Financial Aid Terms To Know

Direct Consolidation Loan

A Direct Consolidation Loan combines federal education loans into one loan for free via completion of the Federal Direct Consolidation Loan Application and Promissory Note. You will have a single monthly payment on the new Direct Consolidation Loan.

Direct Subsidized Loan

A Direct Subsidized Loan is a federal student loan for which a borrower isn't generally responsible for paying the interest while in an in-school, grace, or deferment period.

Federal Perkins Loan

A Perkins Loan was available to undergraduate, graduate, and professional students until Sept. 30, 2017; the program has since expired. The Perkins Loan is a subsidized loan, meaning the federal government pays the loan's interest while the borrower is in school.

Service Obligation

A Service Obligation signing is an agreement to teach full-time, in a high-need field, at an elementary/secondary school/educational service agency for low-income students, and for at min 4/8 academic years following their ending of the grant assisted study.

Full-Time Teacher

A teacher is a person who provides direct classroom teaching or classroom-type teaching in a non-classroom setting, including special education teachers.

Teacher

A teacher is a person who provides professional direct instruction to students.

Cookie

Cookies are bits of data that a website transfers to a computer's hard drive. The most common use of cookies is for a website to determine your personal preferences. Some cookies disappear once you close the browser while some remain.

Credit

Credit refers to the amount of money you borrow and your ability to borrow to purchase goods and services. Credit is extended to you from a credit grantor with which you make an agreement to pay back the amount spent, plus applicable interest and fees, within an agreed-upon time.

Debt Collection

Debt collection is the course of pursuing payments of loan debts due by borrowers.

Debt Consolidation

Debt consolidation is a method of debt refinancing that involves taking out one loan to pay off others.

Default

Default is failure to repay a loan outlined in the agreed promissory note. Most federal student loan default occurs when a payment isn't made in more than 270 days. It can result in legal consequences and a loss of eligibility for additional federal student aid.

Direct PLUS Loan

Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students use to help pay for education expenses.

Loan Discharge

Loan discharge is the removal of a borrower's obligation to repay a loan under certain circumstances including but not limited to death, disability, bankruptcy, fraud, and identity theft.

Rehabilitated Loan

Loan rehabilitation is one method of getting your student loan out of default. To begin the rehabilitation process, you must contact your loan holder. If you're not sure who your loan holder is, log in to your account to get your loan holder's contact information.

Merit-Based

Merit-based means that something is based on a student's skill or ability. For example, a merit-based scholarship might be awarded based on a student's high grades.

PLUS Credit Counseling

PLUS credit counseling helps graduate/professional students and parents of eligible dependent undergraduate students understand the obligations associated with borrowing a PLUS loan and assists them in making careful decisions about taking on student loan debt.

Partial Financial Hardship

Partial financial hardship is an eligibility requirement under the Income-Based Repayment and Pay As You Earn repayment plans. For more information, go to Repayment Plans.

Payroll Deductions

Payroll deductions are amounts of money withheld from your paycheck by your employer.

Principal

Principal refers to the sum of money lent, on which interest is paid.

Repayment

Repayment is paying back money you borrowed by making scheduled payments to a loan holder or servicer.

Room and Board

Room and board is generally the cost of housing and food while attending college or career school.

Satisfactory Academic Progress

Satisfactory academic progress is the process a school uses to determine if a student is meeting all of his or her educational requirements and is on target to graduate on time with a degree or certificate. This process may vary across schools.

Scholarships

Scholarships are gifts that don't have to be repaid and are designed to help students pay for an undergraduate degree. They can be a one-time gift or are renewable, depending on the scholarship.

State Aid

States offer financial assistance to eligible residents to help reduce educational costs. Some state aid is first come, first served, so complete your FAFSA® form early. We don't administer state aid programs. Contact your state grant agency for more information.

Student Fraud

Student Fraud is any situation where an individual falsifies information in order to qualify for student aid. Examples of student fraud include using false information on the FAFSA, such as income or marital status, or reporting an invalid high school diploma.

Student Loan Debt Burden

Student loan debt burden is the percentage of a borrower's monthly income that is dedicated to his or her student loan payments. The smaller this percentage, the lower the debt burden.

Loan Forgiveness

Student loan forgiveness is offered to encourage certain types of employment. A loan may be fully or partially forgiven after a certain number of years of qualifying employment

Annual Taxable Income

Your annual taxable income is the amount of income used to determine how much tax you owe in a given year. This can include wages, salaries, bonuses, tips, investment income, and unearned income.

