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Graduate Student Loan Glossary
| Academic Year | A one-year period between July 1 and June 30. |
|---|---|
| Award Letter | A notice from a financial aid office to a financial aid applicant that specifies the financial aid programs and dollar amount of a each financial aid award. |
| Citizen/Eligible Non citizen |
You must be one of the following to receive federal student aid:
If you're not in one of these categories, you must have an Arrival-Departure Record (I-94) from the U.S. Immigration and Naturalization Service (INS) showing one of the following designations in order to be eligible:
If you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), you aren't eligible for federal student aid. If you're in the United States on an F1 or F2 student visa only, or on a J1 or J2 exchange visitor visa only, you can't get federal student aid. Also, persons with G series visas (pertaining to international organizations) are not eligible for federal student aid. NOTE: Citizens and eligible non citizens may also receive loans from the FFEL and Direct Loan programs at participating foreign schools (see: www.StaffordLoan.com ). Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau are eligible only for Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOGs), or Federal Work-Study. These applicants should check with their financial aid administrators for more information. |
| Cost Less Aid Amount | The difference between the total cost of education and the financial aid package offered to you by the school, including scholarships, grants, work-study and Stafford Loans. This amount is what you are expected to pay out of pocket or through supplemental loan programs (see PLUS and Alternative Loans) |
| Cost of Attendance (COA) | The total amount it will cost a student to go to school-usually expressed as a yearly figure. It is determined using rules established by the U.S. Congress. The COA includes tuition and fees; on-campus room and board (or a housing and food allowance for off-campus students); and allowances for books, supplies, transportation, loan fees, and, if applicable, dependent care, costs related to a disability, and miscellaneous expenses, including an allowance for the rental or purchase of a personal computer. Also included are reasonable costs for eligible study-abroad programs. An allowance (determined by the school) is included for reasonable costs connected with a student's employment as part of a cooperative education program. For students attending less than half time,* the COA includes only tuition and fees and an allowance for books, supplies, transportation, and dependent-care expenses. Talk to the financial aid administrator at the school you're planning to attend if you have any unusual expenses that might affect your cost of attendance. |
| Debt to Income Ratio | The percentage of a loan applicant's (monthly) income that is used to meet debt obligations. Many alternative loan programs use this calculation to determine an applicant's eligibility for a loan program. |
| Default | Failure to repay a loan according to the terms agreed to when you signed a promissory note. Default also may result from failure to submit requests for deferment or cancellation on time. The consequences of default are severe. |
| Deferment |
A temporary period during which a borrower is not required to make payments. Deferments are more common in Federal loan programs rather than alternative loans.
For Subsidized Stafford Loan borrowers (and Perkins Loan borrowers), many deferments are subsidized, meaning the interest that accrues on the loan during the deferment is paid by the federal government. Some deferments are unsubsidized, meaning the interest that accrues must be paid by the borrower. (Resources on the web from the department) |
| Department of Education | The federal agency that establishes financial aid programs and processes financial aid applications. |
| Direct Costs | Costs that the college or university directly bills to the student. Tuition and fees are direct costs. |
| Entrance Counseling | An educational session that first time Stafford borrowers must fulfill before the loan's proceeds can be disbursed. The Exit Counseling sessions provides these first time borrowers basic information about student loans and the terms and conditions of the Stafford Loan program. |
| Eligible Program |
A course of study that leads to a degree or certificate and meets the U.S. Department of Education's requirements for an eligible program. To get federal financial aid, you must be enrolled in an eligible program, with two exceptions:
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| Exit Counseling | An educational session that Stafford loan borrowers must fulfill around the time of graduate or separation from a college. The Exit Counseling session provides the borrower detailed information about the loans he/she borrower, the company that will collect the payment and the repayment alternatives that are available. |
| Expected Family Contribution (EFC) | The amount that a student and family can be expected to contribute towards educational expenses over a year's time. The EFC is calculated when the student submits a financial aid application. |
| Extended Repayment |
A new option to recent federal loan borrowers. This option allows borrowers with high balances (greater than $25,000 in federal loans) to extend the repayment term from its standard 10 year term to 25 or 30 years.
