Glossary of Financial Aid Terms
Academic Year - The measure of academic work to be accomplished each year by a student attending a postsecondary educational institution as defined by each school.
Accrued Interest - Interest that accumulates and is paid in installments at a later time (usually when the principal becomes due) rather than paid on a regular schedule from the time a loan is disbursed and interest begins.
Adjusted Gross Income (AGI) - The total of an individual's income on a tax return after all allowable deductions have been subtracted.
Aggregate Loan Limit - The maximum Federal Stafford Loan amount, subsidized and unsubsidized, students attending a postsecondary educational institution are allowed to borrow throughout their educational careers.
Alternative Loan - An optional loan resource for college students, available through private agencies that are willing to lend to students for educational purposes.
Annual Loan Limit - The maximum Federal Stafford Loan amount, subsidized and unsubsidized, college students are allowed to borrow during a specific period. The annual loan limit for a Stafford Loan is determined by a student's grade level, which in turn is based on how many credits a student has.
Award Letter or Award Package - Financial assistance offered to a student to reduce the cost of postsecondary education. Types of awards include scholarships, grants, loans and/or work study. The combination of all awards is often referred to a financial aid award "package".
Borrower - An individual who agrees to take on the obligation of repaying a loan and accepts the terms of the loan by signing a promissory note. For financial aid purposes, students are borrowers of Federal Stafford Loans, subsidized and unsubsidized, and parents of legally dependent undergraduate students are the borrowers of the Federal Parent Loan for Undergraduate Students (PLUS).
Central Processing System (CPS) - The computer system to which the Federal Processing Center, as contract by the U.S. Department of Education, electronically transmits FAFSA need analysis data. The CPS performs computer database matches to ensure that a student meets certain eligibility requirements, calculates the official family contribution, and prints out the SAR and mails it to the student applicant.
College Work-Study - An employment program administered by postsecondary educational institutions that provides part-time jobs for students with financial need.
Co-Signer - An individual who, by signed a loan promissory note along with the borrower, becomes equally responsible for the loan debt.
Cost of Attendance (COA) - The average cost of a student's postsecondary education in a particular enrollment period, usually one academic year, established byJudson University in accordance with federal regulations. Also referred to as "cost of education" or "budget". It is based on course of study, grade level, residency, and other factors, and includes the following components: average tuition and fees, allowances for room and board (either on or off campus), books and supplies, and miscellaneous personal expenses. In certain cases the COA may include other elements such as transportation, dependent care, and study abroad program expenses. The figure is used in a calculation to determine a student's eligibility for financial assistance programs. Also see "Financial Need".
Data Release Number (DRN) - The confidential four-digit number found on the SAR. Similar to the personal identification number (PIN) provided by a bank that enables a customer to access account information, a financial aid applicant needs to provide the DRN when communicating with the Federal Student Aid Information Center regarding FAFSA and SAR processing.
Default on a Loan - The failure of a borrower to repay a loan according to the terms agreed to when the promissory note was signed. Usually default is established once loan payments are more than 180 days past due. Defaults are recorded on the permanent credit record and can result in serious legal consequences for the borrower.
Deferment of a Federal Loan - A limited and specified period of time during which a borrower of a federal educational loan is not required to make regular monthly payments. To qualify for deferment, the borrower must meet one or more of a number of requirements established by law. Interest payments may or may not be postponed depending on the type of loan. Deferment is not automatic, and the appropriate loan agency must be contacted for more information.
Dependent Student - A college student who does not meet the criteria, as defined by federal law, to be considered an independent student for the purpose of receiving financial aid. A dependent student must report parental income and asset information on the FAFSA to be used in the calculation of the family contribution. The philosophy of the federal government is that the student and parents have the primary responsibility for funding the student's postsecondary education, with financial aid being a supplement to the family contribution.
Disbursement - The process by which financial aid is applied toward a student's postsecondary educational and related living expenses
Estimated Financial Aid (Pending Aid) - Aid eligibility that has not yet been finalized. In order for temporary aid to be finalized, further action on the part of the student may be needed, such as completing corrections or verification.
