|
 |
Career Library & Resources - Glossary |
 |
Educational Loan Terms Postsecondary Terms Financial Aid Terms
Educational Loan Terms
Accrued Interest
Interest that has accumulated on your principal balance.
Amortization
Gradual reduction of a loan debt by periodic installment payments (usually monthly) of interest and principal.
Borrower
The student who signed the promissory not for the loan. In the case of a PLUS loan, the parent who signed the PLUS loan promissory note. This is the person legally responsible for repayment of the loan.
Cancellation
Forgiveness of all or part of the loan due to specific circumstances.
Capitalized Interest
Unpaid accrued interest that is added to the principal balance of the loan (usually after deferment or forbearance).
Certification
The act of attesting that something is true or meets a certain standard. For example, the school certifies the borrower's eligibility for a loan and, if applicable, interest benefits. The borrower completes an application, promissory note, or deferment form, thereby certifying that certain eligibility criteria have been met.
Co-maker
Second borrower on the loan, who has the same responsibilities for repayment as the borrower. The co-maker is jointly and severably liable for the debt. There may be co-makers for some PLUS loans and for Spousal Consolidation Loans.
Consolidation
Program to combine multiple eligible federal education loans. Simplifies repayment if you have loans with different lenders. May allow more years to pay and lower monthly payments.
Default
Failure to pay back the loan as promised. Loans are filed with guaranty agencies or the federal government for collection if past due payments continue. The loan balance is due in full at the time of default.
Deferment
Entitlement to postpone payments when the borrower meets specific eligibility requirements set by the US Department of Education.
Delinquent
When the borrower does not make a payment on time. Late payments are reported to credit bureaus monthly.
Disclosure Statement
Fact sheet sent to the borrower when the loan is borrowed or at the beginning of repayment that shows the repayment terms of the loan.
Electronic Payment
Loan payments are deducted automatically from the borrower's bank account.
Eligibility
You qualify for federal education loans simply by being a U.S. citizen (or eligible non-citizen) enrolled at least half-time at an eligible college. You must complete the Free Application for Federal Student Aid (FAFSA). You're not eligible for federal aid if you have federal loans in default.
Endorser
Person who agrees to be liable for repayment of the loan if the borrower does not pay the loan as agreed. The endorser is secondary liable for the debt.
FAFSA (Free Application for Federal Student Aid)
The form the students must complete to apply for federal Title IV financial assistance, including Stafford loans. The student must include financial information on the student's household so that the expected family contribution can be calculated.
FAFSA e-PIN
An electronic signature that can be used by the borrower when completing a FAFSA application online.
FFELP (Federal Family Education Loan Program)
Loan program authorized by Title IV, part B of the Higher Education Act of 1965, as amended, including the federal Stafford, federal PLUS, federal SLS, and Federal Consolidation loan programs. These loan programs are funded by lenders, guaranteed by guarantors, and reinsured by the federal government.
Fixed Interest Rate
Remains the same over the life of the loan.
Forbearance
A period of time during which the borrower is permitted to temporarily cease making payments or reduce the amount of the payments. The borrower is liable for the interest that accrues on the loan during the forbearance period. Some forbearances are entitlements for eligible borrowers; others are granted at the discretion of the lender.
Grace Period
Stafford loan repayment begins six months after leaving school, graduating, or dropping to less than half-time enrollment.
Graduated Repayment
Payments start low and increase over time.
Guaranty Agency
State or private nonprofit organizations that coordinates the Federal Family Education Loan Program for students, schools, and lenders, and administers the FFELP insurance program.
Holder
Lender or secondary market that owns the promissory note. May be guaranty agency or U.S. Department of Education in case of defaulted loan.
Income-sensitive Repayment
Payment amount based on the borrower's income and amount of education loan debt.
Installment
Periodic payment amount. For Stafford, PLUS, and Consolidated Loans, payments are required monthly.
Interest Rate/Finance Charge
What the borrower pays to use the money borrowed. Set by the federal government, this varies depending on the type of loan when it was made. The interest you pay on your education loans during repayment may be tax-deductible, up to a certain amount. The deduction is phased out at certain income levels. If you pay taxes, you can think of this as paying less total interest on your loan (you pay it, then get some of it back in the form of owing less tax).
Lender
Bank or student loan company(s) that lent the money.
National Credit Bureau
Records financial information about the borrower for use by potential creditors. Education loan information is reported to national credit bureaus monthly.
Perkins Loan
Low interest loan for student. Administered by the school; it is not part of the FFELP program.
PLUS Loan
Loan for parent or legal guardian of dependent student enrolled at least half time in an eligible program. The parent borrower owes interest as soon as the loan is made. Repayment begins when the final disbursement is issued. (A parent's credit history is reviewed when apply for a PLUS loan, but only to determine if there is a history of late payments or other adverse circumstances.)
Principle Balance
Amount of money still owed on the loan, not including accrued interest or future interest.
Promissory Note
A legally binding agreement the borrower signs to obtain a FFELP loan. The borrower promises to repay the loan, with interest, in periodic installments. The agreement also includes information about any grace period, deferment, or cancellation provision and the student's rights and responsibilities with respect to the loan.
