Terms to Know

A | B |C |D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

The following are definitions of terms you may find online or in materials relating to student loans and financial aid.

A

Academic year: A period of no less than 30 weeks of instructional time, normally two semesters.

Accrual Date: The day interest charges begin to be added to the loan balance.

Accruing Interest (on a loan): The adding of interest to the loan amount. For some loans, interest charges begin to add up as soon as the loan is made, increasing the total amount due.

Adjusted Gross Income (AGI): All taxable income as reported on a U.S. income tax return.

Advanced Placement (AP): Credit and/or advanced standing in certain course sequences that post secondary institutions may offer to high school students who have taken high-level courses and passed certain examinations.

Assets: Cash on hand in checking and savings accounts; trusts, stocks, bonds, other securities; real estate (excluding home), income-producing property, business equipment, and business inventory. Considered in determining Expected Family Contribution (EFC).

Associate's Degree: A degree given for successful completion of outlined courses of study at a two-year college.

Award Letter: A means of notifying successful financial aid applicants of the assistance being offered. The award letter usually 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 provides students with the opportunity to accept or decline the aid offered. (See Financial Aid Notification)

B

Bachelor's Degree: The degree given for successful completion of the undergraduate curriculum at a four-year college or university. Also called a baccalaureate degree.

C

Capitalization (of interest): When a lender accrues interest before the borrower starts repayment, then adds that amount to the principal. This amount is called "compounding". Capitalizing increases the total to be repaid and the size of the minimum monthly payment. Students can avoid capitalizing by paying interest as it accrues.

Census Date: Your initial financial aid awards are based on full-time enrollment. Census occurs at the end of the day on the last day to drop/add courses for the semester (typically the Friday of the first week of classes). Federal regulations require the Financial Aid Office to evaluate your "actual" enrollment status for financial aid purposes and adjust your financial aid accordingly at that time. Additional courses registered for after the census date cannot be taken into consideration with regard to your financial aid eligibility, regardless of whether an exception was made by the Registrar's Office to allow late registration.

Central Processing System (CPS): The computer system to which the student's need analysis data is electronically transmitted by the FAFSA processor. The Central Processing System performs database matches, calculates the student's official Expected Family Contribution (EFC), and prints out the Student Aid Report (SAR).

Commuter Student: A student who does not live on campus; typically, "commuter" refers to a student living at home with his or her parents, but can also mean any student who lives off-campus.

Concurrent Enrollment: A student who is registered for credit at two colleges during the same period is considered concurrently enrolled. Generally, students attending GVSU are only eligible to receive aid for credits enrolled at GVSU. However, we have made arrangements with specified colleges to allow concurrent enrollment. You will need to complete a Concurrent Enrollment form, which will allow you to receive aid at GVSU and include the credits from both institutions when determining aid eligibility. Keep in mind, students are not eligible to receive aid at two institutions during the same period.

Consolidation Loan: A loan made to enable a borrower with different types of loans to obtain a single loan with one interest rate and one repayment schedule. Federal Perkins, Federal Stafford (subsidized and unsubsidized), Direct Subsidized and Direct Unsubsidized, Health Education Assistance Loans (HEAL), Health Professions Student Loans, and Loans for Disadvantaged Students may be combined for purposes of consolidation, subject to certain eligibility requirements. A consolidation loan pays off the existing loans; the borrower then repays the consolidated loan.

Cost of Attendance (COA): Generally, this includes the tuition and fees normally assessed to a student, together with the institution's estimate of the cost of room and board, transportation and commuting costs, books and supplies, and miscellaneous personal expenses. In addition, student loan fees, dependent care, reasonable costs for a study abroad or cooperative education program, and/or costs related to a disability may be included, when appropriate. Also referred to as "cost of education" or "budget."

Credit (or Credit Hour): The unit of measurement some institutions give for fulfilling course requirements.

Custodial Parent: The parent with whom the dependent student lives, and whose financial information is used in the need analysis (FAFSA) when parents are divorced or separated.

