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Glossary: A
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Academic Year
A period of at least 30 weeks of instructional time during which a full-time student is expected to complete at least 24 semester hours or 36 quarter hours or 900 clock hours.
Achievement tests
Tests required by some colleges to measure student achievement in specific areas of study such as English, Math or Science.
ACT Test
A test published by American College Testing that measures a student's ability in math, verbal comprehension and problem solving. This test is usually taken during the junior or senior year of high school.
Advanced Placement Test (AP Tests)
Test used to earn college credit for subjects studied in high school and are scored on a scale from 1 to 5 (the best possible score). They are offered in the Spring.
Aid package
The combination of financial aid (loans, scholarships, grants, loans, work study) determined by the financial aid office of a college or university.
Annual Percentage Rate (APR)
The total annual cost of a loan, including all fees and interest.
Award letter
An official document issued by a school’s financial aid office listing all the financial aid awarded to the student. The award letter includes information about the cost of attendance and terms and conditions for the financial aid.
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Glossary: B
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Borrower
The individual who applies for a loan and receives the proceeds of the loan.
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Glossary: C
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Campus-based Aid
Financial aid programs administered by the University. The federal government provides each university with a fixed annual allocation that’s awarded by the financial aid administrator to students
Capitalization
Adding unpaid interest charges to the principal balance of a loan, thereby increasing the balance due. Capitalization increases the amount of the monthly payments and the total amount repaid over the life of the loan. Students can choose to pay the interest as it accrues, rather than capitalizing.
Certification
A process by which the college, university, trade school or vocation school verifies that a student is enrolled on at least a half-time basis, is making satisfactory academic process and is therefore eligible for federal and private loans. Certification must be made prior to any disbursement of funds.
Co-borrower
An individual who signs the promissory note in addition to the borrower and is equally responsible for the obligation if the borrower doesn’t pay.
Cost of Attendance (COA)
The total cost of attending a post-secondary institution for one academic year. This usually includes tuition, fees, room, board, supplies, transportation, and personal expenses.
Common Application
A recommended application form for admission to undergraduate programs at many independent colleges and universities. Students need only complete the form once and send copies to any of the participating colleges to which they wish to apply. Paper and disk copies are available at most high schools.
Consolidation
Combining several loans from multiple lenders into a single loan to reduce the monthly payment amount and/or increase the repayment period.
Cosigner
A person who signs the promissory note in addition to the borrower and is equally responsible for the obligation if the borrower doesn’t pay.
Credit bureau
An agency that gathers and stores credit information on individuals. If a credit report is needed for a loan application, a credit bureau produces a report based on the gathered data. The lender also reports back to credit bureaus how much an individual borrowed and whether the individual makes payments when due.
Credit report
Lenders use credit reports to determine if they should approve a loan and to set the terms (interest rate, fees and length) of the loan.
Credit score
A number, generally between 300 and 800, that reflects the credit history shown in a borrower's credit report. This score is considered predictive of the borrower's future credit performance.
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Glossary: D
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Default
Failure to repay a loan according to the terms of the signed promissory note for the loan. Default occurs at 180 days when the delinquency date is prior to 10/7/98, and 270 days when the delinquency date is on or after 10/7/98.
Deferment
A period during which a borrower, who meets certain criteria, may suspend loan payments. For some loans the federal government pays the interest during a deferment. On others, the interest accrues and is capitalized, and the borrower is responsible for paying the interest.
Delinquency
Failure to make monthly loan payments when due. Delinquency begins with the first missed payment.
Dependent student
An undergraduate student whose parents provide over half of their financial support. A dependent student is single, under 24 years of age, has no legal dependents, is not an orphan or ward of the court nor a veteran of the U.S. Armed Forces. Parents of a dependent student must submit parental information on the FAFSA for their son/daughter to be considered for financial aid.
Disbursement
The release of loan funds to the school for delivery to the borrower. Disbursements are usually made in equal multiple installments co-payable to the borrower and the school.
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Glossary: E
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Early Action
A college admissions program that consists of earlier deadlines and notification dates than the regular admissions process, but that does not require a binding commitment of the student if admission is offered. The student will not know what financial aid will be awarded prior to committing.
Early Admission
A college admissions program that considers high school juniors with enough credits (and remarkable academic and non-academic background) for admission (a year earlier than is typical).
Early Decision
A college admissions program that consists of earlier deadlines and notification dates than the regular admissions process, and that requires a binding commitment of the student if admission is offered. The student applying under this program should apply to only one school. The student will not know what financial aid will be awarded prior to committing.
Expected Family Contribution (EFC)
Amount a family is expected to contribute to a student's education, based on family earnings, net assets, savings, size of family and number of students in college.
