Everything You Need To Know About Student Loans A-Z

Ever wondered what some of the terminologies mean when talking about student loans? If that’s the case, here’s the most comprehensive glossary of terms to help you out. These terminologies will give you a better understanding of about student loans without the lengthy explanations. Please check through all of these and be sure to let us know if we missed anything.

Terms to Help You Understand Student Loans Better

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

Academic Year

This is the amount of the academic work you must complete each year, and the time frame in which you must finish it, as defined by your school. For example, your school’s academic year may be made up of a fall and spring semester, during which a full-time undergraduate student is expected to complete at least 24 semester hours, usually called credits or credit hours, over the course of 30 weeks of instructional time. Academic years change from school to school and even from educational program to educational program at the same school.

For purposes of the Teacher Loan Forgiveness Program, an academic year is defined as one complete school year at the same school, or two complete and consecutive half years at different schools, or two complete and consecutive half years from different school years (at either the same school or different schools). Half years exclude summer sessions and generally fall within a 12-month period. For schools that have a year-round program of instruction, nine months is considered an academic year.

Accreditation

Confirms that an academic institution passed specific minimum academic standards set by an accrediting firm working with the U.S. Department of Education. Schools or universities need to pass the accreditation to be eligible to accept federal student aid programs.

Adjusted Gross Income (AGI)

This amount is derived from all your family’s assets (combination of salaries, dividends, etc.,) minus deduction of expenses and debts. The total is reported on the federal income tax return.

Administrative Wage Garnishment (AWG)

A tool enabling the federal government or your guaranty agency to notify your employer to withhold a portion of your salary to pay for unpaid non-tax debts that are owed to the federal government. If you have a federal student loan in default, up to 15% of your disposable pay could be taken by the federal government or your guaranty agency to repay your debt.

Adverse Credit History

A credit history is a record of your financial standing, which includes your promptness in paying bills and your capacity to repay future debt. To be eligible for a PLUS loan, you need to have a clean credit history. Your credit history may be deemed as unfavorable if at one point, you fell under these credit conditions:

• Bankruptcy discharge in the past five years.
• Voluntary surrender of personal property to avoid repossession within the last five years.
• Repossession of collateral within the last five years.
• Foreclosure proceedings started.
• Foreclosure within the last five years.
• Conveying your real property that is subject to a mortgage (by deed) to your lender to avoid foreclosure (deed in lieu of foreclosure).
• Accounts currently 90 days or more delinquent.
• Unpaid collection accounts.
• Charge-offs/write-offs of federal student loans.
• Wage garnishment within the last five years.
• Defaulting on a loan, even if the claim has been paid.
• Lease or contract terminated by default.
• County/state/federal tax lien within the past five years.

Agreement to Serve (ATS)

This contract needs to be signed sign to obtain a TEACH Grant. Upon signing the ATS, you come to terms with the following conditions:

Teach full-time

Teach in a high-need field

at a low-income school or educational service agency that serves certain low-income schools, and (4) for at least four complete academic years within eight years after completing (or ceasing enrollment in) the course of study for which you received the grant. If you do not complete your teaching service agreement, the amounts of the TEACH Grants you received will be converted to a Direct Unsubsidized Loan that you must repay with interest charges from the date of each TEACH Grant disbursement.

Approved Drug Rehabilitation Program

A drug rehabilitation program that is:

(1) qualified to receive funds from a federal, state or local government or from a federally or state-licensed insurance company; or
(2) administered or recognized by a federal, state or local government agency or court, or a federally or state-licensed hospital, health clinic or medical doctor.

Associate Degree

An undergraduate academic degree granted after completion of two years of study. Community colleges and career colleges generally award associate degrees.

Award Letter

An offer from a college or career school that states the type and amount of financial aid the school is willing to provide if you accept admission and register to take classes at that school.

Award Year

The school year for which financial aid is used to fund your education.

Bachelor’s Degree

An undergraduate academic degree awarded for a course of study that generally lasts four years. Colleges or universities generally award bachelor’s degrees.

Bankruptcy and Student Loans

Student loans are very difficult to include in a bankruptcy. But it is possible. To do so, you must show that payment of the debt “will impose an undue hardship on you and your dependents.”

