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Financial Aid Glossary

Capitalized

On some student loans, interest accrues while you are in school. You may choose to pay the interest quarterly until you graduate and enter repayment status. Or, you may opt to have the interest charges capitalized, i.e., added to the principal balance. Capitalizing interest increases the amount of your loan.

Consolidation

To consolidate is to unite or combine; therefore, a consolidation loan is a combination of several different loans into one new loan. For example, a Perkins loan that is integrated into a consolidation loan becomes a completely different loan with new terms.

Cost of attendance (COA):

The anticipated expenses to attend school that include tuition, fees, housing, transportation, books, supplies, and personal expenses.

Default

Student loans must be repaid. If you fail to meet the repayment terms you agreed to when you signed for your loan, you have defaulted on your financial obligation. Default can result in serious financial consequences, such as a damaged credit history and steep penalty fees.

Deferment

A temporary postponement of loan payments available only under certain conditions; some loans do not accrue interest in deferment, such as subsidized loans

Dependent status:

For financial aid purposes, dependent students are those who rely on parental financial support. As a dependent student, your aid eligibility is weighed against your family's income. Dependent students do not qualify for independent status (see below).

Disbursement

The process by which financial aid funds are transferred into your student account to be applied to your University charges.

Eligible non-citizen

federally defined status that includes permanent residents (I-551 or I-551C) and holders of an I-94 marked "refugee", "asylum granted", "Cuban-Haitian Entrant", among others.

Estimated family contribution (EFC):

Amount of money that your family is expected to contribute to your education. EFC is determined by need analysis of your FAFSA results.

Exit Interviews:

A federal requirement of all students who received student loans. The purpose is to explain about the loans, how to repay, and what happens if you do not repay.

Financial Aid Award Notice (eFAAN):

Online or printed letter that lists your aid awards and the terms and conditions of that aid.

Forbearance:

A postponement of loan payments available to a borrower who doesn't qualify for deferment and is unable to make payments for reasons such as poor health. Interest charges will accrue during forbearance.

Free Application for Federal Student Aid (FAFSA):

A free federal application form that must be completed to be considered for student financial aid available online at FAFSA on the Web. You do not have to pay anything to apply. If the site asks for money, you are at the wrong Web site.

Grants:

Grants and scholarships are gift aid that recipients are not required to repay. During awarding, eligibillity for gift aid is considered first; then, work-study, if requested, and lastly, for loans.

Independent status:

Independent students qualify for more financial aid funds. A student must be at least one of the following to be considered independent for financial aid purposes: at least 24 years old, married, a veteran, on active duty in the armed forces, a graduate or professional student, an orphan or ward of the court, or someone with legal dependents other than a spouse. Students outside these criteria may file an appeal if they want to be considered independent.

Interest:

Interest is charged on loans and must be paid on top of the principal balance. Some loans charge interest from the date of disbursement and others forego interest accrual until graduation.

Loan:

A loan is a temporary provision of money, usually with interest charged. Loans must be repaid in full, including the original amount owed (principal) plus any interest and fees that have accrued. There are many types of loans, each with its own rules.

Origination fee:

Essentially a loan processing fee. The amount will be taken off the top before disbursement but it still counts in the total loan balance that must be repaid. For example: on a $2,500 loan with a 3 percent origination fee, the actual amount disbursed will be $2,425 and the lender will use $75 to pay the organization that funded the loan. Your balance owed will begin at $2,500 and increase as interest accrues.

Principal:

A loan's original amount on which the interest is calculated. The principal represents the amount you borrowed. As you make payments you gradually reduce the outstanding principal balance and the interest assessed each month decreases over time.

Promissory note:

A legally binding form signed by you, the student, or a parent borrower, that is your contractual promise to repay a loan according to the repayment terms and conditions outlined in the note. For example, see the Federal Direct Loan Master Promissory Note (MPN).

Rehabilitation:

Borrowers who go into default status can bring that loan out of default by requesting rehabilitation with the lender. A loan is rehabilitated only if the borrower requests rehabilitation and makes 12 consecutive monthly payments, at which point the borrower is returned to regular repayment status. Loans with judgments are excluded and rehabilitation is allowed one time only.

Scholarships:

Scholarships and grants are gift aid you won't have to pay back. Countless scholarship programs with a wide range of criteria are available. Your eligibility can change every term, so make sure to investigate new opportunities regularly at the One Stop web site.

Special circumstances:

Unusual circumstances and/or expenses (e.g., loss of employment/income, separation, death in the family) that were not recognized when completing your Free Application for Federal Student Aid (FAFSA) may qualify you for additional financial aid. You, the student, and/or your parents, if you have dependent status, will need to complete a Special Circumstances Appeal, along with appropriate documentation.

Student Aid Report (SAR):

The report of your FAFSA results sent to you by the federal government

Subsidized loan:

A federal loan for which the interest is paid by the government while the student is in school or in deferment.

Unsubsidized loan:

A federal loan for which the interest accrues starting from the date of disbursement and continues to accrue throughout in-school status. You can choose to make interest payments while you are in school or have the interest capitalized.

Work-Study:

A state- and federally-funded financial aid program that supports part-time employment for undergraduate and graduate students. Students must find their own employment and the funds are awarded through bi-weekly paychecks from the employer.