Deferment

A deferment is a temporary postponement of payment on a loan that is allowed under certain conditions and during which interest generally doesn't accrue on certain types of subsidized loans.

Graduate or Professional Student

A graduate or professional student is a student who is pursuing education opportunities beyond an undergraduate (bachelor's) degree. Graduate and professional programs include master's and doctoral programs such as Ph.D., J.D., and M.D., among others.

Grant

A grant is a monetary gift for people pursuing higher education. It is often based on financial need and does not need to be repaid (unless, for example, you withdraw from school and owe a refund).

Guaranty Agency

A guaranty agency is a state or private non-profit agency that helps administer the Federal Family Education Loan (FFEL) Program. A guaranty agency insures federal loans by repaying the loan holder when a loan defaults, and then collects the defaulted loan from the borrower.

Judgment Lien

A judgment lien gives a creditor the legal right to keep property when the owner fails to pay a debt. It can only be granted by a court. A student (or parent in the case of a parent borrower) with a judgment lien will not qualify for federal student aid.

Lender

A lender is the organization that made the loan (borrower's school, bank, credit union, etc.).

Loan

A loan is money borrowed from the federal government or a private source like a bank or financial institution, and must be paid back with interest.

Forbearance

A period of time when your monthly loan payments are temporarily stopped or reduced. Interest will continue to be charged on your loans. Be aware that unpaid interest may be capitalized (added to your loan principal balance) at the end of your forbearance period.

Postbaccalaureate Teacher Certification Program

A postbaccalaureate teacher certification program is a program that enables those who hold at least a bachelor's degree to earn teacher certification at the elementary or secondary level. Program specifics can depend on the school and state where the program is available.

Prepaid Tuition

A prepaid tuition plan, also known as a section 529 plan, lets you lock in future tuition rates at in-state public colleges at current prices and is usually guaranteed by the state in which the plan was established.

Proprietary School

A proprietary school is a private, for-profit school that provides education and training.

Regular Student

A regular student is one who is enrolled or accepted for enrollment at an institution for the purpose of obtaining a degree, certificate, or other recognized education credential. To be eligible for federal student aid, you must generally be a regular student.

School Closure

A school closure is an institution that no longer provides educational services to students.

Graduation Rate

A school's graduation rate is the percentage of a school's full-time, first-time degree- or certificate-seeking students who complete their degree or certificate within 150 percent of the published length of the program in which they are enrolled.

Job Placement Rate

A school's job placement rate is the percentage of graduating students who obtained employment either in the recognized occupation for which they were trained or in a related, comparable, recognized occupation within a determined period after receiving their degree/certificate.

Retention Rate

A school's retention rate is the percentage of its first-time students who are seeking bachelor's degrees who return to the institution to continue their studies the following fall.

Transfer Rate

A school's transfer rate is the percentage of its full-time, first-time students who have transferred to another institution.

Standardized Test

A standardized test is a test that is designed to assess individuals against a common standard. For example, the SAT and ACT are standardized tests that some colleges require for consideration for admission.

Teach-Out Plan

A teach-out plan is a written agreement among schools that provides for the equitable treatment of students and a reasonable opportunity for students to complete their program of study if a school ceases to operate before they have completed their program of study.

Total and Permanent Disability (TPD) Discharge

A total and permanent disability discharge relieves you from having to repay your federal student loan(s) and/or complete your Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation. Learn more about TPD discharge .

Transfer Student

A transfer student is a student who has completed some academic credits at a college or university and has requested to enroll at a different institution.

Withholding

A withholding is an amount of money that an employer takes out of your wages and pays to the government. If too little is withheld, you will owe additional taxes. If too much is withheld, you receive a refund.

Endorser Code

An Endorser Code is an identifying number associated to a Direct PLUS Loan application. The code is used by an endorser when completing a Direct PLUS Loan endorser addendum to the Master Promissory Note (MPN) for the loan.

FSA ID

An FSA ID consists of a username and password which gives you access to the U.S. Department of Education's online systems and can serve as your legal signature when completing electronic documents.

Master Promissory Note (MPN)

An MPN is a legal document that contains the Borrower's Rights and Responsibilities and Terms and Conditions for repayment. Direct PLUS and Direct Subsidized / Unsubsidized loans have different MPNs.