Bankruptcy and Federal Student loans – Chapter 13 Bankruptcy

Chapter 13 bankruptcy is a bankruptcy where the entire debt is not wiped out but a payment arrangement is set up, typically for lower than the full balance.

Upon filing your Chapter 13, what’s called “an automatic stay” is typically granted. An automatic stay prohibits most creditors – including your student loan servicers – from trying to collect on your debts. This ends any phone calls or collection letters from every entity that you hold debt with.

Student loans are considered “non-priority unsecured debt” in Chapter 13 bankruptcy. Non-priority debts typically result in the borrower not required to pay the full balance.

Bankruptcy and Federal Student loans – Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a bankruptcy where the entire debt is wiped out. A trustee gathers and sells the debtor’s nonexempt assets in an effort to pay back the creditors.

You must prove that your student loans cause an undue hardship. If you cannot they will not be included in the bankruptcy.

Cancellation

The release of the borrower’s obligation to repay all or a designated portion of principal and interest on a student loan. Also called discharge or forgiveness of a loan.

Capitalization

Additional interest added to the principal balance for unpaid student loan debt. This will continue to add up if the interest is not paid in the agreed dates, (usually the in-school status, the grace period, deferment, or forbearance due dates) the lender reserves the right to capitalize the interest. This leads to the increase in the outstanding principal amount of the loan and you will be forced to pay a heftier amount. Interest is then added to that higher principal balance.

Collection Agency

An entity that recovers unpaid debt from borrowers who have defaulted on their loans.

Collection Charges

See collection costs.

Collection Costs

Expenses charged on defaulted federal student loans that are added to the outstanding principal balance of the loan. These expenses can be up to 18.5 percent of the principal and interest for defaulted Direct Loans or FFEL Program loans and may exceed 18.5 percent for defaulted Federal Perkins Loans and Health and Human Service (HHS) loans.

College Aid

Financial aid from your college or career school.

Common-law Marriage

A marriage relationship made by agreement and by living together without a marriage license. Not all states allow common-law marriages and the elements required for a common-law marriage change from state to state.

Consolidation

The process of putting together multiple loans into a new loan with a different payment structure.

Cosigner

A cosigner is someone who is responsible to settle a borrower’s debt if he or she fails to pay the loan. Generally, a cosigner has an outstanding credit score and a long credit history. If a person is qualified to co-sign a student loan, the lender will send them a cosigner’s notice asking to guarantee the student loan debt.

Cost of Attendance (COA)

The expected amount you will need in going to school and is usually reflected in a yearly figure. COA is mainly made of the following:

• tuition and fees
• room and board (or a housing and food allowance);
• allowances for books, supplies, transportation, loan fees, and dependent care
• miscellaneous and personal expenses (allowance for the rental or purchase of a personal computer)
• costs related to a disability
• costs for eligible study-abroad programs.

Cost may vary as some students attend less than half-time. Also,  a financial aid administrator at the school must be contacted if a borrower foresees any unusual expenses that might affect your COA.

Credit Bureau

An institution that monitors and holds your credit record. This includes your behavior and history on paying bills and analyzes your capacity to repay future loans. For example, if you fail to pay your student loan, the report will then be forwarded to a credit bureau, and it will be harder for you to transact with other lenders.

The person going to college submits a FAFSA. Your parents will include their tax information on your FAFSA, they will an FSA ID to do so. Being a dependent on their taxes is not related to the FAFSA. https://t.co/MUGXckWQOs

— Federal Student Aid (@FAFSA) March 14, 2018

Data Release Number (DRN)

The four-digit number included in a borrower’s FAFSA that makes it easier for them to send FAFSA data to schools borrowers are applying for. This number is required if there’s a need to contact the Federal Student Aid Information Center to correct information to the mailing address or the schools listed on the FAFSA. This number can be seen at the bottom of the FAFSA submission confirmation page or in the top right-hand corner of the Student Aid Report (SAR).

Default

The inability to repay a loan on the agreed period. Majority of federal student loans will default if you miss the deadline which is often set at 270 days. Legal consequences may follow if you default.

