FINANCIAL AID » Terms, Definitions & Acronyms
The financial world is full of jargon and legal terms that can be confusing.
By familiarizing yourself with these terms, you will have a clearer understanding of the world of finanical aid.
Accrued Interest: The interest that accumulates on the unpaid principal balance of a loan.
Additional Unsubsidized Federal Stafford Loan: The additional amount of unsubsidized Stafford Loans available to independent undergraduate students, graduate/professional students, and dependent undergraduate students whose parents are unable to obtain a Federal PLUS Loan.
Aggregate Loan Amount: The total amount disbursed (less any amount repaid or cancelled) to a borrower under a given loan type throughout the borrower's academic career. This amount must not exceed applicable total loan limits, which are based on the student’s graduate/undergraduate status.
Aid Package: A combination of financial aid (scholarships, grants, loans, and/or work-study) assembled by the financial aid office of a college or university for an eligible recipient.
Annual Loan Limit: The maximum amount a student may borrow at a particular grade level in one academic year.
Award Letter: An official document issued by a financial aid office estimating the types and amounts of financial aid awarded to the student. Generally, the award letter includes information about the cost of attendance and terms and conditions for the financial aid.
Campus-Based Federal Aid: Federal money given to a school to give to students of its choosing based on certain criteria (e.g. Federal Supplemental Educational Opportunity Grant and Federal Work Study).
Capitalization: The addition of unpaid accrued interest applied to the principal balance or a loan which increases the total debt outstanding.
COA: Cost of Attendance
Consolidation: The process of combining multiple education loans into one new loan with new repayment terms, monthly payments, and interest rate.
Consortium Agreement: A written agreement between schools in which the student takes classes at one school (the Visiting Institution) and transfers the credits back to the Home Institution, where they will receive financial aid for those courses.
Cosigner: A person who signs the promissory note in addition to the borrower and is responsible for the obligation if the borrower does not pay.
Cost of Attendance (COA): Costs related to a student's enrollment in college for a given academic year. Includes but is not limited to tuition and fees, room and board, allowances for books and supplies, transportation, and miscellaneous personal expenses. A student cannot receive aid (including loans) beyond their cost of attendance.
Credit Balance: A credit on a student's account resulting from an overage from either student aid or payments. When a credit balance is the direct result of Title IV (federal) funds, a refund (called a stipend) will be issued automatically.
Data Release Number (DRN): Information on the Student Aid Report (SAR) found on the upper right corner of the first page. This number is required to accurately identify the appropriate FAFSA data for release to additional schools.
Default: Failure to repay a student loan according to the agreed-upon terms of a promissory note. Default occurs after 270 days of non-payment.
Deferment: An approved temporary suspension of loan payments based on certain events and criteria. The government will pay the interest on a subsidized loan while in deferment.
Delinquency: Failure to make monthly loan payments when they are due. Delinquency begins with the first missed payment. At BBC&S, delinquency refers to a student who has a balance owed to BBC&S and has failed to make any payments on their account for a period of at least six months.
Dependent Student: A student who must provide parent information on the FAFSA. A dependent student is an undergraduate who is not married, is under 24 years of age, has no legal dependents, is not an orphan or ward of the court, and is not a veteran of the U.S. Armed Forces.
Dependency Override: Action taken by a school that changes a student's dependency status from dependent to independent. This action can only be taken under extreme circumstances, such as abandonment by parents, and is not to be used to make a student independent simply because they support themselves. It is also not to be used because a student got married after the FAFSA was submitted.
Direct Loan (DL) Program: A federal program, also called the William D. Ford Federal Direct Loan Program, through which the U.S. government rather than a commercial lender provides four types of education loans to student and parent borrowers: Subsidized and Unsubsidized Stafford Loans for students, PLUS Loans for parents, and Consolidation Loans for all borrowers.
Disbursement: Specifically, the process through which loan funds are paid to a student's account. The term can also refer generally to any aid that is paid to a student's account.
DL: Direct Loan Program
DRN: Data Release Number
EFC: Expected Family Contribution
Expected Family Contribution (EFC): A calculated amount, based on a formula established by Congress, of how much the student's family can be expected to contribute toward the cost of the student's education in an award year. The EFC is calculated when a student's FAFSA information is successfully processed. It is one component schools use to determine the amount and type of aid the student can receive.
FAFSA: Free Application for Federal Student Aid
Federal Family Education Loan Program (FFELP): This program offered loans that were funded by private lenders, guaranteed by guarantors, and reinsured by the federal government. The program no longer exists and has been replaced by the Federal Direct Loan Program as of July 1, 2010.
Federal Pell Grant: Grant paid by the federal government to the neediest students (those whose EFC falls within a certain range). Pell Grants are only awarded to students who have not received a bachelor's or professional degree. Unlike a loan, the grant does not have to be repaid. For most students the Pell Grant provides a foundation of financial aid on which other aid may be added.