Expected Family Contribution (EFC) - See "Family Contribution (FFELP)".
FAFSA - See "Free Application for Federal Student Aid".
FAFSA On The WEB - The electronic system available on the U.S. Department of Education web site where an individual can complete the FAFSA online and submit it via the Internet. Also see "Free Application for Federal Student Aid".
Family Contribution (FC) - The dollar amount the federal government expects that a student (and parents, if dependent, or spouse, if married) can contribute toward the student's postsecondary educational expenses. The FC is computed using the income and asset information reported on the FAFSA in a formula established by Congress as federal law. It is made up of two components: the Parent Contribution (if the student is dependent) and the Student Contribution. The FC is used in a calculation by schools to determine a student's eligibility for financial assistance programs. Also see "Financial Need".
Federal Stafford Subsidized Loan - Long term, low interest educational loan available to students attending a postsecondary educational institution at least half time. A student is required to file the FAFSA and must be pursuing an undergraduate, a graduate, or a professional degree, or a certificate program, to be considered for the loan. Eligibility for this loan is based on financial need. The loan principal is deferred until six months (the grace period) after the student graduates, leaves school, or ceases at least half-time enrollment. The government makes the interest (or subsidy) payment on the student's behalf during the student's enrollment (at least half time), the six-month grace period, or any deferment period.
Federal Stafford Unsubsidized Loan - Long term, low interest educational loan available to students attending a postsecondary educational institution at least half time. A student is required to file the FAFSA and must be pursuing an undergraduate, a graduate, or a professional degree, or a certificate program, to be considered for the loan. Eligibility for this loan is not based on financial need. The loan principal is deferred until six months (the grace period) after the student graduates, leaves school, or ceases at least half-time enrollment. The loan is not "subsidized"; therefore a student is billed for the interest on the loan while enrolled at least half time, during the six-month grace period, or during any deferment period. The student may choose to pay the interest, or postpone the interest payments and allow the interest to be capitalized.
Federal Parent Loan for Undergraduate Students (PLUS) - Long term educational loan available for a parent to borrow on behalf of a dependent child (student) attending a postsecondary educational institution at least half time. Parent borrowers must pass a credit-worthiness check performed by the federal government. Interest begins accruing as soon as any part of the loan is disbursed. Repayment of principal and interest begins 60 days after the entire loan has been disbursed.
Federal Student Aid Information Center - The government agency to contact with general questions about the federal financial aid application process. Some of the services provided by counselors at this number (1-800-433-3243) include assistance with completing the FAFSA, explanation of the SAR and how to make corrections, and assessment of the status of FAFSA and SAR processing.
Financial Aid - The general term that describes financial assistance offered to a student to help reduce the cost of postsecondary education. Programs can include scholarships, grants, loans or work programs, and are funded by federal, state, and private sources. They are meant to supplement what the student (and parents, if dependent, or spouse, if married) is expected to contribute toward educational expenses.
Financial Need - The difference between the cost of a student's postsecondary education and the dollar amount the federal government determines from data reported on the FAFSA that a student (and parents, if dependent, or spouse, if married) can contribute toward those costs. Eligibility for need-based financial aid programs is determined using the resulting figure.
Forbearance of a Federal Loan - A limited and specified period of time during which a borrower of a federal educational loan, because of hardship, is permitted to postpone or reduce loan payments. Also, forbearance may be given for circumstances that are not covered by deferment. To qualify for forbearance, the borrower must meet one or more of a number of requirements established by law. Usually the borrower is charged for the interest that accrues on the loan during the forbearance period. Forbearance is not automatic, and the appropriate loan agency must be contacted for more information.
