Financial
Aid

Glossary of Financial Aid Terms

 


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

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Academic year
The period during which school is in session. For example, an institution's academic year may consist of a fall and spring semester. At Loma Linda University, the academic year begins with the summer term and ends with the spring term.

Accrued interest
Accumulating interest to be paid in installments at a later time rather than being paid at the time the loan is made.

Adjusted gross income
Income after adjustments for social security taxes; federal, state, and local taxes; health-care costs; business income or loss; retirement and/or social security benefits; also referred to as net income.

Award year
The academic year for which financial aid is requested (or received).


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Bankruptcy
A legal action in which a person who is unable to meet the financial obligations is declared bankrupt by a decree of the court under the Federal Bankruptcy Law. Federal student loans, however, cannot normally be discharged through bankruptcy.


C -

Campus based programs
Programs such as Perkins Loans and federal work-study that use federal funds and are administered by the LLU Office of Financial Aid. These programs have limited funds and are awarded based on financial need.

Cancellation
The balance of some student loans may be canceled upon the death or permanent disability of the borrower, or canceled in full or in part, for service in a particular field, or geographic area.

Capitalization 
The process of adding unpaid interest to the principal balance of a loan, rather than pay the interest when it is due. If the interest is capitalized it will increase the amount of the monthly payment during the repayment period. This applies to the Unsubsidized Stafford loan and most private loans.

Citizen / eligible non-citizen
To be eligible to receive Title IV financial assistance, a student must be one of the following:

  • US citizen
  • US national
  • Permanent resident with an I-151 or I-551
  • Holder of an I-94 indicating:
    1. Refugee
    2. Asylum granted
    3. Indefinite parole and/or humanitarian parole
    4. Cuban-Haitian entrant, status pending
    5. Conditional entrant (valid only if issued before April 1, 1980)

College work-study (CWS) 
College work-study is simply a part-time job. This term is sometimes used to refer to the federal work-study program.

Compounded interest
Interest that is paid on both the principal balance of the loan and on any accrued (unpaid) interest. Capitalizing the interest on an Unsubsidized Stafford loan is a form of compounding.

Consolidation
A loan program that enables a borrower to combine various loans with various interest rates or various lenders into a single loan with a more manageable repayment schedule. The repayment period is also extended.

To qualify for consolidation, borrowers must be either in their grace period or currently repaying their student loans, and not more than ninety days delinquent on those payments. Students should keep in mind that interest rates might be higher and repayment periods are longer; therefore they are paying more interest.

Cosigner
A second creditworthy party who signs a promissory note with a borrower who has no collateral or satisfactory credit history. The second party guarantees that the loan will be repaid if the borrower fails to make payments.

Cost of attendance 
The total amount it will cost a student to attend school. The cost of attendance usually includes tuition, fees, books and supplies, and housing and living expenses. Cost of attendance is determined by each institution. Financial aid resources cannot exceed LLU's established cost of attendance.


D -

Default 
Failure to repay a loan according to the terms agreed to when the student signed a promissory note. Default may also result from failure to submit requests for deferment or cancellation on time. The consequences of default are severe. The holder of the loan will likely take action to recover the money. The holder of the loan may report the student to a credit agency, wages may be garnished, and the student may be liable for expenses incurred in collecting the loan. Defaults are recorded on the student's permanent credit record and may result in prosecution and/or loss of future borrowing possibilities. The US Department of Education may ask the Internal Revenue Service to withhold income tax refunds and apply it toward the amount owed and the student will no longer be eligible to receive future federal financial aid.

To avoid default, students should maintain contact with their lender. Students should keep a detailed file of loan information, and notify lenders as their situation changes. It is the student's responsibility to contact their lender if there is a change in their name, address, or enrollment status.

Deferment
The federal government recognizes that individual circumstances can change, especially after you have just completed college. A grace period can help to establish stability during this time. However, some borrowers may not be able to make their loan payments even after their grace periods have expired. Borrowers in this situation may request a deferment, which is a period of time when someone who meets approved circumstances is not required to repay a loan. These circumstances may include pursuing full-time study, active military duty, serving as a Peace Corps or ACTION volunteer, unemployment due to injury, disability, infant care, or other specific circumstances.

Dependent
A dependent student is required to include both student and parent income information on the Free application for Federal Student Aid (FAFSA).

Disbursement
The release of loan funds. In most cases loans are disbursed in equal quarterly installments (example $4,500 for award year of three quarters, $1,500 fall quarter, $1,500 winter quarter, and $1,500 spring quarter) .