D

Deferment (of loan): A condition during which payments of principal are not required, and, for Federal Perkins and Subsidized Federal Stafford and Direct Subsidized Loans, interest does not accrue. The repayment period is extended by the length of the deferment period.

Department of Education, U.S. (ED): The Federal government agency that administers assistance to students enrolled in postsecondary educational programs under the following programs: Federal Pell Grant, Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), Federal Family Education Loan (FFEL) Programs, and William D. Ford Federal Direct Loan (Direct Loan) Program.

Dependent Student: A student who does not qualify as an independent student and whose parental income and asset information is used in calculating an Expected Family Contribution (see Independent Student).

Direct PLUS Loan: Long-term loans made available to parents of dependent students. Interest rates are linked to 52-week Treasury bill rates, but may not exceed 9%. May be used to replace EFC; amount borrowed is limited to the cost of attendance minus estimated financial assistance.

Direct Subsidized and Direct Unsubsidized Loans: Long term, low-interest loans administered by the Department of Education and institutions. Variable interest rate not to exceed 8.25%. Direct Unsubsidized Loans can be used to replace EFC.

E

Educational Benefits: Funds, primarily federal, awarded to certain categories of students (veterans, children of deceased veterans or other deceased wage earners, and students with physical disabilities) to help finance their postsecondary education regardless of their ability to demonstrate need in the traditional sense.

Employment: With reference to financial aid, the opportunity for students to earn money to help pay for their education. Federal Work-Study is one program by which needy students can work to defray their educational expenses.

Expected Family Contribution (EFC): The amount a student and his or her family are expected to pay toward the student's cost of attendance as calculated by a Congressionally-mandated formula known as Federal Methodology. The EFC is used to determine a student's eligibility for the student financial assistance programs.

F

Federal Need Analysis Methodology: A standardized method for determining a student's (and family's) ability to pay for post secondary education expenses; also referred to as Federal Methodology (FM). The single formula for determining an Expected Family Contribution (EFC) for Pell Grants, campus-based programs, and Direct Loan program; the formula is defined by law.

Federal Pell Grant: A federal grant program for needy post secondary students who have not yet received a baccalaureate or first professional degree; administered by the U.S. Department of Education.

Federal Perkins Loan: A campus-based program; a long term, low interest loan program for both undergraduate and graduate students at a current interest rate of 5%. May also be called the Carl D. Perkins National Direct Student Loan Program.

Federal PLUS Loan (FPLUS): Long-term loans made available to parents of dependent students. Interest rates may not exceed 9%. May be used to replace EFC; annual amount borrowed limited to the cost of attendance minus estimated financial assistance.

Federal Supplemental Educational Opportunity Grant (FSEOG): A campus-based program; grant to undergraduate students of exceptional financial need who have not completed their first baccalaureate degree and who are financially in need of this grant to enable them to pursue their education. Priority for FSEOG awards must be given to Federal Pell Grant recipients with the lowest EFCs.

Federal Work-Study Program (FWS): A campus-based program; a part-time employment program which provides jobs for undergraduate and graduate students who are in need of such earnings to meet a portion of their educational expenses.

Financial Aid: General term that describes any source of student assistance outside the student or the student's family. Funds awarded to a student to help meet postsecondary educational expenses. These funds are generally awarded on the basis of financial need and include scholarships, grants, loans, and employment.

Financial Aid Administrator: An individual who is responsible for preparing and communicating information pertaining to student loans, grants or scholarships, and employment programs, and for advising, awarding, reporting, counseling, and supervising office functions related to student financial aid. Accountable to the various publics which are involved and is a manager or administrator who interprets and implements federal, state, and institutional policies and regulations, and is capable of analyzing student and employee needs and making changes where necessary.

Financial Aid Award: An offer of financial or in-kind assistance to a student attending a postsecondary educational institution. This award may be in the form of one or more of the following types of financial aid: repayable loan, a non-repayable grant and/or scholarship, and/or student employment.

Financial Aid Consultant: A person who, for a fee, provides a variety of services to students and parents, including preparing the FAFSA and other financial aid forms, estimating the Expected Family Contribution (EFC), and estimating financial need.

