Terms and definitions

DETAILED GLOSSARY OF KEY TERMS AND DEFINITIONS – For Those Who Wish To Know A Lot About Paying For College and Financial Aid

APR
The "Annual Percentage Rate" is a yearly rate of interest, which includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR, and the rate is used to compare loans, making simple interest and compound interest loans comparable. See “Annual Percentage Rate.”
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Ability-to-Benefit (ATB)
Basis on which a student without a high school diploma, a recognized equivalent, or a General Education Diploma (GED) may qualify for federal student assistance. The department maintains a list of approved tests for measuring a student's ability to benefit from the educational program the student seeks. The test must be administered before the school admits the student.
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Academic Period
A measured period of enrollment (e.g., a semester, trimester, quarter, or clock hours).
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Academic Year
A period of time schools use to measure a quantity of study. The time in which a full-time student should complete two semesters (24 hours), two trimesters, or three quarters at a college, university, technical or vocational school. Or the time it takes to complete at least 36 quarter-hours if a program is measured in credit hours. Academic years vary from school to school, and even from educational program to educational program at the same school.
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Accrediting Agency
An agency that sets educational standards for schools, evaluates schools, and certifies that schools have met these standards. A "nationally recognized accrediting agency" is one that the U.S. Department of Education has recognized to accredit or pre-accredit a particular category of school or educational program. The agency grants accreditation status to schools.
The Department publishes a list of nationally recognized accrediting agencies or associations that the Department has determined to be reliable authorities as to the quality of education or training offered. If the Department determines that there is no nationally recognized accrediting agency or association qualified to accredit schools in a particular category, the secretary of education shall appoint an advisory committee, composed of persons specially qualified to evaluate training provided by schools in such categories, to prescribe the standards a school must meet in order to participate in Title IV programs and to determine whether an individual school meets those standards.
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Accredited Institution
Any school that meets standards established by a nationally recognized accrediting agency, and for which that agency has provided documented acknowledgment of the school's compliance.
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Accrued Interest
The amount of interest that accumulates on the unpaid principal balance of a loan and is payable by the borrower. In the case of some loans such as the Subsidized Federal Stafford Loans, the Federal government pays accrued interest during the in school, grace, and deferment periods.
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Actual Interest Rate
The annual interest rate a lender charges on a loan, which may be equal to or less than the "applicable" - or statutory - interest rate on that loan.
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ACT
A test published by American College Testing to measure a student's ability in math, verbal comprehension, and problem solving. Usually students take this test during their junior or senior year of high school.
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Act, (The)
The Higher Education Act of 1965, as amended. Title IV, Part B of the Act addresses FFELP loans.
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Additional Unsubsidized Stafford Loan
The additional amount of a student's eligibility for Unsubsidized Federal Stafford Loans. This amount is available only to independent undergraduate students, graduate/professional students, and dependent undergraduate students whose parents are unable to obtain a PLUS loan.
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Adjusted Gross Income (AGI)
Income minus allowed deductions shown on a federal income tax return.
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Adjustable Rate
An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.
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Administrative Forbearance
A temporary suspension of, a reduction of, or an extension of time for making principal and/or interest payments on a Federal Stafford, SLS, PLUS, or Consolidation loan that is granted by the holder or lender. This type of forbearance does not require a written request from the borrower or an agreement signed by the borrower before it is granted.
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Administrative Wage Garnishment
Process by which a guarantor, under Federal law, may intercept a portion of the wages of a borrower with a defaulted FFELP loan.
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Advanced Placement Test
Test used to earn credit for college subjects studied in high school and scored on a scale from 1 to 5 (the best possible score). They are offered by the Educational Testing Service (ETS) in the spring. Also known as AP tests.
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Aggregate Loan Limit
The borrower's maximum allowable unpaid principal amount throughout the student's academic career.
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Agreement
Any written contract, agreement, or letter of understanding between the guarantor and another entity that specifies the rights and duties of each party with respect to participation in the guarantor's programs and/or utilization of the guarantor's services.
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ALAS
See “Auxiliary Loans to Assist Students.”
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Americorps
A national and community service program created by the National and Community Service Trust Act of 1993 and administered by the Corporation of National Service. For each year of full time service in the program, participants will receive education awards to help finance their postsecondary education or pay back their student loans.
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Amortization
The gradual reduction of a debt by periodic payments large enough to meet current interest payments and to repay the principal at maturity. The loan is repaid through regular, monthly payments of principal and interest made for a predetermined amount of time.
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Annual Loan Limit
The maximum loan amount a student may borrow for each academic year of study under the Federal Stafford Loan Program.
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Annual Percentage Rate (APR)
The interest maintained on a loan for a one-year period. Expressed as a percentage, it is required to be disclosed by the lender under the Federal Truth in Lending Act. This figure includes upfront costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the promissory note.
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Anticipated Completion (Graduation) Date (AGD)
The date on which a student is expected to complete an academic program. A school in subsequent enrollment status updates provides this date.
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Application
An initial statement of personal and financial information, which is required to approve your loan.
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Applicable Interest Rate
The maximum annual interest rate (under the Higher education Act) that a lender may charge on a loan. Some times referred to as the statutory interest rate.
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Appreciation Rate
Typically, the market value of your home will increase over time. The appreciation rate is a way to judge how quickly the home's value is increasing. You may estimate this figure by calculating the percent increase of the home's value over a period of one year. For example, suppose that you own a $100,000 home and that the value of your home increases by roughly $3,000 per year. In this case, the home's appreciation rate would be 3% because the home's value has grown by 3%, from $100,000 to $103,000.
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Assignment
Language placed on or attached to the promissory note indicating a change or transfer of loan ownership.
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Assets
The elements of your and your family’s financial worth including real estate other than your primary residence, stocks, bonds, cash savings. This does not include a family farm, retirement or pre-paid tuition assets.
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ATB
See “Ability to Benefit.”

Authority
Any private nonprofit or public entity that may issue tax-exempt obligations to obtain the funds used for the making or purchasing of FFELP loans. "Authority" also includes any agency, state postsecondary institution or any other state or local government unit or nonprofit organization authorized by law to issue tax-exempt obligations.
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Auxiliary Loans to Assist Students (ALAS)
A previous name for what became the SLS loan. The Omnibus Reconciliation Act of 1981 extended the Parent Loans for Undergraduate Students (PLUS) program to include loans for independent undergraduate students and graduate and professional students. These loans were called Auxiliary Loans to Assist Students or ALAS. The Higher Education Amendments of 1986 repealed the ALAS program and authorized two separate loan programs in its place - Supplemental Loans for Students (professional and independent undergraduate students), and PLUS loans for parents of dependent students.
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Award Letter (Financial Aid, Aid Package)
The financial aid award letter is a written notification to the financial aid applicant of the types and amounts of aid offered, their responsibilities, the cost of attendance and terms and conditions of each award.
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Award Year
The period between July 1 of a given calendar year and June 30 of the following calendar year.
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-B-
Balloon Payment
Payment on a loan, usually the last, which is larger than the preceding ones as outlined in a signed contract or promissory note.
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Bankruptcy
Legal action in which a person who can’t meet financial obligations is declared bankrupt by court decree. The court may order the person’s property sold to raise money to pay creditors.