Enrollment status
Indicates whether you are a full-time or part-time student. Generally you must be enrolled at least half-time (and in some cases full-time) to qualify for financial aid.
Entrance counseling
Students with Federal educational loans are required to receive counseling before they receive their first loan disbursement, during which the borrower's rights and responsibilities and loan terms and conditions are reviewed with the student. This session may be conducted online, by video, in person with the FAA/FAO or in a group meeting.
Exit counseling
Students with Federal educational loans are required to receive counseling before they graduate or withdraw (leave school), during which the borrower's rights and responsibilities and loan terms and conditions are reviewed with the student. This session may be conducted online, by video, in person with the FAA or FAO or in a group meeting.
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Glossary: F
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Financial Aid Administrator (FAA) / Financial Aid Officer (FAO)
A college or university employee who is involved in the administration of financial aid.
Free Application for Federal Student Aid (FAFSA)
The free form that must be completed by students and parents applying for Federal student aid.
Federal Direct Loan Program (FDLP)
The William D. Ford Federal Direct Loan Program offers Stafford and PLUS loans available directly from the federal government. Selected colleges and universities participate in this program.
Federal Work Study Program
This federal program provides part-time jobs, generally on-campus, for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses.
Federal Family Education Loan Program (FFELP)
The Federal Family Education Loan Program. Stafford and PLUS loans are financed by private lenders and guaranteed by the federal government.
Financial aid
Financial assistance including scholarships, grants, work-study and loans for education.
Financial aid award letter
A letter detailing total amount of financial aid for which a student is eligible.
Financial need / eligibility
The difference between the Cost of Attendance (COA) at a college and the Expected Family Contribution (EFC).
Forbearance
Forbearance allows temporary cessation of payments or smaller payments for a specific length of time.
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Glossary: G
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General Education Development Certificate (GED)
Certificate a student receives if he/she passed the 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.
Gift aid
Financial aid, such as grants and scholarships, that doesn’t need to be repaid.
Grade Point Average (GPA)
An average of a student's grades, where the grades have been converted to a 4.0 scale (4.0 being an A; 3.0 being a B; and 2.0 being a C).
Grace period
Specified period of time between the date a student graduates or drops below half-time status and the date loan repayment begins.
Grants
Financial aid awards that don’t have to be repaid. Grants are available through the federal government, state agencies and colleges.
Guarantor / Guaranty Agency
State agency or private non-profit institution that insures student loans for lenders and helps administer the FFELP. See also guaranty agency.
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Glossary: H
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Half-time
Half-time enrollment is determined by the school that you are attending. Please check with your registrar's office to verify criteria for half-time enrollment. A student must attend school at least half-time to be eligible to receive FDLP or FFELP loans.
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Glossary: I
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In-school
The status of a borrower who is enrolled on at least a half-time basis that continues until the borrower terminates enrollment on at least a half-time basis at a participating school.
Income
The amount of money received from employment, profit or other sources (welfare, disability, child support, Social Security and pensions).
Independent student
A student who is either married, 24 years of age or older, enrolled in a graduate or professional education program, has legal dependents other than a spouse, is an orphan or ward of the court or a veteran of the U.S. Armed Forces.
Institutional loan
Loans specific to a college, university or other post-secondary educational institution.
Interest
An amount, calculated as a percent of the principal loan amount, that is charged for borrowed money.
Internship
Part-time job during the academic year or the summer months in which a student receives supervised practical training in a field of interest.
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Glossary: L
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Lender
A financial institution, agency or school that provides the money to make a loan to a borrower.
Lifetime Learning Tax Credit
A tax credit of up to $1,000 per family, for post-secondary education courses. Only one credit may be claimed per tax year. To claim this credit, the individual (or in the case of a dependent child, the parents) must file a tax credit and owe taxes for that tax year.
Loan
A type of financial aid that is available to students and their parents. Student loan programs have varying interest rates and repayment provisions. Education loans must be repaid.
Loan Disclosure Statement
Also called a Loan Repayment Statement, this statement is issued to a borrower by the lender when the borrower enters repayment. It gives information about the loan, including guarantee and insurance fees and the interest rate.
Loan Forgiveness
Student loans can be "forgiven" (written off) by the Federal Government in the event that; the borrower's school closes while he/she is attending, the borrower becomes permanently disabled or the borrower dies.
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Glossary: M
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Merit-based
A means of determining eligibility for certain types of financial aid using merit, such as talents or accomplishments, as the determining factor.
Master Promissory Note (MPN)
The promissory note a student signs when taking out a Stafford loan. The master promissory note covers both the subsidized and unsubsidized Stafford loans the student may receive for the same enrollment period. If the student is attending a 4-year or graduate school, the master promissory note also covers subsidized and unsubsidized Stafford loans the student may receive for future enrollment periods.
