC depends on the
student's income and assets, but can vary from school to
school. Usually a student is expected to contribute
about 35% of his or her savings and approximately
one-half of his summer earnings above $1,750.
Subsidized Loan
With a subsidized loan, such as the Perkins Loan or the
Subsidized Stafford Loan, the government pays the
interest on the loan while the student is in school,
during the six-month grace period and during any
deferment periods. Subsidized loans are awarded based on
financial need and may not be used to finance the family
contribution. See Stafford Loans for information about
subsidized Stafford Loans. See also Unsubsidized Loan.
Supplemental Education Opportunity Grant
Federal grant program for undergraduate students with
exceptional need. SEOG grants are awarded by the
school's financial aid office, and provide up to $4,000
per year. To qualify, a student must also be a recipient
of a Pell Grant.
Teaching Assistantship
(TA)
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. As the name implies, a TA is required to
perform teaching-related duties.
Term
The number of years (or months) during which the loan is
to be repaid.
Title IV Loans
Title IV of the Higher Education Act of 1965 created
several education loan programs which are collectively
referred to as the Federal Family Education Loan Program
(FFELP). These loans, also called Title IV Loans, are
the Federal Stafford Loans (Subsidized and
Unsubsidized), Federal PLUS Loans and Federal
Consolidation Loans.
Title IV School Code
When you fill out the FAFSA you need to supply the Title
IV Code for each school to which you are applying
(Lyon's code is 001088). This code is a six-character
identifier that begins with one of the following
letters: O, G, B, or E. The Financial Aid Information
Page provides a searchable database of Title IV School
Codes.
Undergraduate Student
A student who is enrolled in a Bachelors program.
Unearned Income
Interest income, dividend income and capital gains.
Unmet Need
In an ideal world, the FAO would be able to provide each
student with the full difference between their ability
to pay and the cost of education. Due to budget
constraints the FAO may provide the student with less
than the student's need (as determined by the FAO). This
gap is known as the unmet need.
Unsecured Loan
A loan not backed by collateral, representing a greater
risk to the lender. The lender may require a co-signer
on the loan to reduce their risk. If you default on the
loan, the co-signer will be held responsible for
repayment. Most educational loans are unsecured loans.
In the case of federal student loans, the federal
government guarantees repayment of the loans. Other
examples of unsecured loans include credit card charges
and personal lines of credit.
Unsubsidized Loan
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. See Stafford Loans for information about
unsubsidized Stafford Loans. See also Subsidized Loan.
Untaxed Income
Contributions to IRAs, Keoghs, tax-sheltered annuities
and 401k plans, as well as worker's compensation and
welfare benefits.
US Department of Education (ED or USED)
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.
Verification
Verification is 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 there is an asterisk next to the EFC figure on your
Student Aid Report (SAR), your SAR has been selected for
verification. Schools may select additional students for
verification if they suspect fraud. Some schools undergo
100% verification.
If any discrepancies are uncovered
during verification, the financial aid office may
require additional information to clear up the
discrepancies. Such discrepancies may cause your final
financial aid package to be different from the initial
package described on the award letter you received from
the school.
If you refuse to submit the required
documentation, your financial aid package will be
cancelled and no aid awarded.
Veteran
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. (Note that in order for a veteran to
be eligible for VA educational benefits, they must have
served for more than 180 consecutive days on active duty
before receiving an honorable discharge. There are
exceptions for participation in Desert Storm/Desert
Shield and other military campaigns.)
ROTC students, members of the National
Guard, and most reservists are not considered veterans.
Since the 1995-96 academic year, a
person who was discharged other than dishonorably from
one of the military service academies (the U.S. Military
Academy at West Point, the Naval Academy at Annapolis,
the Air Force Academy at Colorado Springs or the Coast
Guard Academy at New London) is considered a veteran for
financial aid purposes. Cadets and midshipmen who are
still enrolled in one of the military service academies,
however, are not considered veterans. According to the
US Department of Education's Action Letter #6 (February
1996), "a student who enrolls in a service academy, but
who withdraws before graduating, is considered a veteran
for purposes of determining dependency status".
Having a DD-214 does not necessarily
mean that you are a veteran for financial aid purposes.
As noted above, you must have served on active duty and
received an honorable discharge.
W2 Form
The form listing an employee's wages and tax withheld.
Employers are required by the IRS to issue a W2 form for
each employee before February 28.
Ward of the Court
A ward of the court is someone under the protection of
the courts. The ward of the court may have a guardian
appointed by the court. The legal guardian is not
personally liable for the ward's expenses and is not
liable to third parties for the ward's debts.
Although a ward of the court can have a
legal guardian, having a legal guardian does not
automatically make the child a ward of the court. A
legal guardian can be appointed by parental consent
through a power of attorney. A legal guardian must have
been appointed by the court for the child to be a ward
of the court. When a guardian is appointed by the court,
the parent no longer has the authority to revoke the
guardianship.
Often a minor becomes a ward of the
court when the court determines that the child will be
subject to abuse or neglect if they remain with the
parent or if both of the student's biological or
adoptive parents are deceased.
Note that a child does not
automatically become a ward of the court upon being
incarcerated. The key issue is whether the court assumed
custody of the child because it found that the parents
are unable to properly care for the child. Likewise,
emancipation does not make a student a ward of the
court. Neither incarceration nor emancipation of the
student is sufficient on its own to make the student
independent.
The key issue for financial aid purposes
is that when a child becomes a ward of the court, no
parent or other person is financially responsible for
the child. Legal guardians and foster parents are not
financially responsible for a ward of the court.
Adoptive parents, on the other hand, are financially
responsible for the child.
If the student is declared a ward of the
court before the end of the award year, the student is
considered to be an independent student for the award
year and the student's status would need to be updated.
The school financial aid administrator
should ask for a copy of the court order that declared
the child a ward of the court. If there is any confusion
as to whether the child is a ward of the court or not,
the financial aid administrator should ask for a letter
from the judge clarifying whether the child is a ward of
the court.
Note that a child can be a ward of the
court and still have contact with his or her biological
parents or even still be living with the parents (albeit
under court supervision). The biological parents,
however, are no longer empowered to make any decisions
on behalf of the child.
Work Study
See Federal Work-Study.
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