Judicial action to stay the normal collection of debts against the petitioner, and cause those debts to be satisfied at the direction of the court. Bankruptcies are classified by "chapters," which refers to parts of a larger volume - the US Bankruptcy Act. Types of bankruptcies include:

Chapter 7. This is the most common form of bankruptcy, often referred to as "liquidation." In a Chapter 7 bankruptcy, the eligible assets of the borrower are liquidated and distributed among the creditors by a trustee, with preference given to secured creditors. Borrowers who are unemployed or have few or no assets frequently use this type of bankruptcy.
Chapter 11. A bankruptcy in which the borrower's debts are reorganized. This type of bankruptcy is seldom used by student borrowers and is most often used by financially troubled businesses.
Chapter 12. Chapter 12 bankruptcy is similar to a Chapter 13 bankruptcy, and applies to certain farms and family farm operations with specific debt ceilings.
Chapter 13. This is commonly referred to as the "wage" earner plan. A Chapter 13 bankruptcy allows individuals with regular incomes to satisfy their debts through a court-directed payment plan. Usually, the Chapter 13 debtor(s) has significant debts, but sufficient income to eventually pay the debts.

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Base Stafford Loan Amount
The base amount of a student's eligibility for a Subsidized and/or Unsubsidized Federal Loan(s). The base amount equals the loan limit applicable to a dependent undergraduate student.
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Base Year
The tax year prior to the academic year (award year) for which financial aid is requested. Financial information from this year is used to determine eligibility for financial aid. For example, if a student is submitting a FAFSA in March 2000 for academic year 2000-2001, the base year to be used is 1999.
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Blanket Endorsement
A separate form indicating the transfer of contract rights and ownership of a group of loans. If a blanket endorsement is used to indicate ownership change, a copy of the endorsement must be placed in the borrower file of each loan purchased by the lender or secondary market.
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Borrower
Person to whom a lender extends credit/money for a set period of time. The borrower is the person who applies for the loan, signs the promissory note, receives the loan disbursement and is legally responsible for repayment of the loan. The borrower is the person given the opportunity to use someone else's money for the present, but is legally obligated to repay the loan at some specified future date.
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Borrower-Based Academic Year (BBAY)
An academic year that is individualized per borrower and generally "floats " with the borrower's attendance and progress. For borrowers enrolled in programs of study in schools that are not term-based, the academic year is always a BBAY. A student's BBAY must begin with a term the student actually attends.
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BORROWER'S RIGHTS AND RESPONSIBILITIES
Borrowers have the right to have:

a copy of the completed loan promissory note.
the original promissory note when the loan is paid in full.
a grace period before repayment begins, if your loan provides for one.
list of deferment and cancellation provisions.
a full disclosure regarding the amount borrowed, the interest rate, when repayment (and/or interest) begins, how repayment is to be made and to whom.
information on maximum loan amounts, refinancing, consolidation, pre-payment penalties (if any) and the consequences of defaulting.
knowledge of any transfer and/or selling of your loan from one agency to another.
information on your' current debt load and the estimated monthly repayment amount and time-frame for repaying the loan.

if you withdraw, graduate or drop below half-time enrollment or transfer to a different school.
if you change your name, address or Social Security Number.
if you do not enroll for a period for which a loan was made.
if you have difficulty in meeting your repayment agreement.
if you qualify for deferment or cancellation benefits in a timely manner.

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Borrower-Specific Deferment
Refers to the federal requirement that eligibility for a deferment is applied to all of a borrower's loans, rather than to each separate loan. For example, a borrower who has used the maximum 24 months of internship is not entitled to an additional internship deferment.
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Branch Campus
A permanent location of a school that is geographically apart and independent of the main campus; that offers courses leading to a degree, certificate, or other recognized educational credential; that has its own faculty and administration or supervision; and that has its own budgetary and hiring authority. A branch campus is one type of "additional location" at which schools may offer instruction to students. A school must establish eligibility for each of its locations.
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-C-
Campus-Based Programs (Campus-Based Aid)
The Federal Perkins Loan, Federal Work-Study, and Federal Supplemental Educational Opportunity Grant programs. These programs are administered by a school's financial aid office. A student's financial aid package may contain aid from one or more of these programs.
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Cancellation (Loan)
The release of a borrower from the obligation to repay his or her loan. There are three different cancellation periods within the loan life cycle: before disbursement is made, after disbursement is made but before repayment begins, and once repayment begins. Before disbursement is made, the borrower may cancel (or un-apply for) the loan by telling the lender that the loan is not wanted. After first disbursement and before repayment, the borrower has the right to return the loan proceeds in full within 120 days (afterwards the borrower owes fees and any accrued interest) and thereby cancel the loan. In this same cancellation period, the borrower may also effect a "partial" cancellation by returning individual (but not all) disbursements.

After repayment begins, the borrower must meet certain requirements or conditions to be eligible for discharge from federal student loans. A loan cannot be discharged or cancelled because the borrower didn't complete the program of study at the school (unless the borrower was unable to complete the program because of school closure), didn't like the school or the program of study, or didn't obtain employment after completing the program of study.

Loan Cancellation requires specific conditions such as:

These criteria are specified within the loan promissory note. Loan cancellation releases the borrower from all responsibilities to repay the loan. . Documentation is required.

Not all loans have cancellation provisions. For loans without cancellation provisions, it's wise to acquire life insurance to cover the repayment should the unexpected occur.

Portions of Stafford loans also may be canceled if the borrower takes on certain jobs after graduating. For example, teachers for five consecutive years in designated K-I2 schools serving low-income families may have up to $5,000 of their Stafford loan- debt forgiven for loans received on or after October 7, 1998, if they had no loan balance before then. Stafford loan borrowers who claim bankruptcy may have their loans canceled only if the bankruptcy court rules that repayment would cause undue hardship.

If you have a Perkins loan, you may also have your loan forgiven if you
teach at a designated low-income public school, in a designated subject area or to children with disabilities.

work at a family service agency serving children from low-income families.
work as a nurse, medical technician, law enforcement or corrections officer, or Head Start staff member.
serve in the U.S. Armed Forces in areas of hostility or imminent danger (UP to 50% of your loan debt).
serve as a VISTA or Peace Corps volunteer (up to 70% of your loan debt).

Perkins loan borrowers who claim bankruptcy may have up to 100% of their loan forgiven if seven years have passed between the date the loan became due and the date the borrower filed for bankruptcy.

