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Academic Year - A measure of the academic work to be accomplished by the student. Each school defines its own academic year, but federal regulations set minimum standards. Every eligible program, undergraduate and graduate, must have a defined academic year that contains a minimum of 30 weeks of instructional time. For undergraduate programs, a full-time enrolled student must be expected to complete at least 24 semester or trimester hours, 36 quarter hours, or 900 clock hours over the 30 week period of instructional time. The academic year is the measure used by the school to monitor annual loan limits.

Adjusted Gross Income (AGI) - A figure taken from IRS Form 1040, 1040A, or 1040EZ that represents all taxable income minus IRS allowable adjustments to income.

Aggregate Maximums - The total amount you may borrow through subsidized and unsubsidized Federal Stafford loans is limited. The aggregate maximum is based on whether you are in an undergraduate or graduate program and whether you are a dependent or independent student.

The aggregate maximums are:

Undergraduate program
Dependent student������� $23,000
Independent student����� $46,000 (up to $23,000 may be subsidized)

Graduate program (includes undergraduate borrowing)
Independent student����� $138,500 (up to $65,500 may be subsidized)

For more information, contact your lender, financial aid office, or the .

Application and Promissory Note (A/PN) - A single document which serves as the Federal PLUS loan application, as well as the Promissory Note (see Promissory Note definition).

Assets - Property or resources which have a monetary value. For example, cash on hand in checking and savings accounts, trust, stocks, bonds, and other securities, real estate, income-producing property, business equipment, and business inventory are considered assets.

Award Letter - A means of notifying aid recipients of the assistance being offered by the postsecondary school. The award letter provides information on the types and amounts of aid offered, as well as specific program information, student responsibilities, and the conditions which govern the award. Generally, the award letter provides students the opportunity to accept or decline the aid offered. The letter also includes a deadline date by which to respond.

Award Year - The period of time between July 1st of one year and June 30th of the next year.

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Base Year - For need analysis purposes, the base year is the calendar year preceding the award year. For instance, 2001 is the base year used for the 2002-2003 award year. The Free Application for Federal Student Aid (FAFSA) uses family income from the base year because it is more accurate and easier to verify than projected year income.

Budget - The estimated cost of attendance for an institution which usually includes tuition and fees (including loan fees), books and supplies, room and board, personal expenses, and transportation. Other living expenses may be included.

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Campus-Based Programs - The Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Work-Study (FWS) programs. These three programs are called "campus-based" because the funds are administered directly by the school's financial aid office, which awards these funds to students using federal guidelines.

Capitalization - Unpaid interest is added to the principal balance of your loan. As a result, you will pay more interest over the life of the loan. Your monthly payment amount may be higher or your repayment period could be longer.

Central Processing System (CPS) - The U.S. Department of Education's processing facility for application data. The CPS receives student information from the application processors, calculates a student's official EFC, performs several eligibility database matches, prints the Student Aid Report (SAR) that is mailed to the applicant and produces Institutional Student Information Records (ISIRs) that are sent to the colleges.

Class Rank - The student's position within his/her graduating class, typically determined based on Grade Point Average.

Compound Accreted Value - An amount equal to the original amount plus an investment return accrued to the date of determination at a semiannual compounding rate which is necessary to produce the yield at maturity indicated on the Official Statement that was issued when the college savings bonds were sold.

Consolidation Loan/Direct Consolidation Loan - There are two categories of consolidation loans-Federal Family Education Loan Program (FFELP) Consolidation Loans and Direct Consolidation Loans. Both allow the borrower to combine different types and amounts of federal student loans to simplify repayment. A consolidation loan pays off the existing loans; the borrower then repays the consolidation loan.

Cost of Attendance (also known as Cost of Education) - The student's cost of attendance includes not only tuition and fees (including loan fees), but the student's living expenses while attending school. The cost of attendance is estimated by the school, within guidelines established by federal regulation. Note that the cost of attendance for the Federal Pell Grant Program is different from the cost of attendance in the other student financial aid programs. The cost of attendance is compared to the student's expected family contribution to determine the student's need for financial aid.

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Default - Failure of a borrower to repay his/her loan according to the terms agreed upon when the promissory note was signed, specifically, being at least 270 days delinquent (behind in loan payments).

Deferment - A period of time during which a borrower's repayment obligation is temporarily postponed for an authorized reason. Borrowers whose interest was paid by the federal government while in school will qualify for these same interest benefits during deferment periods.

Dependent Student - A student that does not meet the definition of Independent Student (See Independent Student definition).

Distance Learning - Courses offered by correspondence and/or telecommunications (e.g., videoconferencing, Internet).