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Glossary: N
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Need
The difference between the Cost of Attendance and the Expected Family Contribution (EFC) is the student's financial need.
Need-based
A means of determining eligibility for certain types of financial aid using financial need as the determining factor.
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Glossary: O
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Origination fee
Fee, payable by the borrower and deducted from the principal of a loan prior to disbursement to the borrower. For federally-backed loans, the origination fee is paid to the federal government to offset the cost of the interest subsidy to borrowers. For private loan programs, the origination fee is generally paid to the originator to cover the cost of administering and insuring the program.
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Glossary: P
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Pell Grant Program
The largest federal grant program. Eligibility and award amounts are determined by each college based on federal guidelines.
Perkins Loan Program
Federally-insured loans funded by the federal government and awarded by the school. The loans feature a low interest rate and are repayable over an extended period.
Parent Loans for Undergraduate Students Loan (PLUS Loan)
Federally-insured loans for parents of dependent students.
Private loans
These loans (non-government) are offered by banks or other financial institutions and schools to parents and students.
Promissory note
The binding legal document a student signs for the student loan. It lists rights and responsibilities, and the terms and conditions of the loan.
Preliminary Scholastic Assessment Test (PSAT)
This test helps prepare students for the SAT test. It is usually taken as a high school sophomore or early in the junior year.
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Glossary: R
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Reference
A lender generally will ask a borrower to provide the names, phone numbers, and addresses of at least 3 individuals to be used as references for the borrower.
Repayment
The time during which a borrower actively pays towards an education loan.
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Glossary: S
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Satisfactory academic progress (SAP)
A policy determined by schools, in conjunction with federal guidelines and regulations. Students must maintain academic progress to continue receiving financial aid, including loans.
Student Aid Report (SAR)
A report, summarizing financial and other information reported on the FAFSA, sent to a student by the federal government. The student's financial aid need is indicated by the Expected Family Contribution (EFC), which is printed on the document.
Scholastic Aptitude Test (SAT I)
Test used to measure a student's ability in math, verbal comprehension, and problem solving. SATs are administered during the junior and senior years in high school.
Subject Test (SAT II)
Offered in many areas of study including English, mathematics, many sciences, history, and foreign languages. Some colleges require students to take one or more SAT II tests when they apply for admission.
Scholarships
Scholarships are funds used to pay for higher education that don’t have to be repaid, and are based on any number of criteria, such as academics, achievement, talents, or through various groups.
Secondary market
Institutions that buy student loans from the institutions that originated or owns them.
Selective Service
Registration for the military draft is required to receive federal financial aid. The requirement to register applies to males who were born on or after January 1, 1960, are at least 18 years old, are citizens or eligible non-citizens, and are not currently on active duty in the U.S. Armed Forces.
Servicer
The servicer is an organization hired by a lender or secondary market to help administer the student loan program because of its complexity. Loan servicing includes disbursing loan funds, monitoring loans while borrowers are in school, and assisting borrowers during repayment of their loans.
Nelnet has extensive experience supporting the student loan servicing needs of schools and borrowers across the nation. Dedicated to providing the best possible service, Nelnet strives to provide state-of-the-art products and services that will serve the ever-changing needs of our clients.
Social Security Number (SSN)
Unique nine-digit number assigned to individuals that identifies location of birth (or registration), is necessary to contribute or receive Social Security funds for retirement, and is used by the IRS in associating individual income for the purpose of assessing taxes.
Stafford loans
Loans, both subsidized (need based) and unsubsidized (non-need based), guaranteed by the federal government and available to students to fund education.
Subsidized Stafford loans
Subsidized Stafford loans are awarded to students who demonstrate financial need. The Department of Education subsidizes the interest, so borrowers are not charged interest while enrolled in school at least half-time, and during grace and deferment periods.
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Glossary: T
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Transcript
A list of all the courses that a student has taken at a particular high school or college with the grades that the student earned in each course. Transcripts are usually required for college applications.
Tuition
The amount of money colleges charge for classroom and other instruction, and use of some facilities such as libraries.
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Glossary: U
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Undergraduate student
A degree-seeking student at a college or university who has not earned a first bachelor's degree.
Unsubsidized Stafford loans
Unsubsidized Stafford loans are available to students regardless of financial need. Borrowers are responsible for the interest that accrues during any period.
US Department of Education (ED)
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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Glossary: V
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Verification
A process used to make sure that the information students report on their FAFSA is accurate.
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Glossary: W
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W2 Form
The form that lists an employee's wages and taxes withheld. The IRS requires employers to issue a W2 for each employee before February 28.
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