Cancellation also refers to programs that repay loans--or portion of loans--when borrowers participate in activities, such as serving in health care shortage areas or working as full-time volunteers. It should be noted, the IRS may consider the amount of a loan that is forgiven taxable income. You should consult with you’re your tax advisor and the IRS.

For more information, contact your lender or the agencies holding your loans.
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Cancellation (of a Guarantee)
The revocation of a loan guarantee, which occurs if any of the following conditions exist

No loan proceeds were disbursed or delivered to the borrower.
The lender check(s) was never cashed.
None of the loan proceeds were negotiated within 120 days of the date on which they were disbursed.
EFT and master check loan proceeds in the school's account are not delivered to the borrower within 120 days after being transferred to the account.
The loan is repaid in full within 120 of final disbursement.

The guarantee is not lost on the remainder of the loan if one disbursement is canceled.
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Capitalization
When interest is added to the principal balance of a loan rather than being paid as it accrues; any future interest is then based on the higher principal loan amount. The addition of unpaid accrued interest applied to the principal balance of a loan increases the total debt outstanding. The less frequently capitalization occurs the better. Be sure to check capitalization policies when considering refinancing options.
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Capitalization of Fees and Interest
Fees and accrued interest on a loan are added to the principal balance. Both then become part of the principal balance and begin to accrue interest.
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Capitalized Interest
Accrued interest added to the borrower's outstanding principal balance to create a new and higher balance. Subsequent interest accrues on the new total principal balance, which includes any capitalized interest.
Example: A $5,000 loan at 10% interest, capitalized annually, will accrue $500 in interest in the first year the principal is outstanding. At the end of the first year, the $500 in interest will be added to the $5,000 principal balance. During the second year--assuming no payments are made on either principal or interest--interest will accrue on the new balance of $5,500. As a result, at the end of the second year, the amount of interest accrued will be $550, which will then be added to the $5,500 for a new balance of $6,050 on which interest will accrue during the third year. And so on ...
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Certification
The act of attesting that something is true or meets a certain standard. For example, the school certifies the borrower's eligibility for a loan and, if applicable, interest benefits. The borrower completes an application, promissory note, or deferment form, thereby certifying that certain eligibility criteria have been met. Certification must be made prior to disbursement of funds.
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CFR
See “Code of Federal Regulations.”
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Change of Control
An occurrence that signifies that a different person, partnership, or corporation has obtained authority to control the actions of a school. For example, a change of control can occur when stock is transferred to the parent corporation; when schools merge or divide; when a company is retained to manage a school; or when a school transfers assets or liabilities to the parent corporation.
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Check
A draft (drawn on a financial institution) that is payable on demand and that requires the personal endorsement or other written approval of the borrower to be cashed.
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Citizen/Eligible Non-citizen
You must be one of the following to receive federal student aid:

US citizen
US national (includes natives of American Samoa or Swain's Island)
US permanent resident who has an I-151, I-551, or I-551C (Alien Registration Receipt Card)

If you're not in one of these categories, you must have an Arrival-Departure Record (I-94) from the US Immigration and Naturalization Service (INS) showing one of the following designations in order to be eligible:

"Refugee"
"Asylum Granted"
"Indefinite Parole" and/or "Humanitarian Parole"
"Cuban-Haitian Entrant, Status Pending"
Conditional Entrant" (valid only if issued before April 1, 1980)

If you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), you aren't eligible for federal student aid.
If you're in the United States on an F1 or F2 student visa only, or on a J1 or J2 exchange visitor visa only, you can't get federal student aid. Also, persons with G series visas (pertaining to international organizations) are not eligible for federal student aid.
Note: Citizens and eligible non-citizens may also receive loans from the FFELP and Direct Loan programs at participating foreign schools. Citizens of the Federated States of Micronesia, the Republic of the Marshall Islands, and Palau are eligible only for Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOGs), or Federal Work-Study. These applicants should check with their financial aid administrators for more information.
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Claim
A request that the lender (or lender's servicer) file with the guarantor for reimbursement for their losses on a Federal Stafford, SLS, PLUS or consolidation loan due to the borrower's death, disability, default, or bankruptcy; school closure; or false certification of the borrower's eligibility.
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Clock Hour
A period consisting of one of the flowing:

50-60 minutes of class, lecture, or recitation in a 60-minute period.
50-60 minutes of faculty-supervised laboratory, shop training, or internship in a 60-minute period.
60 minutes of preparation in a correspondence course.