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Economic Hardship - Many Peace Corps volunteers qualify for deferment based on economic hardship.

ED - Abbreviation for the U.S. Department of Education.

Electronic Funds Transfer (EFT) - A process by which student loan proceeds are electronically disbursed directly from the lender to the school, and the school then applies the funds against the student's account at the school. This eliminates the need for individual checks for student loan disbursements.

Electronic Signature - Information or data in electronic form, attached to or logically associated with an electronic record, and executed or adopted by a person or an electronic agent of a person, with the intent to sign a contract, agreement, or record.

Eligibility Units - A system by which the usage of limited available funding for a program (e.g., MAP, IVG, National Guard) is monitored equitably across students attending schools with different calendar terms (e.g., semester, quarter, etc.).

Estimated Financial Assistance - For the Federal Family Education Loan Program (FFELP), the amount of student financial aid the student can expect from federal, state, school, or other sources, including grants, loans or need-based work programs. The school must report this estimate when certifying a loan application.

Expected Family Contribution (EFC) - The amount, determined by a formula Congress established, that a student's family is expected to contribute toward the cost of attendance, based on the family's income and assets. The EFC for the Federal Pell Grant, Campus-Based and Federal Stafford loan programs is used to calculate awards. The EFC is printed on the front of the Student Aid Report (SAR) that is sent to the applicant, and is also included in the Institutional Student Information Record (ISIR) that is sent to the college.

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Federal Family Education Loan Program (FFELP) - The subsidized and unsubsidized Federal Stafford loan, Federal PLUS, and Federal Loan Consolidation programs make up FFELP. Funds for these programs are provided by private lenders, and the loans are guaranteed by the federal government.

Federal PLUS Loan - A federal loan program which provides variable interest rate loans to eligible parents of dependent students. The variable interest rate will not exceed 9%, 10% or 12% (depending on when the loan was originally disbursed) and is adjusted annually.

Federal Stafford Loan - A program in which a student may borrow a variable rate long-term educational loan from a financial institution. There are two types of loans in this program; a subsidized and an unsubsidized Federal Stafford loan (see the definition of each loan). The variable interest rate on both loans will not exceed 8.25% and is adjusted annually.

Financial Aid Package - The total financial aid awarded to a student from a combination of two or more forms of financial aid (grants, scholarships, employment, and/or loans).

Financial Need - The difference between the student's cost of attendance and the Expected Family Contribution (EFC). (Financial need is reduced by any financial aid the student receives.)

Forbearance - A period of time during which a borrower's principal repayment obligation is temporarily postponed for a mutually agreed upon reason between the borrower and lender. Payment of interest which accrues on the account continues to be the responsibility of the borrower.

Free Application for Federal Student Aid (FAFSA) - The federally-approved application completed by the student, that collects household and financial information to be used to calculate the Expected Family Contribution (EFC), and to apply for federal and state financial aid programs. The completion of an institutional application may also be required of the student.

Full-time Students - An enrolled student who is carrying a full-time academic work load (other than correspondence courses) as determined by the institution and which is applicable to all students enrolled in a particular program.

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Gift Assistance - Student assistance funds in the form of a scholarship, grant or tuition waiver. This type of financial aid does not have to be repaid.

Grace Period -The period of time between when the student ceases at least half-time study and when the student must begin to repay the loan in regular monthly installments. Grace periods may be either 6 or 9 months depending on when the loan was originated.

Grade Point Average - The average grade earned throughout a student's applicable secondary or postsecondary education program.

Graduate Fellowship - The graduate fellowship program must be approved by the U.S. Department of Education.

Grants - Awards based on financial need or other special requirements and do not need to be repaid when school is completed.

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Half Time
  • 6 semester or quarter hours per term for schools using both credit hours and semesters, trimesters, or quarters.
  • 12 semester hours or 18 quarter hours per year for schools using credit hours but not semesters, trimesters, or quarters.
  • 12 hours per week for schools using clock hours.
Higher-EdNet - This is ISAC's postsecondary financial assistance location service. This service assists students in finding alternative sources to fund their education.

Holder - The institution with legal title to a borrower's loan. The holder may be the lender that originally made the loan, a secondary market or another lender to which the lender has sold the loan, or in the event of a default, the guaranty agency or the federal government.