Repayment Period
The period that commences after the expiration of the grace period during which the borrower must make regular installment payments of principal and interest. The maximum term of repayment is generally 120 months. With SLS and PLUS loans, repayment occurs immediately after disbursement of the loan (exclusive of statutory deferments), since they do not receive a grace period.
Flexible Repayment
The repayment period for education loans is usually 10 years. However, depending on the amount you borrowed, you can choose to lower your monthly payments by taking as long as 25 or 30 years to pay back your loans. You can temporarily reduce the amount you pay when facing difficulties. You can even postpone repayment if you meet certain qualifications (such as economic hardship or unemployment). The longer you take to pay off a loan, the more you pay (because additional interest accumulates over time).
Secondary Market
State or private agency that purchases the loan from the original lender. This provides money for the lender to make more education loans.
Servicer
State or private agency that processes the borrower's payments, forbearances, and deferments, answers the borrower's questions, and helps the borrower find options to help with repayment.
Spousal Consolidation
Spouses combine eligible federal education loans. Spouses are co-makers and are jointly and severably liable for the total debt.
Stafford Loans
Loans made to undergraduate and graduate students under the FFEL and Direct Loan programs. Borrowers can receive FFEL or Direct Stafford Loans regardless of financial need. The interest rate is variable but does not exceed 8.25 percent.
Subsidized Stafford Loan
Low interest loan for students enrolled at least half time in an eligible program. The federal government pays the interest while the borrower is in school, for six months after the borrower leaves school, and during deferment periods.
Term
Number of months the borrower has to pay back the loan, not including months of deferment or forbearance.
Unsubsidized Stafford Loan
Low interest loan for student enrolled at least half time in an eligible program. The borrower owes interest as soon as the loan is made.
U.S. Department of Education
The agency that makes rules for education loans based on laws enacted by Congress.
Variable Interest Rate
The interest rate changes periodically.
Top
Postsecondary Terms
Postsecondary education
Education beyond high school; includes vocational/technical training schools, proprietary schools, community colleges, four-year college, universities, and training programs.
Types of Postsecondary Institutions:
Two-year Colleges/Community Colleges
Two-year public institutions that lead to an associate degree. Most have programs designed to transfer to four-year institutions.
Technical College
Public institutions that offer certificates, diplomas or associate degrees.
In Kentucky, The community Colleges and Technical Colleges are part of one system: KCTCS (Kentucky Community and Technical Colleges System).
Proprietary Schools
Schools that are privately owned and licensed. These usually offer certificates, diplomas and associate degrees, although some offer bachelors and masters degrees.
Four-year Colleges/Universities
Public or private: non-profit or for-profit institutions. Most programs lead to a bachelors degree. Universities also offer degrees above the bachelors degree.
TRIO Programs - Educational programs funded through the U.S. Department of Education to assist youth and adults in entering postsecondary education. Programs in TRIO include: Educational Talent Search (serves middle and high school students), Educational Opportunity Centers (serves adults), Upward Bound (serves high school students, Ronald McNair post baccalaureate program (serves graduate students); Student Support Services Program (serves students enrolled in postsecondary institutions).
Top
Financial Aid Terms
Campus-based Programs
Federal student aid programs, including Federal Perkins Loans, and Federal Work-Study, administered by colleges.
Enrollment Status
Determined by the number of credit hours for which you register. In most cases, 12 credit hours or more is considered full-time; between nine and 11 credits is three-quarter-time, between six and eight credits is half time; and fewer than six credits is quarter-time.
Expected Family Contribution (EFC)
The results of a federal formula using the family's income and assets to determine the expected contribution towards educational expenses. The EFC is reported on the Student Aid Report.
Federal Direct Student Loan Program (FDSLP)
Low-interest loans for students and parents; includes the Federal Stafford and PLUS loan programs. Loans are obtained through a student's school and repaid to the federal government.
Federal Family Education Loan Programs (FFELP)
Low-interest loans for students and parents; included the Federal Stafford and PLUS loan programs. Loans are obtained from a private lender. Contact a KCAC counselor for further assistance.
Federal Pell Grant
The largest pool of federal grant money. You must apply for a Federal Pell Grant, using the Free Application for Federal Student Aid (FAFSA), to be considered for other forms of aid.
Financial Aid Award Notifications
Letters from the colleges to which you have applied for financial aid informing you of your eligibility.
Scholarships
Gifts of money to students from state, federal, or private sources. While state and federal grant programs are based on financial need, scholarships may be based on a variety of factors, including need, academic excellence, leadership qualities, heritage, or extracurricular interests.
Student Aid Report (SAR)
The official Federal Pell Grant notification you receive after FAFSA is processed.
Federal Personal Identification Number (PIN)
The PIN serves as your identifier to let you access your personal information in various U.S. Department of Education systems. It's like the Personal Identification Number you get from your bank that enables you to access your account. Because your PIN serves as your electronic signature, you should not give it to anyone except persons assisting you with your application, corrections and renewal.
If you forget your PIN you can call 1-800-433-3243 or send an email to www.fafsa.ed.gov and request PIN number and it will be email or mailed to you. It will take approximately 1-3 business days after you request your PIN for you to receive an email with instructions on how to retrieve it electronically, or 7-10 days to receive it in the mail via the U.S. Postal Service. When you use your PIN, you must type the PIN exactly as it appears.
|
|