Financial Aid Notification: The letter or email from the post secondary institution that lets the student know whether or not aid has been awarded. If the student will be receiving assistance, the notification also describes the financial aid package. State agencies and private organizations may send students financial aid notifications separately from the postsecondary institution. Also see Award Letter.

Financial Aid Package: A financial aid award to a student comprised of a combination of forms of financial aid (loans, grants and/or scholarships, employment).

Financial Need: The difference between the institution's cost of attendance and the family's ability to pay (i.e., Expected Family Contribution). Ability to pay is represented by the Expected Family Contribution for federal need-based aid and for many state and institutional programs.

Financial Need Formula: Cost of attendance minus Expected Family Contribution equals financial need (COA - EFC = Need).

Forbearance: Permitting the temporary cessation of repayments of loans, allowing an extension of time for making loan payments, or accepting smaller loan payments than were previously scheduled.

Free Application for Federal Student Aid (FAFSA): The financial aid application document completed by the student, and the student's parents if applicable, that collects household and financial information. The FAFSA is the foundation document for all federal need analysis computations and database matches performed for a student.

G

Gift Aid: Educational funds such as grants or scholarships that do not require repayment from present or future earnings. See Grant.

Grace Period: The period of time that begins when a loan recipient ceases to be enrolled at least half-time and ends when the repayment period starts. Loan principal need not be paid and, generally, interest does not accrue during this period.

Grant: A type of financial aid that does not have to be repaid; usually awarded on the basis of need, possibly combined with skills or characteristics the student possesses. Also see Gift Aid.

I

Income: Amount of money received from any or all of the following: wages, interest, dividends, sales or rental of property or services, business or farm profits, certain welfare programs, and subsistence allowances such as taxable and non-taxable social security benefits and child support.

Income Protection Allowance: An allowance against income for the basic costs of maintaining family members in the home. The allowance is based upon consumption and other cost estimates of the Bureau of Labor Statistics for a family at the low standard of living.

Independent Student: A student who:

(a) will be 24 years of age by January 1 of the aid year;

(b) is an orphan or a ward of the court;

(c) is a veteran of the U.S. Armed Forces;

(d) is currently serving on active duty in the U.S. Armed Forces for purposes other than training;

(d) is married;

(e) is a graduate or professional student;

(e) has legal dependents other than a spouse; or

(f) presents documentation of other unusual circumstances demonstrating independence to the student financial aid administrator.

Investment Plans: Educational savings programs, usually sponsored by commercial banking institutions.

L

Legal Dependent (of Applicant): A biological or adopted child, or a person for whom the applicant has been appointed legal guardian, and for whom the applicant provides more than half support. In addition, a person who lives with and receives at least half support from the applicant and will continue to receive that support during the award year. For purposes of determining dependency status, a spouse is not considered a legal dependent.

Loan: An advance of funds evidenced by a promissory note and requiring the recipient to repay the specified amount(s) under prescribed conditions.

M

Merit-based Aid: Student assistance awarded because of a student's achievement or talent in a particular area, such as academics, athletics, music, etc.

Methodology: Refers to the system used to calculate the Expected Family Contribution (i.e., the Federal Need Analysis Methodology).

N

Need Analysis: A system by which a student applicant's ability to pay for educational expenses is evaluated and calculated. Need analysis consists of two primary components: (a) determination of an estimate of the applicant's and/or family's ability to contribute to educational expenses; and (b) determination of an accurate estimate of the educational expenses themselves.

Need Analysis Formula: Defines the data elements used to calculate the Expected Family Contribution (EFC); there are two distinct formulas: regular and simplified. The formula determines the EFC under the Federal Need Analysis Methodology.

Need-based Aid: Student assistance awarded because a student's financial circumstances do not permit him or her to afford the cost of a post secondary education.

Non Need-based Aid: Aid based on criteria other than need, such as academic, musical, or athletic ability. Also, refers to federal student aid programs where the expected family contribution (EFC) is not part of the need equation.

P

Packaging: The process of combining various types of student aid (grants, loans, scholarships, and employment) to attempt to meet the full amount of a student's need.