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Independent Student - Students who are not dependent on their parents for financial support. Under the federal definition for the 2002-2003 academic year, an independent student is one who meets one of the following criteria:
  1. is 24 years old (born before 1/1/79)
  2. is a veteran of the U.S. Armed Forces
  3. is an orphan or is a ward/dependent of the court or was a ward/dependent of the court until age 18, or both of his or her parents are deceased
  4. has children who receive more than half of their support from student
  5. has legal dependents (other than a spouse or children) who live with the student and receive more than half of their support from student
  6. is married as of the date of completion of the FAFSA
  7. is working on a master's or doctorate program in 2002-2003
Institutional Student Information Record (ISIR) - A federal output record sent to the school, which contains the EFC and all the information provided by the student on the FAFSA.

Insurance Premium/Guarantee Fee - A guarantee agency charge, not to exceed 1% of the loan amount, which is deducted from the loan proceeds of each loan prior to disbursement.

Interest Benefits -The interest payment made by the federal government to the lender on behalf of an eligible subsidized Federal Stafford borrower during the in-school, grace, deferment and post-deferment grace periods.

Interest Rate - Refer to Variable Interest Rate.

Interim Status - The status of those loans which have not yet entered repayment. Interim status includes the in-school period during which a borrower is continually attending school on at least a half-time basis and during the student's 6- or 9-month grace period. The federal government will pay interest benefits on eligible subsidized Federal Stafford loans during this time.

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Loans - a form of financial aid that must be repaid with interest. Loans provide monetary assistance through participating lenders, colleges, the federal government, and other organizations. Loan funds are to be used for educational purposes and must be repaid.

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Mandatory Fees - the charges assessed by an institution to each and every full-time student for each term. Application, graduation, laboratory, breakage, add/drop fees, and program administration fees for out-of-state or foreign study are specifically excluded. For the purposes of ISAC's rules, tuition is not a mandatory fee.

Master Check - The Master Check process enables lenders to submit one check to a school for all borrowers receiving a disbursement at that institution, instead of individual checks. The funds for individual students cannot be moved from the school's restricted account to the student's individual account if the borrower has not authorized the movement of funds.

Master Promissory Note (MPN) - Used for Federal Stafford loans, a promissory note (see Promissory Note definition) that can be used as both a single year and a multi-year note. Borrowers can sign an MPN once, at the time they first borrow, and then receive additional loans during the same year or in subsequent years without signing an additional note.

Multiple Disbursement -The procedure by which disbursement of student loan funds is made in more than one installment, as required by federal regulations.

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Need Analysis - The process of analyzing the student's household and financial information on the student's FAFSA to calculate an Expected Family Contribution (EFC) and eligibility for financial aid.

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Origination Fee - A federal government charge of 3% for each FFELP loan, which is deducted from loan proceeds prior to every disbursement. A 3% fee is also deducted for Federal Direct Loans.

Overaward - Generally, any campus-based or loan funds disbursed in excess of the student's financial need (the overaward concept does not apply to the Federal Pell Grant Program because it is an entitlement program.)

Overpayment - Any payment of financial aid that exceeds the amount for which a student was eligible. An overpayment may be the result of an overaward, an error in cost of attendance or Expected Family Contribution (EFC), or a student not meeting any other eligibility criterion, such as citizenship or enrollment in an eligible program.

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Parents' Contribution - The financial amount that parents are expected to contribute to meet postsecondary educational expenses, based on the need analysis formula.

Personal Identification Number (PIN) - A code or password, unique to or associated with, a specific user, and entered into a data-processing device for purpose of verifying the identity of a person requesting a transaction or access to a system.

Priority Consideration Date - The last date by which an application will be deemed "on-time" and guaranteed to be considered for full-year eligibility.

Professional Judgment - The financial aid administrator's ability to make changes or adjustments to a student's financial aid package based on extenuating circumstances.

Promissory Note - A binding legal document, included in the Federal Stafford Loan Master Promissory Note (MPN) and Federal PLUS Loan Application and Promissory Note (A/PN), that the borrower signs when obtaining a loan and on which the borrower promises to repay the loan, with interest, in specified installments. The promissory note also includes information about the grace period, deferment or cancellation provisions, and the student's rights and responsibilities with respect to that loan.

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Rehabilitation Training - The rehabilitation training program must be approved by the U.S. Department of Education and you must have a disability.

Renewal Applicant - any individual who requests consideration (for a scholarship, grant, tuition waiver, guaranteed or alternative loan) for a subsequent period of enrollment after, in a previous period of enrollment, being awarded and receiving funds from the same program for which they are now requesting consideration.

Renewal FAFSA- A simplified reapplication form for continuing students. The Renewal FAFSA allows the student to update the financial information and other items that have changed from the prior year's FAFSA, rather than completing the entire FAFSA for each award year.