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COA
See “Cost of Attendance”
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Code of Federal Regulations (CFR)
The collection of federal regulations promulgated by the US Government.
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Cohort Default Rate
The percentage of Stafford and SLS loan borrowers who default before the end of the fiscal year following the fiscal year in which they entered repayment on their loans. The Department calculates this rate annually to determine the default experience of the students who attend a particular period of time. Unless otherwise specifically indicated, the cohort default rate includes the FFELP cohort default rate or the weighted average cohort rate.
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Collateral
Collateral is the lender's security for loans made. It is the property of a borrower that is pledged by the borrower to protect the interests of a lender. If the borrower fails to repay the loan for which the collateral was pledged, the collateral may become property of the lender.
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Collection Agencies
If you default on your student loans, the lender or guarantor may use a collection agency to collect the loan. The collection agency's costs are added to the amount due, and the borrower must then repay the collection costs in addition to the amount due on the loan.
Federal regulations state that a borrower who has defaulted on his or her student loans may be required to pay reasonable collection costs in addition to other charges, such as late payment fees. What constitutes reasonable is not very well defined.
The federal regulations concerning campus-based loan programs, such as the Perkins Loan, suggest that collection costs may not reasonably exceed 30% of the amount of principal, interest, and late charges collected on the loan, plus any court costs, for first collection efforts and 40% for second collection efforts. For Perkins loans made from 1981 through 1986, many promissory notes limited collection costs to 25% of the outstanding principal and interest due on the loan. Since then, however, promissory notes have had no such restriction.
For loans held by the US Department of Education (e.g. Federal Direct Stafford Loans), the department assesses collection costs at a rate of 25%.
When consolidating a defaulted loan, collection costs of up to 18.5% of the outstanding principal and interest may be included in the amount consolidated. So a collection agency might be willing to reduce its fees to 18.5% if the student consolidates his or her loans. But the collection agency is under no obligation to do so. So if the student consolidates the loans and the collection agency does not reduce its fees, the student must pay the amount in excess of 18.5%.
If you work out a payment schedule within 60 days of default, some collection agencies will waive or reduce the collection fee.
Overall, it appears that collection costs can legally be as high as 40%, or perhaps even higher.
If you think the collection costs are excessive, you can ask the collection agency to provide a detailed itemization of the actual costs incurred in collecting the loan. Although federal regulations are murky on this point, it appears that the costs must be based on either the actual costs incurred in collecting the loan or the average costs incurred for similar actions taken to collect loans in similar stages of delinquency.
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Collection Charges
Costs incurred by the lender or its agents in collecting overdue payments. These charges may include, but are not limited to, attorney's fees, court costs, and telegrams; they may not include routine costs associated with preparing letters or notices or making telephone calls to the borrower.
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College Scholarship Service (CSS)
A division of the College Board that collects additional information used by colleges, universities, and scholarship programs in awarding private financial aid funds. The CSS/Financial Aid PROFILE is a customized financial aid application form required at certain colleges, which collects additional financial information to determine eligibility for institutional aid.
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Co Maker
One of two individuals who are joint borrowers on a federal parent (PLUS) loan or on a consolidation loan, and who are jointly liable for the repayment of the loan. Before the introduction of the common Stafford loan application/promissory note, some lenders may have required co makers on old Subsidized Stafford loans.
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Common Application
A standardized application and promissory note developed by FFELP participants and approved by the Department by which a borrower applies for a FFELP loan. Different application forms are required for Federal Stafford and Federal PLUS loans. Common applications are periodically revised and approved to reflect major changes in FFELP regulations.
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Compound Interest
Interest, assessed at pre-arranged intervals, and added to the principal, resulting in a new and higher balance. It is this higher balance upon which each subsequent interest assessment is based.
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Confirmation (as it relates to the MPN)
A process by which the school, lender, or guarantor (on behalf of the school or lender) advises the borrower of the proposed loan types and amounts. The borrower must take action to confirm the loan type or request a specific loan amount. A school, lender, or guarantor (on behalf of the school or lender) may establish confirmation for the entire loan or may request that the borrower confirm each disbursement of the loan.
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Cooperative Work-Study Education
A program in which the student alternates between full-time college study and full-time paid employment related to the student's area of study. Under this plan, a bachelor's degree often requires five years to complete.
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Consequences of Default
If you default on your student loan: Your loans may be turned over to a collection agency. You'll be liable for the costs associated with collecting your loan, including court costs and attorney fees. You can be sued for the entire amount of your loan. Your wages may be garnished. Your federal and state income tax refunds may be withheld. Your defaulted loans will appear on your credit record, making it difficult for you to obtain an auto loan, mortgage, or even credit cards. A bad credit record can also harm your ability to find a job. You won't receive any more federal financial aid until you repay the loan in full or make arrangements to repay what you already owe and make at least six consecutive, on time, monthly payments. (You will also be ineligible for assistance under most federal benefit programs.) You'll be ineligible for deferments. Federal interest benefits will be denied. You may not be able to renew a professional license you hold. And of course, you will still owe the full amount of your loan.
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Consolidation (Loan)
An available option for the borrower to combine various loans into a single loan with a new more manageable repayment schedule and interest rate.
Loan Consolidation, also called a Consolidation Loan, combines several student or parent loans into one bigger loan from a single lender, which is then used to pay off the balances on the other loans. Consolidation loans are available for most federal loans, including FFELP (Stafford, PLUS, and SLS), FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans, and Direct loans. Some lenders offer consolidation loans for private loans as well.
Consolidating your existing student loans can make repaying them more manageable. With loan consolidation, student loans are combined into a single new loan with just one monthly payment, a fixed interest rate, and an extended repayment term from 12 to 30 years, depending on the total student-loan debt. Married borrowers may consolidate their individual loans under a single payment schedule. Consolidation loans often reduce the size of the monthly payment by extending the term of the loan beyond the 10-year repayment plan that is standard with federal loans. However, by extending the term of a loan the total amount of interest paid is increased.
In certain circumstances (for example, when one or more of the loans was being repaid in less than 10 years because of minimum payment requirements), a consolidation loan may decrease the monthly payment without extending the overall loan term beyond 10 years. In effect, the shorter-term loan is being extended to 10 years. The total amount of interest paid will increase unless you continue to pay the same monthly payment as before, in which case the total amount of interest paid will decrease.
The fixed interest rate on consolidation loans is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent, but can be no higher than 8.25%. Some graduate students have found it necessary to consolidate their educational loans when applying for a mortgage on a house.
The benefits of consolidation differ for each borrower. In order to offset the increased interest expense, you can make larger payments, applying the extra as an early payment on principal. Get all the facts first before opting for a consolidation loan. You may be relinquishing your deferment or repayment options. Your signature on the consolidation application and promissory note obligates you to the terms of the new loan. You don't have to consolidate all your loans, but any loans you list on the application will be consolidated. To learn more, consult with your lender, financial advisor and financial aid office.
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Correspondence Study
A course of study in which the school provides instructional materials, including examination on those materials, to students who are not physically attending classes at the school. Instructions may be provided, in whole or in part, by video technologies. If the school offers 50% or more of its total courses by telecommunications, or by a combination of telecommunications and correspondence courses, the telecommunications courses offered by that school are considered "correspondence courses." A home study course for which instruction is proved by video cassettes or discs is also considered a correspondence course during any award year unless the school provides instruction via the same media, during the same award year, to its on campus students. If a course is a combination of correspondence work and residential training, the entire course is considered correspondence study.
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Cost of Attendance (COA/Cost of Education, Student Budget)
The total costs of college for the school year; also called student budget. COA includes tuition and fees; on-campus room and board (or a housing and food allowance for off-campus students); and allowances for books, supplies, transportation, loan fees, and, if applicable, dependent care, costs related to a disability, and miscellaneous expenses, including an allowance for the required rental or purchase of a personal computer. Also included are reasonable costs for eligible study-abroad programs. An allowance (determined by the school) is included for reasonable cost connected with a student’s employment as part of a cooperative education program.
For students attending less than half time, the COA includes only tuition and fees and an allowance for books, supplies, transportation, and dependent-care expenses. Talk to the financial aid administrator at the school you’re planning to attend if you have unusual expenses that might affect your cost of attendance.
COA is determined using rules established by the U. S. Congress.
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Cost-Less-Aid
A figure calculated by deducting all financial assistance the student has been or will be awarded for the loan period from the cost of attendance for the same period of enrollment.
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Credit
An amount or sum placed at an individual's disposal by a bank or other lending institution. The individual - or borrower - may use this sum to pay for products and services but must repay (usually over time) the lending institution for that usage.
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Credit Bureau
An agency that compiles, maintains, and distributes credit and personal information to creditors. This information may include a borrower's payment habits, number of credit accounts, balance of those accounts, place of employment, length of employment, and records of financial transactions. Lenders check with credit bureaus to learn whether a potential customer seeking a loan is likely to repay, based on the way other obligations have been handled in the past.
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Credit Scoring
A quick and consistent method of determining the likelihood that you will repay your loans. It is an evaluation tool that predicts how well you will manage credit, relative to other borrowers, based on your past credit performance. The credit bureau score is a snapshot that focuses on individual borrower behavior. Some examples of the factors used to calculate your credit score include promptness in paying bills, number of credit cards, total credit limit, and the amount owed on accounts.
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Credit History
Record of current and past credit transactions used by potential lenders to determine a person’s ability to pay back debt.
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Credit-Ready
A credit-ready borrower is one who has no credit history OR a credit history with no excessive number of delinquencies on consumer loans or revolving charge accounts; no prior education loan defaults; no derogatory credit items such as charge offs, foreclosures, open judgments, bankruptcy, etc.
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Credit Report
A summary of your credit history. It is maintained by an authorized credit-reporting agency and sent to potential creditors, when requested. Credit reports include information such as current and recent addresses, employer information, payment performance for seven years, type of debt you have and the lending institution for each account, available credit, and current balances.
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Cumulative Loan Limit
See “Aggregate Loan Limit”
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Cure
Reinstatement of a loan's guarantee upon completion of a prescribed series of loan collection activities; also the process by which the loan's guarantee is reinstated
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Custodial Account
In a custodial account, a minor is the owner of the account, however, an adult controls the investment until the minor is 18 (i.e., reaches majority). The interest and dividends on the account are then taxed based on the minor's lower income bracket. If the minor has little other income, these earnings may escape tax altogether. Custodial accounts include those governed by the Uniform Gifts to Minors Act and/or the Uniform Transfer to Minors Act.
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-Economic Hardship
A period during which the borrower is working full time but is earning an amount that does not exceed the greater of the minimum wage or the poverty line for a family of two. Economic hardship also exists if a borrower's monthly payments on federal education loans are equal to or greater than 20 percent of the borrower's total monthly gross income, as defined in FFELP regulations.
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ED (US Department of Education)
US Department of Education. The government agency that administers several federal student financial aid programs, including the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loan, the FFELP, and the FDLP.
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ED Form 799
Lender's Interest and special Allowance Request and Report, a federal form that a lender uses to report loans made (and resulting origination fees owed) by the lender to the Department and interest benefits and special allowance earned by the lender. The fees owed are usually deducted from what the Department owes the lender for interest benefits and special allowance.
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EFA
See “Estimated Financial Assistance.”
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EFC
See “Expected Family Contribution.”
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Effective APR
The Effective Annual Percentage Rate (APR) of a loan is the most accurate measure of what a loan will cost - it takes into account the interest rate, the fees, the length of the loan, and the timing of the payments. If you compare identical repayment periods for each of the different loan programs, the Effective APR will allow you to accurately compare the cost.
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Electronic Funds Transfer (EFT)
The electronic distribution of loan funds from the lender to an account at the school or the school's financial institution.
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Eligibility Letter
A term used to describe the materials the Department's Institutional Participation Division Sends to school that has received federal approval for participation in title IV programs. The "letter" includes an Approval Notice and copy of the school's Program Participation Agreement.
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Eligible Borrower
A borrower or potential borrower who meets federal eligibility criteria for a Federal Stafford loan or, in the case of a parent borrower, a Federal PLUS loan.
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Eligible Program
A course of study that leads to a degree or certificate and meets the US Department of Education's requirements for an eligible program. To get federal financial aid, you must be enrolled in an eligible program, with two exceptions:

If a school has told you that you must take certain coursework to qualify for admission into one of its eligible programs, you can get a Direct Loan or a FFEL Program Loan (or your parents can get a PLUS Loan) for up to 12 consecutive months while you're completing that coursework. You must be enrolled at least half time, and you must meet the usual student aid eligibility requirements.
You must be enrolled at least half time, and you must meet the usual student aid eligibility requirements. If you're enrolled at least half time in a program to obtain a professional credential or certification required by a state for employment as an elementary or secondary school teacher, you can get a Federal Perkins Loan, Federal Work-Study, a Direct or FFEL Stafford Loan, (or your parents can get a PLUS Loan) while you're enrolled in that program.

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Endorser
An individual who endorses the promissory note and is responsible for payment of the loan if the borrower does not pay. Also see co-signer.
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Enrollment Status
An indication of whether you are a full-time or part-time student. The number of credit hours being attempted by a student. Generally you must be enrolled at least half-time (and in some cases full-time) to qualify for financial aid. Normally, students must be half-time or more to apply for scholarships. Individual programs will list the criteria.
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Entrance Interview
A loan repayment and debt management counseling session required by federal regulations that is arranged and conducted by a school's financial aid office for students who are receiving their first federally guaranteed student loan associated with attendance at the school. This counseling session must be conducted before the student can receive the proceeds of the first disbursement of any federally guaranteed education loan. During this counseling session, borrowers review their rights and responsibilities. As a first time borrower, your initial loan disbursement will be made 30 days after the loan period begins. First time borrowers should be sure to have enough money available to cover any expenses that are due before the disbursement arrives.
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Equity
Your equity in your home is the difference between the remaining balance owed on your mortgage loan and the appraised value of the home. Your equity increases if your home increases in value and as you make your monthly payments of principal and interest. The principal portion of your payment is used to repay the amount you borrowed.
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ESL
English as a Second Language.
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ETS (Educational Testing Service)
Company that produces and administers the SAT and other educational achievement tests.
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Evaluating A Lender
When selecting a lender “ü” with your financial aid office. It is generally wise to try to stay with one lender throughout school. You should also:

Compare interest rates and terms. Federal programs are generally very similar. However, some lenders offer discounts. Private programs can vary significantly.
Compare borrower benefits, including those for paying on time and for making loan payments electronically.
Compare what other services, benefits or endorsements the lenders provide
Compare repayment plans offered.
Compare loan application processes—lenders are beginning to offer online applications and instant loan approvals.
Compare levels of customer service offered.
Determine what are the customer service hours.
Determine if you will have online access to you view and update your account.

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Exit Interview
A loan repayment and debt management counseling session required by federal regulations that is arranged and conducted by a school's financial aid office for students who have received federally guaranteed loans while attending school. This counseling session must be conducted before the student graduates or leaves the school, whenever possible.
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Expected Family Contribution (EFC)
The dollar amount that is determined by a formula that is specified by law to set an available income figure a family is expected to pay toward a student's educational costs. This calculation is based on factors such as family earnings, taxable and non-taxable income, assets such as savings and checking accounts, benefits such as unemployment or Social Security, students in college and size of family. The EFC is used in determining eligibility for Federal need-based aid.
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Extended Repayment Plan
A recent addition to repayment options for the federal loan programs is the extended repayment plan. If a borrower has more than $30,000 in federal loans to repay, he or she may qualify to extend the repayment period to 25 years.
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Federal Processor (Central Processing Service)
The federal government’s computer system that analyzes the information on the FAFSA, calculates how much the student and his or her family could pay toward college, and sends out the Student Aid Report (SAR).
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Federal Stafford Loans
A federal education loan issued by a participating lender. There are two types, subsidized and unsubsidized. Subsidized Federal Stafford Loans are based on need, and the federal government pays the interest while the student is in school. Unsubsidized Stafford Loans are not based on need, and the borrower is responsible for the interest. The interest rate for a Stafford loan cannot exceed 8.25%, and interest rates are adjusted each July 1.