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Default Rate

The percentage of borrowers who are not able to repay their loans listed in the terms of their promissory notes.

Deferment

The rescheduling of payment on your loan provided you meet certain criteria. This allows your loan not to accumulate further interest on any of these types of loans:

• Direct Subsidized Loans
• Subsidized Federal Stafford Loans
• Federal Perkins Loans

Delinquent

A loan is labeled delinquent if payment is made past its due date. A loan continues to be delinquent until all missed payments are settled. If the borrower fails to pay, the loan servicer must be contacted immediately to readjust the loan and be considered in good standing.

Dependency Status

The determination of a Free Application for Federal Student Aid (FAFSA) applicant as dependent or independent.

Dependent Student

A student who is not eligible for an independent student. An independent student is one of the following:

• at least 24 years old
• married
• a graduate or professional student
• a veteran
• a member of the armed forces
• an orphan
• a ward of the court
• someone with legal dependents other than a spouse
• an emancipated minor or someone who is homeless or at risk of becoming homeless

Diploma Mill

An unaccredited school (or a business claiming to be a school) that awards a degree or other credential for a fee while requiring little or no class work meeting college-level standards.

Direct Consolidation Loan

A federal loan implemented by the U.S. Department of Education that allows borrowers to combine multiple federal student loans into a new loan. This consolidated loan requires borrowers to make a monthly payment on their federal loans and the time frame for payment is extended.

Direct Loan

A federal student loan available through the William D. Ford Federal Direct Loan Program wherein eligible students borrow from the U.S. Department of Education and its participating schools. Here are the types of Direct Loans:

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans and Direct Consolidation Loans

Direct PLUS Loan

A loan type initiated by the U.S. Department of Education to professional and post-graduate students, as well as parents of dependent undergraduate students where the borrower is fully responsible to make the complete payment with interest regardless of the loan status.

Disbursements (disburse or disbursed)

Payment of the loan funds to the borrower by the school. Students generally receive their federal student loan in two or more disbursements.

Discharge

The release of a borrower from the obligation to repay his or her loan.

Discretionary Income

Your income minus the poverty guidelines for your family size.

Disposable Pay

The amount that remains from an employee’s pay after deductions.

Early Action

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

Early Decision

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

Educational Service Agency

An educational service agency is a regional public multiservice agency (not a private organization) that is authorized by state law to develop, manage, and provide services or programs to local education agencies, such as public school districts.

Electronic Debit

A type of service that makes transactions between lender or servicer a seamless transition. This means allowing the servicer to debit a corresponding amount on a lender’s savings account on agreed payment dates.

Elementary School or Secondary School

For the purposes of the Teacher Loan Forgiveness Program, an elementary or secondary school is defined as a public school or nonprofit private school that provides elementary education or secondary education as determined by state law (or by the U.S. Department of Education if the school is not in a state).

Eligible Noncitizen

A U.S. national (includes natives of American Samoa or Swains Island), U.S. permanent resident (who has an I-151, I-551 or I-551C [Permanent Resident Card]), or an individual who has an Arrival-Departure Record (I-94) from U.S. Citizenship and Immigration Services (USCIS) showing one of the following designations:

• “Refugee”
• “Asylum Granted”
• “Cuban-Haitian Entrant (Status Pending)”
• “Conditional Entrant” (valid only if issued before April 1, 1980)
• Victims of human trafficking, T-visa (T-2, T-3, or T-4, etc.) holder
• “Parolee” (You must be paroled into the United States for at least one year and you must be able to provide evidence from the USCIS that you are in the United States for other than a temporary purpose and that you intend to become a U.S. citizen or permanent resident.)

If you meet the noncitizen criteria above, you are eligible to receive federal student aid. If you are unsure of your eligibility, please check with your school’s financial aid office for more information.

 

Emancipated Minor

An individual ruled by the court to be an adult in his or her state of legal residence. Only applies for those who are under 18.

Endorser

An endorser is someone who has an unblemished credit history and is willing to repay the loan if the borrower is unable to repay it.

Entrance Counseling

A mandatory information gathering session which occurs before borrowers receive their first federal student loan that explains their responsibilities and obligations as a student borrower.