Resources -The amount of student financial aid the student may expect from federal, state, school, or other sources. The school must consider this available assistance to determine eligibility for campus-based funds.

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Satisfactory Academic Progress - The policy based on federal regulations and set by the school to determine that sufficient academic standards are met by the student. The student must achieve these standards to continue to receive financial aid.

Scholarships - Awards based on academic, merit-based, athletic factors, or various other talents. Financial need is generally not a factor in determining eligibility, and scholarships do not usually have to be repaid.

Secondary Market - A company that buys student loans from lenders.� The company holds and services loans until the loans are paid.� The company usually cannot originate new loans, so the borrower needs to stay in touch with the lender to obtain a future loan.� The company may employ a servicer (billing agent) to process a borrower�s regular loan payments.

Servicer - A company contracted by a lender or holder to perform the administrative tasks such as processing the loan and collecting payments, that are associated with educational loans.

Standard Repayment - Most student loan payments are set up on a standard repayment plan with monthly payments that remain constant throughout the repayment period.

State of Legal Residency (or, Residency) - The state in which your true, fixed, and permanent home is located. For dependent students, the state of legal residence is usually the state in which your parents live.

Student Aid Report (SAR) - The output document sent to the student from the federal processing system. The SAR contains the financial and other information reported by the student on the FAFSA, as entered into the processing system. The student's eligibility for aid is determined based on the EFC calculated by the processor and printed on the front of the SAR. Additional information is provided to the student on the SAR.

Subsidized Federal Stafford Loan - A variable low interest rate loan based on financial need. The federal government will pay the interest while the student is in-school, during the grace period and authorized deferment periods. The variable interest rate will not exceed 8.25% and is adjusted annually.

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Taxable Income - Income earned from wages, salaries, tips, as well as interest income, dividends, alimony, estates or trust income, business or farm profits, and rental or property income.

Teacher Loan Forgiveness Program - To be eligible for this program, the following conditions must be met:

  • You must be a new borrower. You may qualify for loan forgiveness only if you had no outstanding balance on a Federal Family Education Loan (FFEL) program loan or a William D. Ford Federal Direct Loan (Direct Loan) program loan on October 1, 1998, or had no outstanding balance on a FFEL or Direct Loan program loan on the date you obtained a loan after October 1, 1998.
  • You must teach on a full-time basis for five consecutive and complete academic years in a designated low-income school. At least one of the five years must be after the 1997-98 academic year.
  • The school at which you perform the teaching service must be listed in the Annual Directory of Designated Low-Income Schools for Teachers Cancellation Benefits.� This directory can be obtained from the U.S. Department of Education.
  • If you are in default on your loan you may be eligible for this program if you make satisfactory repayment arrangements.
Based on these conditions, the earliest most teachers could apply for forgiveness is after the 2002-03 academic year (five years after the 1997-98 academic year).

Applications are available from your lender or the .

If you have questions about this program, please e-mail the or call 1-, extension 0.

Title IV Assistance - Monetary awards provided per Title IV (Student Financial Assistance) of the Reauthorization of the Higher Education Act of 1965.

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  • You must be conscientiously seeking, but unable to find, full-time employment.
  • If you are receiving unemploment benefits that will automatically qualify you for the unemployment deferment. No form is required but you need to call your lender.
Unmet Need - The difference between a specific student's total available resources and the total cost for the student's attendance at a specific institution.

Unsubsidized Federal Stafford Loan - A low variable interest rate loan not based on financial need. This loan is available for students who are not eligible or only partially eligible for a subsidized Federal Stafford loan or for independent students borrowing at the higher loan limits. The student is responsible for paying the interest from the date the loan is disbursed. Repayment of principal begins six months after the student graduates or ceases to be enrolled on at least a half-time basis. The variable interest rate will not exceed 8.25% and is adjusted annually.

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Variable Interest Rate - An interest rate which changes at specified times over the life of a loan. Refers to the rate of interest on the Federal PLUS and Federal SLS Loan Programs, as well as the current interest rate for the Federal Stafford Loan Program.

Verification - A procedure whereby the school checks the information the student reported on the FAFSA, usually by requesting a copy of the tax returns filed by the student and, if applicable, the student's spouse and parent(s). Many schools conduct their own form of verification. In addition, schools must verify the students selected through the federal processing system, following the procedures established by regulation.

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William D. Ford Federal Direct (Direct Loan) Loan Program - A program that allows participating schools to administer subsidized and unsubsidized Federal Stafford and Federal Direct PLUS loans directly to student and parent borrowers. Direct loans have very similar terms and conditions to FFELP loans. Funds for these programs are provided by the federal government.

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