Free Application for Federal Student Aid (FAFSA) - The standard federal form that a student attending a postsecondary educational institution must complete each academic year to be considered for financial aid. The FAFSA collects income and asset data that allows for a determination of the family contribution figure. Once the applicant submits the FAFSA to the federal government's processing center, the data is prepared for release to the schools and state agencies listed on the application. The school or agency is then responsible to determine the student's financial aid eligibility. A student might be permitted to file the Renewal FAFSA if a FAFSA was filed in the previous academic year. The renewal form contains both preprinted data with responses from the prior year FAFSA, as well as other items that must be updated with current information. If a student qualifies to use the renewal FAFSA, the federal government will notify the student by mail in the months of December or January for the following academic year.
Gift Aid or Gift Assistance - Funding for postsecondary education, such as grants or scholarships, that does not require repayment or a work obligation.
Grace Period - The time period that begins the day a borrower no longer qualifies for loan deferment at a postsecondary educational institution: the date of graduation, or the last day of attendance, or the date a student's enrollment drops to below half-time status. The grace period is six months for Federal Stafford Loans, subsidized and unsubsidized, and nine months for Federal Perkins Loans. During the grace period, repayment of loan principal (and, in some cases, interest) is not required.
Grant - Funding for postsecondary education, usually awarded on the basis of need that does not require repayment or a work obligation. Federal Title IV grant programs include Pell Grant and Supplemental Educational Opportunity Grant (SEOG).
Independent Student - For financial aid purposes, a student who meets one or more of the following criteria:
- Age 24 by December 31 of the academic year for which aid is being pursued
- Orphan or ward of the court
- Veteran of the U.S. Armed Forces
- Graduate or professional student
- Married prior to signing and filing the FAFSA
- Have legal dependents other than a spouse
Interest on a Loan - The fee a lender charges a borrower for using money. In regard to federal student loans, the interest that is accruing while the borrower is enrolled at least half time, during the grace period and during any other approved deferment period is: a) paid by the federal government on the borrower's behalf for the Federal Stafford Subsidized Loan and Perkins Loan, or b) billed to the student for the Federal Stafford Unsubsidized Loan. For all loan programs, once repayment of loan principal begins, interest is charged.
Lender - The organization that furnishes loan funds, whether it be a bank, college, the government, or another establishment.
Loan - With respect to financial aid, a sum of money (principal) borrowed to assist with the financing of a student's postsecondary education. By signing a promissory note, the borrower promises to repay a specified amount under prescribed conditions. The lender usually charges interest for use of the money, and the amount borrowed is typically repaid with interest over a period of time.
Loan Period - The time frame covered by an educational loan, generally two semesters in length, beginning at the start of the one semester and running through the last day of the next consecutive semester. However, a loan period can also be only one semester in length.
Loan Servicer - The agent designated to track and collect a loan on behalf of a lending institution.
Need-Based Aid - Any form of monetary assistance awarded by a postsecondary educational institution on the basis of a student's demonstrated financial need. Need is established by subtracting the family contribution figure, as calculated from the FAFSA data, from the average cost of attendance figure. If a positive amount remains, the student may be eligible for a number of need-based aid programs. Also see "Financial Need".
Pell Grant - A federal grant program offered to high-need students who are working toward a first bachelor's degree at a postsecondary educational institution. It is designed to assist students with the least ability to contribute toward their basic educational expenses. This grant is considered gift assistance and does not require repayment or a work obligation.
Perkins Loan - Federally subsidized long term, low interest educational loan available to students attending a postsecondary educational institution full time. Students are required to file the FAFSA and must be pursuing an undergraduate degree. Eligibility for this loan is based on financial need. The loan principal and interest is deferred until nine months (the grace period) after the student graduates, leaves school, or ceases at least half-time enrollment. The school is the student's lender and the loan must be repaid to the school.
Personal Identification Number (PIN) - The code that serves as a financial aid applicant's unique identifier, allowing the student access to personal information in various U.S. Department of Education systems. The PIN can be used to file the Renewal FAFSA online. A request for the PIN may be made on the web site of the U.S. Department of Education.
Principal of a Loan - The amount of money borrowed through a loan, excluding interest or other charges (unless they are capitalized).