Exit Counseling

Serves as an “exit interview” when a student who owns a loan is graduating soon. The student is tasked to answer questions pertaining to when and how he/she can pay the loan.

Expected Family Contribution (EFC)

This is the number used to determine your eligibility for federal student financial aid. This number results from the financial information you provide in your FAFSA^SM, the application for federal student aid. Your EFC is reported to you on your Student Aid Report (SAR).

What is the Difference between Federal and Private Student Loans?https://t.co/6v1GGz7Ose via @cappex#studentloans #collegelife pic.twitter.com/UfGecK3d54

— Knowledge4College (@k4college) September 26, 2017

FAFSA

Free Application for Federal Student Aid.

FAFSA4caster

An online tool that provides an early estimate of your federal student aid eligibility to help you financially plan for college.

Federal Family Education Loan (FFEL) Program

Under this program, private lenders provided private loans to students that were guaranteed by the federal government. These loans included Subsidized Federal Stafford Loans, Unsubsidized Federal Stafford Loans, FFEL PLUS Loans, and FFEL Consolidation Loans. Federal student loans under the FFEL Program are no longer made by private lenders. Instead, all new federal student loans come directly from the U.S. Department of Education under the Direct Loan Program.

Federal Pell Grant

A federal grant for undergraduate students with financial need.

Federal Perkins Loan

A federal student loan, made by the recipient’s school, for undergraduate and graduate students who demonstrate financial need.

Federal School Code

An identifier that the U.S. Department of Education assigns to each college or career school that participates in the federal student aid programs. In order to send your FAFSA information to a school, you must list the school’s Federal School Code on your application. A list of Federal School Codes is available at www.fafsa.gov.

Federal Student Aid

Financial aid from the federal government to help you pay for education expenses at an eligible college or career school. Grants, loans, and work-study are types of federal student aid. You must complete the FAFSA to apply for this aid.

Federal Student Aid PIN

Your electronic personal identification number that serves as your identifier to allow access to personal information in various U.S. Department of Education systems and acts as your digital signature on some online forms. If you do not already have a PIN, you can request one online at www.pin.ed.gov.

Federal Student Aid Programs

The programs authorized under Title IV of the Higher Education Act of 1965 that provide grants, loans and work-study funds from the federal government to eligible students enrolled in college or career school.

Federal Student Loan

A loan funded by the federal government to help pay for your education. A federal student loan is borrowed money you must repay with interest.

Federal Work-Study

A federal student aid program that provides part-time employment while you are enrolled in school to help pay your education expenses.

FFEL Program

Federal Family Education Loan Program

Financial Aid Offer

The total amount of financial aid (federal and nonfederal) a student is offered by a college or career school. The school’s financial aid staff combines various forms of aid into a “package” to help meet a student’s education costs.

Financial Aid Office

The office at a college or career school that is responsible for preparing and communicating information on financial aid. This office helps students apply for and receive student loans, grants, scholarships and other types of financial aid.

Financial Aid Package

The total amount of financial aid (federal and nonfederal) a student is offered by a college or career school. The school’s financial aid staff combines various forms of aid into a “package” to help meet a student’s education costs.

Financial Need

The difference between the cost of attendance (COA) at a school and your Expected Family Contribution (EFC). While COA varies from school to school, your EFC does not change based on the school you attend.

Forbearance

A time frame where your monthly loan payments are temporarily halted or reduced to a lower amount. Your lender may allow you a forbearance if the lender sees your willingness to pay but is simply lacking of fund at the moment. Principal payments are postponed during forbearance. However, interest continues to accrue. Unpaid interest that accrues during the forbearance will then be added to the principal balance (capitalized) of your loan(s), piling up to the amount you owe.

Foster Care

A temporary living arrangement for dependent children when their parent(s) or another relative cannot take care of them.

Free Application for Federal Student Aid (FAFSA)

The FREE application used to apply for federal student aid, such as federal grants, loans, and work-study.

Full-time Employment as a Teacher

For the purposes of the Teacher Loan Forgiveness Program, full-time employment as a teacher is determined by the state’s standard. For a borrower teaching in more than one school, the determination of full-time is based on the combination of all qualifying employment.