While extending the repayment term reduces the loan's monthly payment, it also increases the total amount of interest paid on the loan. |
| Federal Direct Student Loan Program (FDSLP) | The program name for loans that are both guaranteed and funded by the federal government. If your school is a "Direct Lending School", your Stafford Loan is administered by the Federal Direct Student Loan Program (FDSLP). Funds for "direct loans" are provided by the US government directly to students and their parents through their schools. Applications can be obtained from your school. Banks and guarantee agencies are not involved in the process. |
| Federal Family Education Loan Program (FFELP) | The collective name for the Federal Stafford and PLUS loan programs. FFELP loans are funded by private lenders. |
| Federal Methodology Expected Family Contribution (FM EFC) | The specific EFC calculated by the federal government based on information submitted on the FAFSA. The FM EFC calculation is set each year by the U.S. Department of Education and determines eligibility for federal aid programs. |
| Federal Pell Grant | A need based financial aid program funded by the federal government. Students with an EFC less than $x are eligible for the Pell Grant. The amount of the award is based on the student's enrollment level (full time, three-quarter time, etc.) and the cost of Federal Supplemental Education Opportunity Grant (SEOG) -- a need based financial aid program funded by the federal government. Colleges receive an annual allocation of SEOG and, within certain guidelines, develop an awarding policy for this fund. |
| Federal PLUS Loan | A federally guaranteed loan program that allows parents to borrow funds to help pay educational expenses. The program does require the borrower to pass a simple credit check. The loan's interest rate is variable, but new loans have a maximum interest rate of 9%. |
| Federal Stafford Loan | A federally guaranteed loan program that allows students to borrow funds from lenders. Stafford loans allow the student to defer payments while he/she is in school. The interest rate for new Stafford Loans is variable but will not exceed 8.25%. |
| Federal Work Study (FWS) | Federally funded program that allows colleges and universities to create campus based employment programs for financial aid recipients. |
| Financial Aid Package | The total amount of financial aid (federal and nonfederal) a student receives. |
| Financial Need | The difference between a student's Cost of Attendance and Expected Family Contribution. It is the amount of financial aid the student "needs" to afford attendance at a particular college. |
| Free Application for Federal Student Aid (FAFSA) | The official application form for all federal financial aid programs. |
| General Education Development (GED) Certificate | A certificate students receive if they've passed a specific, approved high school equivalency test. Students who don't have a high school diploma but who have a GED may still qualify for federal student aid. A school that admits students without a high school diploma must make a GED program in the vicinity of the school available to these students and must inform them about the program. Students who pass an approved ability-to-benefit (ATB) test may also be qualified. An applicant without a high school diploma or its recognized equivalent can be eligible for funds if he or she 1) passes an independently administered test, ATB, approved by the Department of Education and used for determining the student's ability to benefit from post secondary education or 2) enrolls in a school that participates in a process that has been both prescribed by the state in which the school is located and approved by the Department. |
| Graduated Repayment |
This option is available for federal loans, and even some alternative loan providers offer graduated repayment.
Under graduated repayment, payments are low (usually just enough to cover the loan's accruing interest) when the borrower first enters repayment. Periodically, the payments increase to pay off the loan in the standard 10 year repayment term. The idea of graduated repayment is to have low payments while a borrower is first entering the working world. Then, as income increases, the student loan payments also increase. |
| Grants | A type of financial aid award that does not have to be repaid. Grants are often made based on an applicant's financial need or EFC. |
| Guarantee Agency (Guarantor) | One of approximately forty companies throughout the country that financially guarantee that loans made by lenders under the FFELP will be repaid. Guarantee agencies typically retain a percentage of each student loan to maintain a fund to cover unpaid loans. A list of existing guarantee agencies is available at the following link (DOE Link) |
| Guarantee Fee | A type of fee a borrower pays to a lender. Guarantee fees are collected as a financial reserve to protect the loan program in cases of student default. Federal Stafford, PLUS and Federal Direct Student loans guarantee fee is a maximum of 1% of the loan's principal balance. |
| Half Time | At schools measuring progress by credit hours and semesters, trimesters, or quarters, half-time enrollment is at least six semester hours or quarter hours per term. At schools measuring progress by credit hours but not using semesters, trimesters, or quarters, half-time enrollment is at least 12 semester hours or 18 quarter hours per year. At schools measuring progress by clock hours, half-time enrollment is at least 12 hours per week. Note that schools may choose to set higher minimums than these. |
| Income Sensitive Repayment |
This repayment alternative is available to some federal loan borrowers (check with your lender or servicer to learn if your loans qualify for this alternative). Income sensitive repayments bases the monthly payment on the borrower's income in relation to total federal loan indebtedness.
