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Glossary of Terms
BudgetA figure used to determine eligibility for financial aid, representing the average cost of education, generally for a school year. The budget is also known as the Cost of Attendance; it includes fees, tuition, room and board, books and supplies, transportation and miscellaneous items. CapitalizationThe practice of adding interest to the principal, or loan amount, instead of paying the interest while in school. Capitalization eliminates payments while in school, but does increase the amount owed after school. CancellationSome loans provide for cancellation for part or all of the amount owed under certain circumstances, such as teaching in designated teacher shortage areas. Consolidation LoanThis is a loan that allows borrowers to lower their monthly payments by replacing their original loan(s) with a new loan. Consolidation loans usually have a longer period of repayment, and more interest that must be paid. Cost of AttendanceSee Budget, above. DefaultFailure to repay or otherwise meet the terms and conditions of a loan. For most student loans, it takes six months of delinquent payments for a loan to go into default. The penalties for defaulting include loss of financial aid eligibility, a bad credit rating, withholding of tax refunds, garnishing wages, and loss of monthly payment options (the whole loan becomes due and payable at once). DefermentA deferment is the postponement of the payments on a student loan. Most deferments are legal entitlements; if you meet the deferment criteria and apply for it properly, the deferment must be granted to you. (see also forbearance). DelinquencyFailure to make a scheduled payment on a loan. DependentThis means that parental information is considered in determining a student's eligibility for financial aid. Note that a student may be living away from home and not receiving any money from parents and still be dependent for financial aid purposes. Also, students are not considered independent just because their parents are not claiming them on their tax return. Generally, any student under age 24 is considered dependent. (see also Independence vs. Dependence ). EFTElectronic Funds Transfer is used by lenders to send student loan funds directly to schools, in lieu of a paper check that the student must endorse. Entrance InterviewA required session for first time student borrowers during which the terms and conditions of the loan are explained. Student borrowers must attend at SJSU before their loan checks can be disbursed. Exit InterviewA required session for student borrowers who are graduating or otherwise leaving school, or dropping below half time enrollment, during which the terms and repayment of the loan(s) are explained. Expected Family ContributionThe amount a student (and parents, if dependent) is expected to pay towards the cost of attending college. This figure directly determines eligibility for financial aid. FAFSAThis is the Free Application for Federal Student Aid used to apply for federal and state financial aid. FATFinancial Aid Transcript. This is a record of the financial aid received (or not received) at a particular college. All schools are required to obtain this information from all previous colleges before disbursing financial aid to a student, even if the student never received financial aid. A school may obtain this information electronically from the National Student Loan Database System, or via a paper FAT sent directly to the college. Fee deferralUsed to delay the payment of registration fees while the student's financial aid is being processed. The fee deferral is valid only through the evaluation process and is based on the student's financial aid eligibility. Financial NeedThis is the same as financial aid eligibility. ForbearanceForbearance is a way to postpone or reduce the payments on a student loan. Forbearance differs from a deferment in three ways: 1) it is not a legal requirement; 2) it is given at the lender's (or holder of the loan) discretion; and 3) interest continue to acrrue even if forebearance is granted. (see also deferment). GarnishWithholding part of a borrower's pay to repay a loan, generally when that loan has been defaulted. Grace PeriodThis is a period of time during which a borrower is not required to make payments on a student loan. Grace periods normally begin after the student is no longer enrolled at least half-time, and last from 6 to 9 months. Guarantee AgencyThis is an agency that repays a lender should a borrower default on a student loan. In California the state agency responsible for administering and guranteeing student loans is the California Student Aid Commission. Guarantee FeeThis is a fee deducted from student loans to help pay the cost of defaults. It is also known as the insurance premium. The guarantee fee for Federal Stafford, Unsubsidized Stafford and PLUS loans is 1%. (see also Origination Fee). IndependentMeans that parental information is not considered in determining a student's eligibility for financial aid. Any student who is age 24 by December 31 of the award year is automatically independent for financial aid purposes. (see also Independence vs. Dependence). NeedEligibility for financial aid. Need is the difference between the student's budget, or cost of attendance, and expected family contribution. Origination FeeThis is a fee deducted from student loans to help pay the administrative costs. The origination fee for Federal Stafford, Unsubsidized Stafford and PLUS loans is 3%. (see also Guarantee Fee). PINPersonal Indentification Number. The PIN is issued by the US Department of Education, and is used by students to apply for financial aid online, electronically sign their applications, make corrections online, access the National Student Loan Data System (NSLDS) Web site and view information about federal student aid you have received. The PIN is similar to the PIN you use to access your bank account, and therefore should be kept secret. ) PrincipalThe amount borrowed or owed on a loan. Promissory NoteA written, legally binding promise to repay a loan. The promissory note outlines the terms and conditions of the loan, including repayment schedule, interest rate, deferment policy, and cancellation provisions. Often a Master Promissory Note is used that applies to any subsequent loans, so a new prom note is not needed every year. Renewal FAFSAThe Renewal FAFSA has most of your answers already filled in, using the information you provided on your last application. This greatly reduces the amount of time it takes to reapply. You just need to provide updated financial and tax information, and update any other information that has changed from the previous year. SARThe Student Aid Report sent to the student after applying for financial aid, which determines eligibility for a Pell Grant . Also known as ESAR, ISIR (Electronic Student Aid Report, Institutional Student Aid Report). Satisfactory Academic ProgressRefers to a schools policy concerning the minimum number of units that must be completed each semester, the maximum time frame, and the minimum GPA required while receiving financial aid. Secondary MarketA source of funds for student loans. A secondary market institution buys loans from the original lender, so that lender has funds to loan again. When a student loan is sold to a secondary market, the terms of the loan do not change, even though the payments may be made elsewhere. Supplemental Loan for StudentsThis is a federal loan for independent students that was eliminated in 1994, having been replaced by Federal Unsubsidized Stafford loans. Subsidized LoanThis is a loan that student borrowers do not have to pay interest on until after their grace period expires. Unmet NeedThe difference between a student's eligibility for financial aid and the amount of financial aid actually received. Unmet need occurs if a school does not have sufficient funds to match a student's eligibility, or when a student is eligible for but does not want a loan or work study. Unsubsidized LoanThis is a loan that student borrowers must pay all the interest on, including while they are enrolled. However, students can elect to capitalize the interest, and make their payments after they are out of school. VerificationA review process through which a Financial Aid Office must
request documentation from a financial aid applicant to verify the accuracy of
the information provided on the FAFSA application. |
Financial Aid & Scholarship Office
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