Paying For College

Unpaid interest that has been added to the principal balance of a loan

Capitalized Interest

Someone who legally agrees to take responsibility for a person's debt if they cannot repay it

Cosigner

Total expense of going to college which may include tuition, room and board, fees, books and supplies, transportation, health insurance, etc. Also known as Sticker Price or a school's published price.

Cost Of Attendance

Long-term failure to repay a loan according to the terms agreed to, which has a substantial negative impact on the borrower's credit score

Default

A process that allows a borrower to pause their federal student loan payments; interest does NOT accrue during this time period on subsidized loans

Deferment

Describes the status of being behind on one or more loan payments

Delinquency

A federal loan available to graduate or professional students and eligible parents of dependent undergraduate students to help pay for the cost of the student's education at participating schools

Direct Plus Loans

A federal student loan available to undergraduate students; the federal government pays interest on the loan as long as the student is in school at least part-time

Direct Subsidized Loan

A federal student loan available to undergraduate and graduate students; the student is responsible for paying the interest during the time they are in school, which means they must pay that interest while studying or have it rolled into the principal amount of their loan

Direct Unsubsidized Loan

A portion of a federal student loan that the school pays out by applying the funds to the student's school account or by paying the borrower directly. Students generally receive their federal student loans in more than one disbursement.

Disbursement

A mandatory information session which takes place before a student receives their first federal student loan. It explains their rights and responsibilities as a student borrower.

Entrance Counseling

A mandatory information session which takes place when a student graduates, leaves school, or attends school less than half-time. It explains the student's loan repayment responsibilities and when repayment begins.

Exit Counseling

A report you receive with the information you submitted in your FAFSA. It contains your SAI and other information that colleges will use to determine your financial aid package.

FAFSA Submission Summary

The largest form of student aid in the country; federal aid programs come in the form of government grants, loans, and work-study opportunities

Federal Student Aid

The total amount of financial aid (federal and nonfederal) a student is offered by a college, designed to help meet a student's education costs

Financial Aid Offer

A loan with an interest rate that does not change over the life of the loan

Fixed-Rate Loan

A process that allows a borrower to pause their federal student loan payments; interest continues to accrue during this time period and may be capitalized

Forbearance

A free online application that current or prospective college students can submit each year to determine their eligibility for financial aid

Free Application For Federal Student Aid (FAFSA)

Financial aid that does not have to be paid back, such as scholarships and grants

Gift Aid

A period of time during which a borrower is typically not required to make loan payments. It generally begins on the day after a borrower graduates, leaves school, or drops below half-time enrollment. This period typically lasts 6 to 9 months but can vary.

Grace Period

Student aid coming from the state or federal government, the school, or from private sources that does not need to be repaid

Grants

The rate charged for borrowing money usually expressed as a percent of the amount borrowed

Interest Rate

A process that allows a borrower to COMBINE multiple federal loans into one, allowing the borrower to make one monthly payment. The new interest rate of the loan is a weighted average of the prior loans' rates.

Loan Consolidation

A process that REPLACES one or more existing federal or private loans with a new private student loan, ideally with a lower interest rate

Loan Refinancing

The organization that collects payments on a loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a loan holder

Loan Servicer

A legal document in which you promise to repay your federal student loan(s) and any accrued interest and fees to your lender or loan holder

Master Promissory Note (MPN)

Expenses that are essential for you to be able to live and function

Needs

The actual cost a student pays to attend a school, calculated as the sticker price minus grants and scholarships

Net Price

A federal grant usually awarded to undergraduate students who display exceptional financial need and have not earned a bachelor's, graduate, or professional degree. This grant does not have to be repaid.

Pell Grant

A fee that some lenders charge if you pay off all or part of your loan early

Prepayment Penalty Fee

Original amount of money borrowed, separate from interest or fees

Principal

A non-federal student loan made by a bank, credit union, or other entity, which sets the terms and conditions for the interest rate, grace period, and length of repayment

Private Student Loan

The maximum time period over which you must repay your student loan -- currently between 10 and 30 years for Federal loans

Repayment Period

A plan that outlines your monthly loan payment, repayment period, and how much interest you will pay over the life of the loan

Repayment Plan

Cost of housing and food while at college

Room And Board

A type of aid primarily awarded for academic merit (good grades) or for something you have accomplished (volunteer work, athletics, etc) that does not need to be repaid

Scholarship

Total expense of going to college which may include tuition, room and board, fees, books and supplies, transportation, health insurance, etc. Also known as Cost of Attendance or a school's published price.

Sticker Price

A numerical value that colleges use to determine a student's financial need for federal aid

Student Aid Index (SAI)

The sticker price for the academic portion of your college expenses, which does not include room and board, textbooks, or other fees

Tuition

A loan in which the interest rate can change, based on prime rate or index rate, over the course of the loan

Variable-Rate Loan

Expenses that help you live more comfortably

Wants

A federal program that provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses

Work-Study