What is the Difference between Federal and Private Student Loans?https://t.co/6v1GGz7Ose via @cappex#studentloans #collegelife pic.twitter.com/UfGecK3d54

— Knowledge4College (@k4college) September 26, 2017

General Educational Development (GED) Certificate

A certificate that students receive if they’ve passed a specific, approved high school equivalency test. Students with a GED certificate are eligible to receive federal student aid.

Grace Period

The time period where students are allowed not to pay the loan. This is to give them ample time to look for a job. Six months is usually given as the grace period for fresh graduates before they start paying their student loans.

Graduation Rate

The figure that determines the progress of students who started their studies as full-time, first-time degree- or certificate-seeking students by showing the percentage of these students who complete their degree or certificate within a 150% of “normal time” for finishing the program in which they are enrolled.

Grant

Financial aid that is often based on a borrower’s financial need that does not need to be repaid. This is waived if a student decides to withdraw from school.

Guaranteed Student Loans

The name for Federal Family Education Loan (FFEL) Program loans that were made prior to 1992.

Guaranty Agency

A state agency or a private, nonprofit organization that administers Federal Family Education Loan (FFEL) Program loans.

Homeless

Refers to people that lack fixed, regular and appropriate housing. People living in a shelter, park, motel or car, or temporarily living with other people for having nowhere else to go are considered homeless. It may go as far as fleeing from abusive parents.

Homeschool

A school in which parents, legal guardians or tutors serve as the children’s educator.

What Is An Independent Student On The FAFSA And Why It’s Harder Than You Think To File… https://t.co/a84D0NULcB #StudentLoans @moneyunder30 pic.twitter.com/sAiINcOTWd

— Barbara Friedberg (@barbfriedberg) October 18, 2017

Income Tax Refund Offsets

A debt collection tool that makes it easier for the government to claim income tax refunds from individuals who owe the federal government to help repay the outstanding student debt. This tool may be used for federal student loans borrowers who are in default.

 

Interest

Additional expense added for the use of borrowed money. Borrowers pay interest to a lender and gradually increases depending on the agreed time frame of settlement. A certain percentage is added to the unpaid principal amount of the loan.

Interest Rate

The percentage at which interest is calculated on your loan(s).

Job Placement Rate

The percentage of graduating students who obtained employment either in the recognized occupation for which they were trained or in a related comparable recognized occupation within a determined timeframe after receiving their degree or certificate.

Judgment Lien

Gives a creditor the legal right to keep a home or property when the owner fails to pay a debt. A judgment lien can only be granted by a court when a creditor takes a debtor to court for failing to pay a debt and the debtor loses. A student (or parent in the case of a parent borrower) will not qualify for federal student aid if he or she owns property that is subject to a judgment lien for a debt owed to the United States.

Legal Guardianship

A relationship created by court order, through which the court appoints an individual other than a minor’s parent to take care of the minor. A legal guardian is not considered a parent on the student’s FAFSA. In fact, a student in legal guardianship does not need to report parent information on the FAFSA because he or she is considered an independent student.

Lender

The organization that made the loan initially; the lender could be the borrower’s school; a bank, credit union, or other lending institution; or the U.S. Department of Education.

Lifetime Eligibility Used (LEU)

The amount of all Federal Pell Grant aid (in percentage) awarded to you divided by the amount of Pell Grant aid you would have been eligible to receive based on full-time enrollment. The amount of Federal Pell Grant funds a student may receive over his or her lifetime is limited by federal law to be the equivalent of six years of Pell Grant funding.

Litigation

The act or process of bringing or contesting a legal action in court.

Loan Forgiveness

Waiving of a portion or 100 percent of the remaining federal student loan balance. This means borrowers are no longer responsible for repaying whatever amount is left on the loan.

Loan Holder

The entity that keeps tab of the promissory note and reserves the right to collect from the borrower.

 

Loan Servicer

A company tasked to collect payments on a loan, answers to customer service queries and is obliged to do other administrative tasks incorporated with keeping a loan on behalf of a lender. For borrowers unsure of who their federal student loan servicer is, it can be found over at www.nslds.com.

