Accrued Interest

The interest that accumulates on the unpaid principal balance of a loan.

Alternative Loans

A non-government education loan offered by banks, credit unions and other lenders.  These loans are based on creditworthiness and ability to repay rather than financial need. 

Appeals

See Professional Judgment

Capitalization

The addition of unpaid accrued interest applied to the principal balance of a loan that increases the total debt outstanding.

Consolidation

Combining several education loans into a new loan with a new payment schedule and interest rate.

Cost of Attendance (COA)

The total amount it will cost to go to school, usually expressed as a yearly amount.  This amount includes reasonable amounts for tuition, fees, books, room & board.  Other miscellaneous personal expenses may be added to the COA. 

Default

Failure to repay a loan according to the terms agreed to when you signed a promissory note.  Default occurs after 270 days of non-payment on an account for Title IV loan programs.

Deferment

An approved temporary suspension of loan payments based on certain events and criteria.

Disbursement

When financial aid funds are paid to the student’s account to pay tuition and fees. 

Eligibility

Expected Family Contribution (EFC)

An amount, established by law, that is a measure of a family's financial strength. This calculation is based on family earnings, assets, students in college, and size of family. The EFC is used in determining financial need for federal student aid.

FAFSA

Free Application for Federal Student Aid. This application must be submitted to receive any form of federal student aid.  Schools and states also frequently use FAFSA data in awarding state and private aid.

Federal Family Education Loan Program (FFEL)

This federal program allows private lenders to offer federal loans including Federal Stafford Loans, Parent PLUS Loans and Graduate PLUS Loans.  Since FFELP loans are guaranteed against default by the federal government, they usually have low interest rates.

Financial Need

The difference between a student's educational costs and the Expected Family Contribution (EFC).

Forbearance

The approved temporary suspension, reduction, or extension of loan payments due to a financial hardship. During forbearance, interest continues to accrue.

Grace Period

The period between when a student graduates, leaves school (unofficially or officially), or drops below half time and when loan payments must begin.  The length of the grace period depends on the type of federal student loan.

Loan Origination Fee

The fee charged by the lender

Master Promissory Note (MPN)

The binding legal contract between the lender and the borrower. By signing this note, the borrower is obligated to repay the loan as agreed upon in the terms of the contract.

Private Loans

See Alternative Loans

Professional Judgment

When a financial aid administrator adjusts the EFC, COA or dependency status of a student or family.  This typically occurs in the event of extreme changes in the student’s personal situation such as death in the family, unemployment, disability, etc.

Promissory Note

The binding legal contract between the lender and the borrower. By signing this note, the borrower is obligated to repay the loan as agreed upon in the terms of the contract.

Refund

The amount sent to the student for living expenses after tuition and fees are paid.

Satisfactory Academic Progress

Most federal aid requires students to maintain an acceptable GPA as determined by the institution.  Financial aid can be denied for students not meeting satisfactory academic progress.

Student Aid Report (SAR)

The report you receive after you submit your FAFSA.  The SAR summarizes the information on your FAFSA. The schools you list on your application receive electronic copies of your SAR.  If that information is complete and accurate, and if you're eligible, your school will use your SAR in awarding federal student aid.

Subsidized Loans

Loans for which the federal government pays the interest until the student enters repayment, as well as during deferment.  A subsidized loan is awarded on the basis of financial need. 

Unsubsidized

Loans for which the student is responsible for paying from the date of disbursement until the loan is paid in full, regardless of enrollment status.  The federal government does not pay the interest on these loans, and they are not made on the basis of financial need.

UAPP

University Application for Financial Aid.   This form is used to verify the information submitted on the FAFSA.

Verification

Proper documentation required to verify the accuracy of information reported on the FAFSA.

Work-Study

Money for education expenses paid by the school in return for on-campus or community based work.