First Stafford Loan borrowers must participate in an entrance interview before loan money can be disbursed. During this counseling session, borrowers review their rights and responsibilities. As a first time borrower, your initial loan disbursement will be made 30 days after the loan period begins. Otherwise, federal regulations mandate that Federal Stafford Loan funds must be disbursed to borrowers accounts within three days of receipt by the institution. First time borrowers should be sure to have enough money available to cover any expenses that are due before the disbursement arrives.
To participate in the Federal Stafford Loan Program, enrollment must be on at least a half-time basis.
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Federal Supplemental Educational Opportunity Grant (SEOG)
SEOGs are awards of between $100 and $4,00 per year that are awarded to undergraduate students with exceptional financial need, with priority given to those with Pell Grants. These awards are grants and like scholarships, they do not have to be paid back.
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Federal Supplemental Loans for Students (SLS)
This program was merged with the unsubsidized Federal Stafford Loan program on July 1, 1994.
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Federal Work-Study
Federal Work-Study may be offered as part of the financial aid package. If so, your college will help you find a part time job on or off campus. If possible, you will be placed in work related to your studies or career plans, or in community service. Federal Work-Study participants earn at least federal minimum wage. Also see “Work-Study”
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Fees
Are charges that cover costs not associated with the student’s course load, such as costs of some athletic activities, clubs and special events. Also see Origination Fee and Guarantee Fee.
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Financial Aid
Financial aid is the money available from various sources to help students and families pay for college.
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Financial Aid Package
The total amount of financial aid (federal and nonfederal) a student receives. Usually a combination of Federal and non-Federal aid such as grants, loans, or work-study, combined in a “package” to help meet the student’s need. The packaging of financial aid is the major responsibility of the school’s financial aid office.
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Financial Need (Financial Aid Eligibility)
The difference between a student's educational costs (budget) and the Expected Family Contribution (EFC). Financial need is equal to the Cost of Education (estimated or actual costs for college attendance and basic living expenses which includes: tuition, fees, room, board, books, supplies, transportation) minus the Family Contribution (the amount a student’s family is expected to pay, which varies according to the family’s resources) equals Financial Need.
Students can receive up to the amount of Financial Need of need-based financial aid such as Pell Grants and Stafford Loans.
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Fixed Expense
A regular expense to be paid at a set amount, e.g., rent, tuition.
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Fixed Interest
Interest, specified upon origination of the loan, which does not change during the term of the loan.
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Forbearance
Temporary cessations of regularly scheduled payments or temporarily permitting smaller payments than were originally scheduled due to financial hardship. During this period interest continues to accrue, even on subsidized loans. Because less is paid during periods of forbearance, it takes longer to repay the loan. This also means increasing both the balance owed on the loan and the monthly repayments required after the forbearance period has ended. This option is not available for loans in default.
Forbearances are typically granted in 12-month intervals for up to three years. Forbearance is a formal arrangement between the borrow and the lender/holder or servicer that prevents delinquency or default by allowing the borrower to suspend/reduce payments for a period of time, in order to ease the borrower’s serious financial difficulties. Forbearances are not granted automatically. Forbearances are granted at the lender's discretion. You may have to continue paying the interest charges during the forbearance period. An application and documentation must be submitted to support a request for deferment.
Borrowers should contact their lenders/servicers as soon as they recognize that their income will not support their loan repayment schedule. Borrowers should not stop making payments on their student loans until after they are notified that forbearance has been granted, otherwise they will be deemed delinquent and possibly go into default.
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FDSLP
The Federal Direct Student Loan Program.
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Free Application for Federal Student Aid (FAFSA)
The official document used by every college and university to determine eligibility for Federal Student Aid. A scholarship program often requires a copy of this document.
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Gap
A period during the servicing of a loan in repayment when due diligence activities (collection activities) are performed. For a loan serviced under regulations published December 18, 1992 a gap greater than 45 days (greater than 60 days in the case of a transfer) results in the loss of the loan's guarantee.
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Garnishment of Wages
The deduction of a portion of a borrower's paycheck, with or without the borrower's consent. A lender or the government may take this action to force repayment of a loan that is in default.
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General Education Development (GED) Certificate
A certificate students receive if they've passed a specific, approved high school equivalency test. Students who don't have a high school diploma but who have a GED may still qualify for federal student aid. A school that admits students without a high school diploma must make a GED program in the vicinity of the school available to these students and must inform them about the program.
Students who pass approved ability-to-benefit (ATB) test may also be qualified. An applicant without a high school diploma or its recognized equivalent can be eligible for funds if he or she 1) passes and independently administered test, ATB, approved by the Department of Education and used for determining the student's ability to benefit from postsecondary education or 2) enrolls in a school that participates in a process that has been both prescribed by the state in which the school is located and approved by the Department.
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Getting Out of Default
To get out of default, you need to make arrangements with your servicer or lender to repay the loan. Once you have made six regular payments, you will be eligible for additional Title IV aid.
After you have made twelve regular payments and applied for and received "rehabilitation", you will no longer be considered in default. At this time record of the default will be removed from the reports to credit reporting bureaus.
For information about your options, you should contact the servicer of the loan and/or the original lender. The financial aid office at your school should be able to tell you the name, address, and telephone number of your lender, and can also provide you with help and advice about repayment problems.
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Gift Aid
Financial aid, such as grants and scholarships, which does not need to be repaid.
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Grace Period
A grace period is the time during which repayment of the loan is postponed. The most common grace period granted in promissory notes include all the years while enrolled in school at least half time, the period after a student either graduates, ceases to be enrolled at least half time or leaves school and before loan payments must begin. No payment is due during this time. Grace periods for educational loans are automatic. You do not have to apply for them. There is no grace period for PLUS loans.
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Grade Level
A student's academic class level, as certified by a school official. Undergraduate students are 01 (freshman/first year) through 05 (fifth year/other undergraduate); graduate and professional students are A (first year) through D (fourth and beyond).
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Graduate or Professional Student
A student who:

Is enrolled in a program or course above the baccalaureate level at an institution of higher education, or enrolled in a program leading to a first professional degree.
Has completed the equivalent of at least three years of full time study at an institution of higher education, either before entrance into the program or as part of the program itself.
Is not receiving Title IV aid as an undergraduate student for the same period of enrollment.
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Graduated Repayment
Loan repayment that is lower at the beginning of repayment and gradually increases during the repayment period. It is not based on income.
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Grant
A sum of money given as financial aid awarded to students for the purpose of paying at least part of the cost of college. Grants are generally based on financial need that does not have to be paid back.
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Is enrolled in a program or course above the baccalaureate level at an institution of higher education, or enrolled in a program leading to a first professional degree.
Has completed the equivalent of at least three years of full time study at an institution of higher education, either before entrance into the program or as part of the program itself.
Is not receiving Title IV aid as an undergraduate student for the same period of enrollment.