Federal School Code: A six-digit number that the U.S. Department of Education assigns to each school that is eligible to participate in Federal Student Aid programs. The code must be entered on the student's FAFSA in order for their FAFSA to be sent to that school. BBC's Federal School Code is 002670.
Federal Supplemental Educational Opportunity Grant (FSEOG): A federal campus-based grant program that provides grant assistance to undergraduate students who have not earned a bachelor's degree or first professional degree. Priority in awarding FSEOG funds is given to students who have exceptional financial need and are Federal Pell Grant recipients.
Federal Work-Study (FWS) Program: A Federal campus-based employment program that provides funding to participating schools so they can provide part-time jobs to eligible undergraduate and graduate students with demonstrated financial need. The purpose of the program is to help students fund their education. Paychecks are given to the student and are not automatically credited to their account.
FFELP: Federal Family Education Loan Program
Financial Aid: Financial assistance in the form of scholarships, grants, work-study, and loans for education.
Financial Need: The difference between a student's Cost of Attendance at a school and their Expected Family Contribution (EFC) from the FAFSA. It is the gap between the cost of attending the school and the student's resources.
Fixed Interest Rate: On a fixed interest loan, the interest rate remains the same for the life of the loan.
Forbearance: A temporary delay or reduction of loan payments agreed to by the lender and borrower. Interest continues to accrue during forbearance.
Free Application for Federal Student Aid (FAFSA): A student financial aid application form completed by students and parents to apply for federal student aid. The information provided is the source for all federal student aid need analysis computations, including the student's Expected Family Contribution (EFC). The FAFSA must be completed each year and is the starting point to apply for virtually all forms of student aid, including the BBC Grant.
FWS: Federal Work Study
Grace Period: Specified period of time between the date a student graduates or drops below half-time status and the date loan repayment begins. Usually six months.
Grant: A form of financial aid that does not have to be repaid.
Independent Student: A FAFSA term for a student who is 24 years of age or older, married, has legal dependents other than a spouse, a veteran, an orphan or ward of the court, or is a graduate student.
Interest Rate: A percentage of a loan that must be repaid as a charge for the use of the loan. See Fixed and Variable Interest Rates.
Lender: Lender A financial institution that provides funds to a borrower. The Federal government is the lender under the Direct Loan Program.
Loan: An advance of funds guaranteed by a signed promissory note in which the recipient of the funds promises to repay a specified amount under prescribed conditions. A financial source that is available to students and their parents through student loan programs with varying interest rates and repayment provisions to supplement the family's financial resources, scholarships, and grants.
Loan Balance: The total unpaid amount of a specific loan. This sum includes outstanding principal, capitalized interest, accrued interest, late charges, and any miscellaneous fees such as returned check fees.
Master Promissory Note (MPN): The legal document that requires a student loan borrower to repay the funds borrowed under the Direct Loan Program or under the Federal Family Educational Loan Program. Use of the MPN form simplifies the loan process by eliminating the need for eligible students to complete a promissory note every year they borrow.
MPN: Master Promissory Note
National Student Loan Data System (NSLDS): A U.S. Department of Education integrated system that collects and reports information about the financial aid history of students who receive federal student aid and maintains that information in an online database available to both the student and their school. The database stores information about both loans and grants. When a student submits their FAFSA, the DOE conducts a match of FAFSA data against this database to confirm the student’s identification and eligibility for federal student financial aid. A user ID and password are required to access the database.
Need-Based: Aid that uses financial need as the determining factor for the student's eligibility.
NSLDS: National Student Loan Data System Origination Fee A fee paid by a borrower to the lender to help defray the cost of making a loan.
Parent Loan for Undergraduate Students (PLUS): A government issued loan to parents rather than students. The maximum amount of the loan is determined by the student's Cost of Attendance. The loan is usually used to supplement Stafford Loans.
Pennsylvania Higher Education Assistance Agency (PHEAA): The state agency that issues and administers all Pennsylvania State Grants and Special Program funds.
Personal Identification Number (PIN): An identifier that allows students and parents to access their personal information in U.S. Department of Education systems. The PIN is also used to electronically sign the FAFSA and make electronic corrections to data submitted. A PIN should always be protected and never provided to anyone other than the person for whom it was created.
PHEAA: Pennsylvania Higher Education Assistance Agency
PIN: Personal Identification Number
PJ: Professional Judgment
PLUS: Parent Loan for Undergraduate Students
Principal Balance: The outstanding amount of the loan on which the lender charges interest. As the loan is repaid, a portion of each payment is used to satisfy interest that has accrued and the remainder of the payment is applied to the outstanding principal balance.
Professional Judgment: A provision in the Higher Education Act allowing financial aid administrators to adjust the data elements used to calculate the student's EFC. The exercise of professional judgment may increase a student's eligibility for financial aid. Professional judgment can be used only on a case-by-case basis, and the reason must be documented in the student's file. See Special Circumstances.
Proration: A reduction of the standard annual loan limit for an undergraduate student. Proration of the loan amount is required if the student's program, or the remainder of the student's program, is less than a full academic year in length (e.g. - a student graduating in December).