Under this option, monthly payments can drop to as low as the amount of interest that accrues on the loan's principal balance. Borrowers must apply for this option annually and must provide documentation of income - usually in the form of a federal tax return. |
| Indirect Costs | Costs associated with a student's enrollment that are not billed by or incurred through the College. Transportation and miscellaneous costs are indirect costs. |
| Institutional Methodology Expected Family Contribution (IM EFC) | A variation of the FM EFC calculated by a college or university. This EFC calculation can incorporate different items than the FM EFC calculation and is used by colleges to allocate institutionally sponsored aid programs. |
| Interest Rate |
Stafford Loan interest is variable, adjusted annually and set by the Department of Education. It is currently 4.86% for the 7/1/02-6/30/03 loan period.
You must be attending school at least half time to be eligible to receive Direct or FFEL Program loans. Half-time enrollment is not a requirement to receive aid from the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study, and Federal Perkins Loan programs. |
| Loans | Financial aid awards that the student (or other party like a parent, for example) borrows from a lender, the school or other third party. Loans must be repaid by the borrower according to the terms of a promissory note, usually with interest. |
| Loan Servicer | Once a loan has been approved and disbursed, by the lender or the guarantee agency, it is usually transferred to a servicing company. This is a company that is responsible for managing your account while you are in school and during repayment. You will repay the servicing company until the loan is paid in full. Any questions or repayment issue should be addressed to the servicing company. However, if you are having problems with the servicer, you should contact your lender for additional assistance. |
| Origination fee | A fee the borrower pays to the lender for originating a student loan. Origination fees are most often associated with Federal Stafford, PLUS and Federal Direct Student loans. The maximum origination fee for these federal loans is 3% of the loan's principal balance. |
| Promissory Note | The binding legal document you sign when you get a student loan. It lists the conditions under which you're borrowing and the terms under which you agree to pay back the loan. It will include information about your interest rate and about deferment and cancellation provisions. It's very important to read and save this document because you'll need to refer to it later when you begin repaying your loan. |
| Regular Student | One who is enrolled in an institution to obtain a degree or certificate. Generally, to receive aid from the programs discussed in this booklet, you must be a regular student. (For some programs, there are exceptions to this requirement. See the definition of eligible program.) |
| Satisfactory Academic Progress |
To be eligible to receive federal student aid, you must maintain satisfactory academic progress toward a degree or certificate. You must meet your school's written standard of satisfactory progress. Check with your school to find out its standard.
If you're enrolled in a program that's longer than two years, the following definition of satisfactory progress also applies to you: You must have a C average by the end of your second academic year of study or have an academic standing consistent with your school's graduation requirements. You must continue to maintain satisfactory academic progress for the rest of your course of study. |
| Scholarships | A financial aid award that does not have to be repaid. Scholarships are generally made based on an applicant meeting certain eligibility criteria. |
| Selective Service Registration | If required by law, you must register, or arrange to register, with the Selective Service to receive federal student aid. The requirement to register applies to males who were born on or after January 1, 1960, are at least 18 years old, and are not currently on active duty in the U.S. Armed Forces. (Citizens of the Federated States of Micronesia, the Marshall Islands, or Palau are exempt from registering. |
| Standard Repayment | A repayment alternative in which a borrower pays a set amount monthly over the entire repayment term. Also called "Simple Repayment". |
| Subsidized Stafford Loan | This is a need-based student loan. Interest that accrues on Subsidized Stafford loans while the student is in school (at least half time) is paid by the federal government on the student's behalf. |
| Unsubsidized Stafford Loan | The Unsubsidized Stafford Loan is a non-need based loan program, so students with no financial need can even qualify for this aid program. Interest that accrues on Unsubsidized loans must be paid by the borrower, even while he/she is in school. The borrower may make periodic payments (monthly or quarterly, depending on the lender's policy) or allow the interest to accrue throughout enrollment and have the interest "capitalized" (added to the loan's principle balance). While capitalization eliminates having to make payments while in school but increases the total cost of a loan. |
| Work Study | See Federal Work Study |