Academic Year

An academic year is one complete school year at the same school, or two complete, half years at different schools. For schools that have a year-round program of instruction, nine months is considered an academic year.

Educational Service Agency

An educational service agency is a regional public multiservice agency that is authorized by state law to develop, manage, and provide services or programs to local education agencies, such as public-school districts.

Eligible Program

An eligible program is a program of organized instruction or study of a certain length that leads to an academic, professional, or vocational degree or certificate, or other recognized education credential.

Emancipated Minor

An emancipated minor is someone who has been legally deemed an adult by a court in his or her state of residence. If you are an emancipated minor, you are considered an independent student and will not provide information about your parents on the FAFSA® form.

Endorser

An endorser is someone who agrees to repay the Direct PLUS Loan if the borrower becomes delinquent in making payments or defaults on the loan. The endorser may not be the student on whose behalf a parent obtains a Direct PLUS Loan.

Independent Student

An independent student is at least 24 years old, married, a graduate/ professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, someone with legal dependents (not a spouse), an emancipated minor, or someone who is or at risk of being homeless.

Offset

An offset is when a payment from the U.S. Department of Treasury (such as an income tax refund) is reduced or stopped to pay off a delinquent debt. The remainder of a refund will be processed; an offset shouldn't delay it unless the entire refund is applied to the debt.

Out-of-State Student

An out-of-state student is a student who is attending a college or career school outside of his or her state of legal residence.

Undergraduate Student

An undergraduate student is a student who is enrolled in an undergraduate course of study at a college/university or career school that usually doesn't exceed four years and leads to an undergraduate degree or certificate.

Unsubsidized Loan

An unsubsidized loan borrowed through the Direct Loan Program offers students a low, fixed interest rate and flexible repayment terms. It is not based on financial need. The borrower is responsible for paying all the accumulated interest, until the loan balance is paid off.

Aid For Military Family Service

Both the federal government and nonprofit organizations offer money for college to veterans, future military personnel, active duty personnel, or those related to veterans or active duty personnel

Discretionary Income

Discretionary income is a factor used in determining a borrower's eligibility for certain repayment plans and/or loan rehabilitation. It's the difference between annual income and a percentage of the poverty guideline for the borrower's family size and state of residence.

Early Action

Early action is a college admission policy that allows applicants to apply and receive notice of their admission early. Applicants accepted under early action are not under a binding agreement to attend that school and may submit applications to other schools.

Early Decision

Early decision is a college admission policy that allows applicants who commit to attend a school to apply and receive notice of their admission early. If an applicant is accepted, he or she agrees to attend that school and must withdraw all other applications.

Homeless

Eligible loans: Direct loans and FFEL Program loans other than those in default, PLUS loans made to a parent borrower, or Consolidation Loans that repaid a Direct or Federal PLUS Loan made to a parent borrower. Consolidating a Federal Perkins Loan may make you eligible.

Income-Contingent Repayment (ICR) Plan

Eligible loans: Direct loans other than those in default and parent PLUS loans. Consolidating a Federal Perkins Loan, FFEL Program loan or Direct PLUS Loan made to a parent may make you eligible.

Enrollment Status

Enrollment status is reported by the school you attended, and indicates whether you are, or were, full-time, three-quarter time, half-time, less than half-time, withdrawn, graduated, etc.

Entrance Counseling

Entrance counseling explains the obligations you agree to meet as a condition of borrowing a Direct Loan. Topics include: Understand Your Loans, Manage Your Spending, Plan to Repay, Avoid Default and Make Finances a Priority.

Exit Counseling

Exit counseling provides important information that you need as you prepare to repay your federal student loan(s). Topics include: Understand Your Loans, Plan to Repay, Avoid Default, and Make Finances a Priority.

Federal Work Study

Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need. The program encourages community service work and work related to your field of study. To receive funds, you will need to be awarded work study and secure a job.

Federal Student Aid

Federal student aid is aid from the government in the form of grants, loans, and/or work-study to assist students with college or career school. Students have to complete the FAFSA® form to apply for this aid.

Financial Aid

Financial aid is money to help pay for college or career school.

Financial Awareness Counseling

Financial awareness counseling provides tools and information to help you understand your financial aid and assist in managing your finances. Topics include: Understand Your Loans, Manage Your Spending, Plan to Repay, Avoid Default and Make Finances a Priority.