Master Promissory Note

A binding legal document a borrower must sign when applying for a federal student loan. The MPN can be used to make multiple loans for up to 10 years. One must be cautious of the terms and conditions listed to avoid potential defaults and to learn of rights as a borrower. It’s vital to keep and save a copy of your MPN due to the fact that you’ll need to refer to it later once you start repaying your loan or when you need references about provisions of the loan, such as deferments or forbearances.

Merit-based

Based on a student’s skill or ability. Example: A merit-based scholarship might be awarded based on a student’s high grades.

“When grant aid was growing rapidly, many students were protected from the price increases, but as the growth in federal and state grant aid has slowed, the average net prices students pay are rising” https://t.co/dS1BxCsR12

— Beyond the Professoriate (@BeyondProf) December 19, 2017

National Student Loan Data System (NSLDS)

A centralized database, available at www.nslds.ed.gov, which stores information on federal grants and loans for the borrowers and government’s perusal. NSLDS holds information on how much aid a student has received, his/her enrollment status, and loan servicer(s) he/she made a transaction with. NSLDS can be accessed using the Federal Student Aid PIN.

Need-based

Based on a student’s financial need. Example: A need-based grant might be given based on a student’s insufficient income.

Net Price

A rough figure of the cost that a student or his/her family need to pay in a calendar year to pay for education expenses for the student to attend their desired school. Net price is determined by asking the university’s cost of attendance and deducting any grants and scholarships for which the student may be able to apply for.

Net Price Calculator

A tool that allows current and prospective students, families, and other consumers to estimate the net price of attending a particular college or career school.

New Borrower

You are a new borrower if you had a clean record on a Direct Loan Program Loan or a Federal Family Education Loan Program loan as of Oct. 1, 2007, or have no outstanding balance on such a loan on the date you receive a new loan after Oct. 1, 2007.

Nolo Contendere

A plea of no contest, meaning the defendant neither admits nor disputes a charge, serving as an alternative to a pleading of guilty or not guilty.

UC price tag for out-of-state students going up, to $41,622 a year https://t.co/YsEqjzQ1WC

— Point California (@pointcalifornia) March 15, 2018

Out-of-state Student

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

Partial Financial Hardship

An eligibility requirement for the Income-Based Repayment (IBR) and Pay As You Earn plans.

For Income-Based Repayment, a circumstance in which the annual amount due on your eligible loans, as calculated under a 10-year Standard Repayment Plan, exceeds 15 percent of the difference between your adjusted gross income (AGI) and 150 percent of the poverty line for your family size in the state where you live.

On the other hand, Pay As You Earn is a circumstance in which the annual amount due on your eligible loans, as calculated under a 10-year Standard Repayment Plan, exceeds 10 percent of the difference between your adjusted gross income (AGI) and 150 percent of the poverty line for your family size in the state where you live.

For both plans, the amount that would be due under a 10-year Standard Repayment Plan is calculated based on the greater of the amount owed on your eligible loans when you originally entered repayment, or the amount owed at the time you selected the IBR or Pay As You Earn plan.

PLUS Loan

A loan available to graduate students and parents of dependent undergraduate students for which the borrower is fully responsible for paying the interest regardless of the loan status.

Post-baccalaureate Teacher Certification Program

A program for students who have already earned a bachelor’s degree that (1) does not lead to a graduate degree, (2) is treated as an undergraduate program, and (3) consists of courses required by a state in order for the student to receive a certification or license to teach in an elementary or secondary school in that state.

Principal

The total sum of money borrowed plus any interest that has been capitalized.

Private Loan

A nonfederal loan made by a lender such as a bank, credit union, state agency, or school.

Promissory Note

The binding legal document that you must sign when you get a federal student loan. It lists the terms and conditions under which you agree to repay the loan and explains your rights and responsibilities as a borrower. It’s important to read and save this document because you’ll need to refer to it later when you begin repaying your loan or at other times when you need information about provisions of the loan, such as deferments or forbearances.

Proprietary School

A private for-profit school that provides education and training.