Professional Judgment - Financial aid administrator discretion, based on the special circumstances of a student, to change data elements used in determining financial aid eligibility for a student attending a postsecondary educational institution.
Promissory Note - The contract between a lender and a borrower that contains the terms and conditions governing the loan program, including the repayment obligations. It becomes legally binding when signed (executed) by the borrower. The borrower promises to repay the loan, with interest, in periodic installments.
Renewal FAFSA - See "Free Application for Federal Student Aid".
Repayment of a Federal Loan - The process of paying back an educational loan to the lender (e.g. bank, college, or federal government) in periodic (usually monthly) installments of principal and interest. A choice of repayment plans or consolidation may be available. A federal educational loan must be repaid even if the student doesn't complete a school's program of study, doesn't like the school or the program of study, or doesn't obtain employment after completing the program of study.
School Code - For financial aid purposes, the federal ID number assigned to postsecondary educational institutions by the U.S. Department of Education. Judson's school code, also known as the Title IV Code or Federal School Code, is 001700.
Scholarship - A form of educational financial assistance that does not require repayment or a work obligation. A "merit-based" scholarship is awarded to a student who demonstrates potential for distinction, usually in academic performance. A "need-based" scholarship is awarded to a student who demonstrates financial need. Some scholarships may require both academic proficiency and demonstrated financial need.
Scholarship Search Services - Online systems available through the Internet that help students find sources of funding for postsecondary education. An applicant provides information regarding such things as academic achievement, heritage, artistic talents, athletic ability, educational goals, or career plans. In turn, the data is transmitted to a national computer database, and soon after the student is presented with a list of sources or organizations that offer scholarships for which the student may be eligible. In most cases, search services do not provide any awards directly to applicants. It is up to the student to follow through and apply for the scholarships. Note: A student should be wary of any service that guarantees a scholarship, charges a large fee, or requires that a credit card or bank account number be provided, since the same information is available for low or no cost. Also, the U.S. Department of Education does not evaluate private scholarship search services. A student should check the reputation of a service by contacting the Better Business Bureau or a State Attorney General's Office.
Selective Service Certification - Documentation that must be collected to verify that all male students (who were born on or after 1/1/60) are registered with Selective Service. If required by law, a student attending a postsecondary educational institution must register with the Selective Service before receiving federal financial aid.
Self-Help Aid - Financial aid loan programs or employment opportunity programs awarded to a student by a postsecondary institution as a form of educational financial assistance.
Student Aid Report (SAR) - The official notification from the federal government that summarizes the information submitted on the FAFSA. The document is sent directly to a college student from the federal Central Processing System and displays the calculated family contribution figure and special messages related to the student's application. It is to be reviewed carefully for mistakes that could have been made by the student when the FAFSA was completed or by the federal government when the FAFSA was processed. If the SAR data does not require corrections, the student may keep the document with personal records. If corrections are needed, Part II of the SAR must be completed with the revisions and signatures, and then mailed to the appropriate Federal Processing Center address as listed in the SAR instructions.
Supplemental Educational Opportunity Grant (SEOG) - A federal grant program offered to high-need students who are working toward a first bachelor's degree at a postsecondary educational institution. It is designed to assist students with the least ability to contribute toward their basic educational expenses. This grant is considered gift assistance and does not require repayment or a work obligation.
Title IV Funds - Federal financial aid programs authorized under Title IV of the Higher Education Act of 1965, as amended, and regulated and administered by the U.S. Department of Education.
U.S. Department of Education - The branch of the federal government that administers the federal financial assistance programs for students attending postsecondary educational institutions. These programs include: Pell Grant, Perkins Loan, Supplemental Educational Opportunity Grant, Work-Study, and all loans under the Federal Family Education Loan Program (FFELP). Also referred to as the "federal government".
Verification - The process the U.S. Department of Education uses to make sure that the information reported on the FAFSA is accurate. Technical and administrative procedures are used by a student's postsecondary educational institution to detect and resolve inaccuracies in the data supplied on the FAFSA. Usually evaluation of tax and asset documentation is required.