Parent Contribution: A quantitative estimate of the parents' ability to contribute to postsecondary educational expenses.

Principal (of a loan): The amount of money borrowed through a loan; does not include interest or other charges, unless they are capitalized.

Professional Judgment (PJ): Aid administrator discretion, based on special circumstances of the student, to change data elements used in determining eligibility for federal student aid.

Promissory Note: The legal document which binds a borrower to the repayment obligations and other terms and conditions which govern a loan program.

R

Repayment Schedule: A plan that is provided to the borrower at the time he or she ceases at least half-time enrollment. The plan should set forth the principal and interest due on each installment and the number of payments required to pay the loan in full. Additionally, it should include the interest rate, the due date of the first payment, and the frequency of payments.

S

SAP (Satisfactory Academic Progress): Minimum academic standards that a student must maintain in order to continue to receive financial aid.

Scholarship: A form of financial assistance that does not require repayment or employment and is usually made to students who demonstrate or show potential for distinction, usually in academic performance.

Simplified Needs Test: An alternate method of calculating the Expected Family Contribution for families with adjusted gross incomes of less than $50,000, who have filed, or are eligible to file, an IRS Form 1040A or 1040EZ, or are not required to file an income tax return. Excludes all assets from consideration.

Student Aid Report (SAR): The official notification sent to a student as a result of the Central Processing System (CPS) receiving an applicant record (via FAFSA) for the student. The SAR summarizes applicant information, an Expected Family Contribution for the student, and displays other special messages related to the student's application. In some instances the SAR may need to be submitted to the financial aid office at the school the student plans to attend, but only if the school requests it.

Student Contribution: A quantitative estimate of the student's ability to contribute to postsecondary expenses for a given year.

Subsidized Loan: The government pays the interest on the loan while the student is in school, during the six-month grace period, and during any deferment periods. Subsidized loans are awarded based on financial need and may not be used to finance the family contribution.

T

Taxable Income: Income earned from wages, salaries, and tips, as well as interest income, dividend income, business or farm profits, and rental or property income.

TIP: Tuition Incentive Program. TIP is an incentive program that encourages eligible Michigan students to complete high school by providing tuition assistance for the first two years of college and beyond.

Title IV Programs: Those federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended. Includes: the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, Federal Perkins Loan, Federal Stafford Loan, Federal PLUS Loan, Direct Loan, Direct PLUS Loan, and SSIG.

Tuition Payment Plans: A strategy by which payment for present costs of postsecondary education is extended into a future period of time.

U

Unmet Need: The difference between a student's total cost of attendance at a specific institution and the student's total available resources.

Unsubsidized Loan: With this loan, the government does not pay the interest while the student is enrolled. The student has the option to either pay the accruing interest monthly or allow the interest to capitalize. Required payments do not begin until 6 months after the student drops below half-time enrollment. Unsubsidized loans are not based on financial need and therefore may be used to finance the family contribution.

Untaxed Income: All income received that is not reported to the Internal Revenue Service or is reported but excluded from taxation. Such income would include but not be limited to any untaxed portion of Social Security benefits, Earned Income Credit, welfare payments, untaxed capital gains, interest on tax-free bonds, dividend exclusion, and military and other subsistence and quarters allowances.

V

Verification: The process of the University checking the information that the student reported on the financial aid application. This is done by requiring the student to complete an institutional form and requiring the student to submit various documents such as student and parent tax forms and W2 statements.

Veterans Educational Benefits: Assistance programs for eligible veterans and/or their dependents for education or training.

Vocational Rehabilitation: Programs administered by state departments of vocational rehabilitation services to assist individuals who have a physical or mental disability which is a substantial handicap to employment.

W

William D. Ford Federal Direct Loan (Direct Loan) Program: The collective name for the Direct Subsidized, Direct Unsubsidized, Direct PLUS Loan, and Direct Consolidation Loan Programs. Loan funds for these programs are provided by the federal government to students and parents through postsecondary institutions that participate in the program. With the exception of certain repayment options, the terms and conditions of loans made under the Direct Loan Program are identical to those made under the FFEL program.