Refund: The distribution of a credit balance to a student.
Renewal FAFSA: A FAFSA that is pre-populated with the student's prior year data and used for updating information for the upcoming year. To use the Renewal FAFSA, the student must have an eligible FAFSA submitted for the preceding year. The student may access the Renewal FAFSA online.
Repayment: The time during which a borrower actively pays back an education loan.
Repayment Period: The period during which interest accrues on a borrower's loan and principal payments are required. The repayment period excludes any period of authorized deferment or forbearance.
Repayment Schedule: A legal addendum to a Promissory Note stating the terms of loan repayment and fulfilling disclosure requirements. The Repayment Schedule is a plan that indicates the total principal and interest due, an installment amount, and the number of installments required to pay the loan in full. The Repayment Schedule also contains the interest rate for the loan(s) included on the schedule, the due date of the first and subsequent installments, and the frequency of installments.
SAP: Satisfactory Academic Progress
SAR: Student Aid Report
Satisfactory Academic Progress (SAP): The qualitative (grade point average) and quantitative (time limit) measure of a student's progress toward completing a program of study. To maintain eligibility for federal student aid, the student must show continued progress. BBC has separate policies for federal and institutional aid which can be located in the “Guide to Costs and Financial Aid” on the BBC website.
Scholarships: A form of financial assistance that does not have to be repaid. Scholarships may be awarded based on any number of criteria, such as academics, achievements, hobbies, talents, and affiliations with various groups, or career aspirations. Scholarships may come from a student's school or from other outside sources.
Section 529: Plans Prepaid tuition plans and college savings plans, named for the section of the IRS code that authorizes them. Also known as Qualified Tuition Programs (QTPs).
Self-Help Aid: Financial aid in the form of loans or student employment.
Special Circumstances: Circumstances under which a Professional Judgment adjustment, by the school, to the student's FAFSA would be appropriate. Examples include (but are not limited to) the death of a parent or spouse, loss of income, medical and dental expenses in excess of 11% of income, one-time payments received that would have been included in the adjusted gross income, removing private school tuition paid for siblings (see Tuition Validation), and dependency overrides.
Stafford Loan: A need-based government loan issued to students rather than their parents under the Direct Loan Program. The amount of the loan is determined by the Expected Family Contribution (EFC). Repayment is not required until after graduation or until after the student drops below half time. Stafford Loans are either Subsidized or Unsubsidized. See Subsidized and Unsubsidized Stafford Loan.
Standard Repayment Schedule: A repayment schedule under which the borrower pays the same amount for each installment payment throughout the entire repayment period, or pays an amount that is adjusted to reflect annual changes in the loan's variable interest rate. The length of repayment for a loan being repaid using a Standard Repayment Schedule cannot exceed 10 years, excluding in-school, grace, deferment, or forbearance periods.
Stipend: An automatic refund resulting when Title IV funds create a credit balance on a student's account.
Student Aid Report (SAR): The output document the U.S. Department of Education sends to a student after a FAFSA is processed. It summarizes the information the student submitted on the FAFSA, reports the student's calculated EFC, provides comments to the student as well as information for their selected school, and reports the student's loan history.
Student Loan Interest Statement: IRS Form 1098-E, issued by an individual or institution that receives more than $600 in student loan interest during a calendar year to the borrower. The borrower may use this form to claim the interest as a deduction when completing their taxes.
Subsidized Stafford Loan: The federal government pays the interest that accrues on a subsidized loan during an in-school, grace, authorized deferment, and (if applicable) post-deferment grace period if the borrower meets certain eligibility requirements. The amount a student can receive is determined by financial need as well as their grade level.
Title IV Financial Aid: Federal student aid such as Stafford and PLUS loans and Pell Grants. The term also refers to campus-based Federal aid such as FSEOG and FWS.
Tuition Validation: A term used by BBC which denotes the process of verifying the amount of private school tuition paid by a parent for the sibling(s) of the student in college. This is a professional judgment action to remove the amount of tuition paid from the parents' income as indicated on the FAFSA. The goal is to reduce the student's EFC and increase their eligibility for aid.
Unsubsidized Stafford Loan: This loan is usually given to a student who is either ineligible for a subsidized loan or who has exhausted their eligibility for one and needs additional loan funds. The loan accrues interest charges from the date of disbursement forward. While the student is in school, in the grace period, or in deferment, students may elect to make pay the interest or have it capitalized and added to the principal balance of the loan after the grace period.
Variable Interest Rate: An interest rate that is recalculated on a periodic basis, usually based on the prime rate. For federal loans, this rate changes yearly on July 1.
Verification: The process a school follows to check the accuracy of the information reported by the student on the FAFSA. The information reported is compared against documents, such as federal tax forms and signed verification worksheets that the student/parent provides to the school. Students are selected for verification by the government, not by the school. If the student is selected, Federal student aid cannot be disbursed to the student's account prior to verification being completed. Institutional aid for first year students at BBC may also be withheld.
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