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First Stafford Loan borrowers must participate in an entrance interview before loan money can be disbursed. During this counseling session, borrowers review their rights and responsibilities. As a first time borrower, your initial loan disbursement will be made 30 days after the loan period begins. Otherwise, federal regulations mandate that Federal Stafford Loan funds must be disbursed to borrowers accounts within three days of receipt by the institution. First time borrowers should be sure to have enough money available to cover any expenses that are due before the disbursement arrives.
To participate in the Federal Stafford Loan Program, enrollment must be on at least a half-time basis.
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Federal Supplemental Educational Opportunity Grant (SEOG)
SEOGs are awards of between $100 and $4,00 per year that are awarded to undergraduate students with exceptional financial need, with priority given to those with Pell Grants. These awards are grants and like scholarships, they do not have to be paid back.
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Federal Supplemental Loans for Students (SLS)
This program was merged with the unsubsidized Federal Stafford Loan program on July 1, 1994.
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Federal Work-Study
Federal Work-Study may be offered as part of the financial aid package. If so, your college will help you find a part time job on or off campus. If possible, you will be placed in work related to your studies or career plans, or in community service. Federal Work-Study participants earn at least federal minimum wage. Also see “Work-Study”
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Fees
Are charges that cover costs not associated with the student’s course load, such as costs of some athletic activities, clubs and special events. Also see Origination Fee and Guarantee Fee.
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Financial Aid
Financial aid is the money available from various sources to help students and families pay for college.
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Financial Aid Package
The total amount of financial aid (federal and nonfederal) a student receives. Usually a combination of Federal and non-Federal aid such as grants, loans, or work-study, combined in a “package” to help meet the student’s need. The packaging of financial aid is the major responsibility of the school’s financial aid office.
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Financial Need (Financial Aid Eligibility)
The difference between a student's educational costs (budget) and the Expected Family Contribution (EFC). Financial need is equal to the Cost of Education (estimated or actual costs for college attendance and basic living expenses which includes: tuition, fees, room, board, books, supplies, transportation) minus the Family Contribution (the amount a student’s family is expected to pay, which varies according to the family’s resources) equals Financial Need.
Students can receive up to the amount of Financial Need of need-based financial aid such as Pell Grants and Stafford Loans.
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Fixed Expense
A regular expense to be paid at a set amount, e.g., rent, tuition.
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Fixed Interest
Interest, specified upon origination of the loan, which does not change during the term of the loan.
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Forbearance
Temporary cessations of regularly scheduled payments or temporarily permitting smaller payments than were originally scheduled due to financial hardship. During this period interest continues to accrue, even on subsidized loans. Because less is paid during periods of forbearance, it takes longer to repay the loan. This also means increasing both the balance owed on the loan and the monthly repayments required after the forbearance period has ended. This option is not available for loans in default.
Forbearances are typically granted in 12-month intervals for up to three years. Forbearance is a formal arrangement between the borrow and the lender/holder or servicer that prevents delinquency or default by allowing the borrower to suspend/reduce payments for a period of time, in order to ease the borrower’s serious financial difficulties. Forbearances are not granted automatically. Forbearances are granted at the lender's discretion. You may have to continue paying the interest charges during the forbearance period. An application and documentation must be submitted to support a request for deferment.
Borrowers should contact their lenders/servicers as soon as they recognize that their income will not support their loan repayment schedule. Borrowers should not stop making payments on their student loans until after they are notified that forbearance has been granted, otherwise they will be deemed delinquent and possibly go into default.
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FDSLP
The Federal Direct Student Loan Program.
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Free Application for Federal Student Aid (FAFSA)
The official document used by every college and university to determine eligibility for Federal Student Aid. A scholarship program often requires a copy of this document.
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Gap
A period during the servicing of a loan in repayment when due diligence activities (collection activities) are performed. For a loan serviced under regulations published December 18, 1992 a gap greater than 45 days (greater than 60 days in the case of a transfer) results in the loss of the loan's guarantee.
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Garnishment of Wages
The deduction of a portion of a borrower's paycheck, with or without the borrower's consent. A lender or the government may take this action to force repayment of a loan that is in default.
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General Education Development (GED) Certificate
A certificate students receive if they've passed a specific, approved high school equivalency test. Students who don't have a high school diploma but who have a GED may still qualify for federal student aid. A school that admits students without a high school diploma must make a GED program in the vicinity of the school available to these students and must inform them about the program.
Students who pass approved ability-to-benefit (ATB) test may also be qualified. An applicant without a high school diploma or its recognized equivalent can be eligible for funds if he or she 1) passes and independently administered test, ATB, approved by the Department of Education and used for determining the student's ability to benefit from postsecondary education or 2) enrolls in a school that participates in a process that has been both prescribed by the state in which the school is located and approved by the Department.
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Getting Out of Default
To get out of default, you need to make arrangements with your servicer or lender to repay the loan. Once you have made six regular payments, you will be eligible for additional Title IV aid.
After you have made twelve regular payments and applied for and received "rehabilitation", you will no longer be considered in default. At this time record of the default will be removed from the reports to credit reporting bureaus.
For information about your options, you should contact the servicer of the loan and/or the original lender. The financial aid office at your school should be able to tell you the name, address, and telephone number of your lender, and can also provide you with help and advice about repayment problems.
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Gift Aid
Financial aid, such as grants and scholarships, which does not need to be repaid.
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Grace Period
A grace period is the time during which repayment of the loan is postponed. The most common grace period granted in promissory notes include all the years while enrolled in school at least half time, the period after a student either graduates, ceases to be enrolled at least half time or leaves school and before loan payments must begin. No payment is due during this time. Grace periods for educational loans are automatic. You do not have to apply for them. There is no grace period for PLUS loans.
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Grade Level
A student's academic class level, as certified by a school official. Undergraduate students are 01 (freshman/first year) through 05 (fifth year/other undergraduate); graduate and professional students are A (first year) through D (fourth and beyond).
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Graduate or Professional Student
A student who:
@@@
Is enrolled in a program or course above the baccalaureate level at an institution of higher education, or enrolled in a program leading to a first professional degree.
Has completed the equivalent of at least three years of full time study at an institution of higher education, either before entrance into the program or as part of the program itself.
Is not receiving Title IV aid as an undergraduate student for the same period of enrollment.
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Graduated Repayment
Loan repayment that is lower at the beginning of repayment and gradually increases during the repayment period. It is not based on income.
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Grant
A sum of money given as financial aid awarded to students for the purpose of paying at least part of the cost of college. Grants are generally based on financial need that does not have to be paid back.
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Gross Income
For qualifying purposes, the income before taxes or expenses are deducted.
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Guarantee
A promise to pay a debt if the borrower fails to repay. The government or guaranty agency guarantees student loans made by banks.
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Guarantee Fee/Insurance Premium
A fee that covers default insurance for guaranteed student loans. This fee is a percentage of principal charged to the borrower by the guarantor to insure a lender against loss resulting from a borrower's failure to repay. In most cases, the lender deducts this fee from the loan proceeds and pays it to the guaranty agency. In an increasing number of cases, the guaranty agency is waiving the fee.
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Guarantor
Lenders generally do not provide loans without a financial services organization to guarantee repayment. Guarantors are state agencies or private, nonprofit institutions or organizations that insures lenders up to permissible limits against losses due to a borrower's default, death, disability, or bankruptcy. Guarantors include the U.S. Department of Health and Human Services, the U. S. Department of Education, state agencies, and insurance companies. If the guarantor of one of your loans contacts you, respond immediately because your loan may be going into default.
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Guaranty Agency
The agency that insures FFELP loans against default. The guaranty agency administers the FFEL Program for schools. The federal government sets loan limits and interest rates, but each guaranty agency is free to set its own additional limitations, within federal guidelines. To find out the name, addresses, and telephone number of the agency serving your state, as well as information about borrowing, contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243). A directory of guaranty agencies is available on the Department of Education's World Wide Web site at WWW.ed.gov/offices/OPE/guaranty.html
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-H-