Regular Student

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

Retention Rate

Measures the percentage of first-time students who are seeking bachelor’s degrees who return to the institution to continue their studies the following fall.

Room and Board

An allowance for the cost of housing and food while attending college or career school.

Satisfactory Academic Progress

A school’s standards for satisfactory academic progress toward a degree or certificate offered by that institution. Check with your school to find out its standards.

Scheduled Award

The maximum grant amount you are eligible to receive for the award year if you are enrolled full-time for the full school year. This amount is calculated from the information you (and your family) provided when you filed your FAFSA.

Scholarship

Money awarded to students based on academic or other achievements to help pay for education expenses. Scholarships generally do not have to be repaid.

Service Obligation

The teaching service requirement specified in the Agreement to Serve (ATS) that one must sign to be granted a TEACH Grant.

By signing the ATS, you agree to the following:

• teach full-time
• teach in a high-need field
• teach at a low-income school or educational service agency that serves certain low-income schools
• teach for at least four complete academic years within eight years after completing (or ceasing enrollment in) the course of study for which you received the grant.

In the event that one is not able to accomplish these requirements, the corresponding amounts of the TEACH Grants received will be converted to a Direct Unsubsidized Loan that one must now pay with interest charges from the date of each TEACH Grant disbursement.

Standardized Test

A test that is designed to assess individuals against a common standard.

State Aid

Financial aid from a student’s state of legal residence.

Student Aid Report (SAR)

A rundown of data you listed on your Free Application for Federal Student Aid (FAFSA). FAFSA usually takes 7-10 days to get back to you and sends the report via e-mail. If there are no corrections or additional information you must provide, the SAR will contain your EFC, which is the number that’s used to determine your eligibility for federal student aid.

Subsidized Loan

A loan based on financial need for which the federal government pays the interest that accrues while the borrower is in an in-school, grace, or deferment status. For Direct Subsidized Loans first disbursed between July 1, 2012, and July 1, 2014, the borrower will be responsible for paying any interest that accrues during the grace period. If the interest is not paid during the grace period, the interest will be added to the loan’s principal balance.

Teacher Education Assistance for College and Higher Education (TEACH) Grant

A federal grant that provides up to $4,000 per year to students who agree to teach for four years at an elementary school, secondary school, or educational service agency that serves students from low-income families and to meet other requirements. If the service obligation is not met, the grant is converted to a Direct Unsubsidized Loan.

Transfer Rate

The percentage of the full-time, first-time students who transferred to another institution.

TRIO

Program outreach and student services programs designed to identify and provide services for individuals from disadvantaged backgrounds. TRIO includes eight programs targeted to serve and assist low-income individuals, first-generation college students, and individuals with disabilities in progressing through the academic pipeline from middle school to postgraduate programs.

Unsubsidized Loan

A loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan.

Verification

The process your school uses to confirm that the data reported on your FAFSA is accurate. Your school has the authority to contact you for documentation that supports income and other information that you reported.

Did you know that can use #FinancialAid to fund a full degree overseas? Over 1000 institutions in over 40 countries around the world are eligible under the William D. Ford Federal Direct Loan program. https://t.co/R65JY0pfax pic.twitter.com/Jw9wOZfokd

— StudyOverseasGuide (@TheSOGuide) December 2, 2017

William D. Ford Federal Direct Loan Program

The federal program that provides loans to eligible student and parent borrowers under Title IV of the Higher Education Act. Funds are provided by the federal government to eligible borrowers through participating schools.

Work Study

A federal student aid program that provides part-time employment while you are enrolled in school to help pay your education expenses.

 

Looking for more info about student loans? Watch this video from How to Adult and find out how student loans work!

There are several ways how you can come up with the money for your college fees, and one of the most popular ways to pay for those expenses is through student loans. And when you apply for a student loan, you might stumble upon some of the words listed above. These terminologies will help you understand things about student loans clearly, and make you communicate with your lender a lot better.

Got more student loan terminologies in mind? Share it with us in the comment section below!

Up Next: 5 Benefits To A Student Consolidation Loan

Editor’s Note: This post was originally published in May 2017 and has been updated for quality and relevancy.