Half-Time Enrollment

For tax purposes, you might claim head of household if you are unmarried and responsible for more than half of the cost of keeping up your and your dependent's home. Whether you are head of household can affect how you report tax return information on the FAFSA® form.

Gross Income

Gross income is your total income before deductions.

Family Size

Household size does not mean people who physically live with you. It's about who you support financially. If you do not financially support anyone, you will just put 1 for yourself.

Interest

Interest is a loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender. The expense is calculated as a percentage of the unpaid principal amount of the loan.

Legal Guardianship

Legal guardianship is a designation by a court that authorizes someone to care for an individual in place or absence of parents. Having a legal guardian qualifies you as an independent student, such that you do not have to report your parents' income on the FAFSA® form.

Litigation

Litigation is the act or process of bringing or contesting a legal action in court.

William D. Ford Federal Direct Loan Program

The Direct Loan Program is the federal student loan program under which eligible students and parents borrow directly from the U.S. Department of Education at participating schools. Loans include Direct Subsidized, Direct Unsubsidized, Direct PLUS, and Direct Consolidation Loans.

Extended Repayment Plan

The Extended Repayment Plan allows you to repay your loans over an extended period. Payments are made for up to 25 years. There are specific eligibility requirements to qualify for this plan.

Federal Family Education Loan (FFEL) program

The Federal Family Education Loan (FFEL) Program was a program that worked with private lenders to provide education loans guaranteed by the federal government. The FFEL Program ended in 2010. All loans are now made through the Direct Loan Program.

Federal Supplemental Educational Opportunity Grant (FSEOG)

The Federal Supplemental Educational Opportunity Grant (FSEOG) is a grant that is awarded to an undergraduate student who demonstrates exceptional financial need to help pay for their education. Awards can range from $100-$4000 and do not need to be repaid.

Graduated Repayment Plan

The Graduated Repayment Plan starts with lower payments that increase every two years. Under this plan, you make payments for up to 10 years (between 10 and 30 years for consolidation loans).

Ombudsman Group

The Ombudsman Group is dedicated to helping resolve disputes related to the federal student aid programs, including Direct Loans, Federal Family Education Loan (FFEL) Program loans, Perkins Loans, and grant programs.

Public Service Loan Forgiveness (PSLF) Program

The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 (10 years) qualifying monthly payments under a qualifying repayment plan, while working full-time for a qualifying employer.

Pay As You Earn (PAYE) Plan

The Pay As You Earn Plan is a repayment plan with monthly payments that are generally equal to 10% of your discretionary income, but never more than the 10-year Standard Repayment amount.

Federal Pell Grant program

The Pell Grant is the largest federal grant program offered to undergraduates. It is designed to assist students from low-income households. To qualify for a Pell Grant, a student must demonstrate financial need by completing and submitting the FAFSA® form.

Revised Pay As You Earn (REPAYE) Plan

The REPAYE Plan is a repayment plan with monthly payments that are generally equal to 10% of your discretionary income.

Standard Repayment Plan

The Standard Repayment Plan is the basic repayment plan for the William D. Ford Federal Direct Loan (Direct Loan) and Federal Family Education Loan (FFEL) Programs. Payments are fixed and made for up to 10 years (10-30 years for Consolidation Loans).

TEACH Grant Initial and Subsequent Counseling

The TEACH Grant Initial and Subsequent Counseling process acquaints the student to the TEACH Grant program and the TEACH Grant service obligation.

TEACH Grant

The TEACH Grant funds students who are completing/plan to complete coursework that is required to be a teacher, and who agree to teach full-time in a high-need field at an educational service agency or school for low-income students for at least four years.

Public Service Loan Forgiveness (PSLF) Help Tool

This tool will help you understand the following about the Public Service Loan Forgiveness (PSLF) program: what is required to participate, if an employer qualifies, which loans qualify, which forms to submit, and other actions to take to receive PSLF.

Tuition

Tuition is the amount of money you owe for receiving instruction, materials, and/or supplies, or for the rental or purchase of equipment, for a course of study at your institution.

Untaxed Income

Untaxed income is income you don't pay taxes on, such as Supplemental Security Income, child support, or federal or public assistance.

Iraq and Afghanistan Service Grant (IASG)

You may be eligible for the Iraq and Afghanistan Service Grant (IASG) if your parent or guardian died as a result of military service performed in Iraq or Afghanistan after the events of 9/11, and you are not eligible for a Federal Pell Grant.