Half Time
At schools measuring progress by credit hours and semesters, trimesters, or quarters, half-time enrollment is at least six semester hours or quarter hours per term. At schools measuring progress by credit hours but not using semesters, trimesters, or quarters, half-time enrollment is at least 12 semester hours or 18-quarter hours per year. At schools measuring progress by clock hours, half-time enrollment is at least 12 hours per week.
Note that schools may choose to set higher minimums than these. You must be attending school at least halftime to be eligible to receive Direct or FFEL Program loans. Half-time enrollment is not a requirement to receive aid from the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study, and Federal Perkins Loan programs.
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Holder
The holder of a loan is any organization that owns your promissory notes. The holder may be the original lender. Sometimes, lenders sell loans to another organization, thereby transferring ownership of the promissory notes. The organization that buys the loan--thereby taking ownership of the promissory note--is now the holder of the loan. As the borrower, your obligation is to repay the loan to the holder of the loan--that is, to the organization that owns your promissory notes.
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Home Equity
The portion of a home's value that the homeowner owns outright; it is the difference between the fair market value of the home and the sum of the principal balances remaining on mortgage loans held by the homeowner for that home.
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Home Equity Loan
A loan based on a homeowner's equity in the home. A fixed or adjustable rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax -deductible. Often used for vehicle purchases, home improvement or freeing of equity for investment in other real estate or investments. Often recommended to replace or substitute for consumer loans whose interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and education loans.
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Home Equity Line of Credit
A variation of the home equity loan that allows a homeowner to draw money against (i.e., write checks) the home's equity on an ongoing basis. Generally, a home equity line of credit features a variable interest rate, a specific time period during which money may be withdrawn, and a repayment period following any withdrawal. The credit also revolves on a home equity line of credit: as soon as principal is repaid, it may be borrowed again.
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HOPE Scholarship
The HOPE Scholarship provides a family up to a $1,500 maximum tax credit per year per dependent student.
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The status of a student or borrower who is serving a criminal sentence in a federal, state, or local penitentiary, prison, jail, reformatory, work farm, or other similar correctional institution. A student or borrower who is living in a halfway house or in home detention or who has been sentenced to serve only weekends is not considered to be incarcerated.
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Income-Contingent Repayment Schedule
A repayment schedule for some FDLP loans under which the borrower's monthly payment amount is adjusted annually, base on the total amount of the borrower's Direct loans, the borrower's family size, and the Adjusted Gross Income reported on the borrower's most recent income tax return. In the case of a married borrower, who files a joint income tax, the AGI includes the spouse's income.
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Income-Based Repayment
(Income Sensitive/Income Contingent) Repayment schedule where the amount of the monthly payments is based on the income earned by the borrower.
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Income-Sensitive Repayment
Loan repayment that is based on the borrower's income. Payments increase as income rises.
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Individual Retirement Account (IRA)
An individual tax-deferred savings and investment account meant to accumulate funds for retirement. Also known as IRA. Currently, the maximum yearly contribution to all retirement IRAs (including Roth IRAs) is $2,000. Before 1997, there was only one type of IRA, now often referred to as a traditional IRA
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Independent Student
Must meet one of the following conditions:

24 years old -- born before January 1, 1978
You are a veteran of the US Armed Forces (or you attended a US military academy and were released under a condition other than dishonorable).
Not 24 but is an orphan or ward of the court (or were a ward of the court until age 18).
You have a legal dependent other than a spouse for whom you pay more than half their support.
You’re a graduate or professional student.
You’re married.
You have serious/special family circumstances, as documented by a financial aid administrator.

Whether you’re a dependent or independent student is key to establishing your eligibility for financial aid and determining the types and amounts of aid you may receive. If you’re dependent on your parents, your parent’s ability to contribute is considered and their information must be included on your FAFSA. If you’re independent, you’ll be evaluated on your own – your parents’ income or assets won’t be considered for most financial aid. (If married, your spouse’s income and assets will be considered, too.) Also see Independent Student.
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Ineligible Borrower
A borrower who does not meet federal eligibility criteria for a Federal Stafford loan, or in the case of a parent borrower, a Federal PLUS loan.
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Information Review Form
A document associated with the Student Aid Report (SAR) on which the borrower can correct any incorrect information on the SAR. Document is returned to the Department of Education.
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In-School Period
The time during which a student is enrolled on at least a half-time basis at a participating school, beginning on the date on which the borrower is enrolled on at least a half-time basis and continuing until the borrower terminates enrollment on at least a half-time basis.
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Institution
Generally refers to a school participating in the Title IV programs.
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Institution-Based Aid
Financial assistance programs offered and controlled by the individual colleges, such as alumni scholarships and endowments from private donors.
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Institution of Higher Education
A school that:

Is located in a state.
Admits as a regular student lonely a person who has a certificate of graduation from a secondary school or a recognized equivalent or has demonstrated the ability to benefit from the school's education or training program by passing a federally approve standardized test.
Is legally authorized in each state in which it physically located to provide, and provides within that state, a program of postsecondary education that awards an associate, bachelor's, graduate, or professional degree or provides a program of not less that two years in length that is acceptable for full credit toward such a degree or training program of at least one year that lead to a certificate, degree or other recognized credential and prepares students for gainful employment in a recognized occupation.
Is a public or other nonprofit school and is accredited by a nationally recognized accrediting agency or association approved by the US Department of Education for this purpose, or if not so accredited, is a school that the