E -

Expected Family Contribution (EFC) 
The EFC is calculated using a needs analysis formula that uses information reported on the FAFSA. The figure is the total amount the student and family are expected to contribute to the student's education for the academic year. This figure is used to determine the student's eligibility for financial aid. The EFC is printed on the front page, top right hand corner of the Institutional Student Information Record (ISIR). 

Electronic Funds Transfer (EFT) 
A method where funds that the student applied for are electronically transferred from the lender into the student's tuition account.

Eligible program
A program of study which leads to a degree, certificate, or other recognized educational credential at an institution of higher education that participates in US Department of Education student financial aid programs.

Estimated cost of attendance
The anticipated cost of attending LLU for one academic year: including, tuition, room and board, books and supplies, and travel and personal expenses.


F -

FAFSA (Free Application for Federal Student Aid)
The FAFSA is the federal application that a student must complete to receive federal, state, or institutional aid. This form has to be completed each academic year by the student, in order to be eligible to receive financial aid. 

FFELP
 (Federal Family Education Loan Program)
Federally funded educational loan programs, including Federal Subsidized and Unsubsidized Stafford Loans, and Federal Parent Loans for Undergraduate Students (PLUS).

Federal school code 
Loma Linda University's School code is 001218. This code must be included when completing a FAFSA.

Federal Work-Study (FWS)
Program providing undergraduate and graduate students with part-time employment during the school year. The federal government pays a portion of the student's salary, making it cheaper for departments and businesses to hire the student. For this reason, work-study students often find it easier to get a part-time job. Eligibility for FWS is based on need. Money earned from a FWS job is not counted as income for the subsequent year's need analysis process.

Financial aid package
Federal and non-federal aid such as grants, loans, college work study, and outside resources are combined in a "package" or a written notice of eligibility to help meet the student's need.

Financial need
The difference between the cost of attendance and the estimated family contribution. 

Fixed interest
Rate of interest set at the time the loan is negotiated that remains constant over the life of the loan.

Forbearance
An arrangement whereby the lender may permit the temporary cessation of payments (principal and/or interest), or allow an extension of time for making payments, or accepting smaller payments than were previously scheduled. During forbearance interest will accrue and it must be paid or it will be added to the loan principal, increasing the total amount of loan borrowed and the amount of interest a student will pay.


G -

Grace period
The period between the time a borrower leaves school, or if in school, drops below half-time and the time they are obligated to begin repaying their loans. This period allows the borrower to find a job and establish a budget before repayment begins. Federal Stafford Loans offer a six-month grace period; Federal Perkins Loans offer a 9-month grace period. Students only get one grace period.

Grant
A type of award that does not need to be repaid. The award is usually based on merit and/or need.

Gross
The term gross refers to an overall total, excluding deductions. Gross income, for example, is a student's total income without taxes or other items deducted from it. The gross amount of a student's Federal Stafford Loan or PLUS Loan, is the full amount they borrowed, including loan fees (1.072-4.288%).

Guarantee agency
An agency which acts as an intermediary for the federal government in providing guarantees to repay lenders if FFELP loan borrowers default.

Guarantee fee
The fee charged to guarantee student loans against loss through default, usually deducted from the disbursement of principal.


I -

Independent

An independent student uses only student income information on the Free Application for Federal Student Aid (FAFSA) and is not required to include parent information. The criteria for determining that a student is independent have been determined by the federal government, and examples follow:

  • The student is or will be 24 years old during the academic year
  • The student is enrolled in a master's or doctoral program
  • The student is married when he or she completes the FAFSA
  • The student has a child or other dependent who receives more than half of his or her support from the student
  • The student is an orphan or ward of the court
  • The student is a veteran of the US Armed Forces
  • As determined by a court in your state of legal residence, are you or were you in legal guardianship
  • As determined by a court in your state of legal residence, are you or were you an emancipated minor

If one or more of these criteria apply to a particular student, that student will be considered independent and will not be required to include parent information on the FAFSA. The student will also be able to borrow a larger Federal Stafford Loan.

Institutional Student Information Record (ISIR)
The name for the electronic version of Student Aid Reports (SAR) delivered to schools by the FAFSA processors.

Insurance fee
Fee charged to guarantee student loans against loss through death or permanent disability.

Interest
A fee charged to the borrower for the privilege of using the lender's money. Interest is calculated as a percentage of the principal balance of the loan. The rate may be fixed (constant throughout the life of the loan) or a variable rate (may change at specified times).


L -

Lender
A financial institution that provides the funds for students to borrow educational loans.

LIBOR
London Interbank Offered Rate is a reference rate provided by the BBA (British Banker's Association). It is based on the rate of interest at which banks borrow funds from other banks in the London interbank market.

Loan
Type of financial aid, which must be repaid, with interest.

Loan forgiveness
Under certain circumstances, the federal government will cancel or "forgive" all or part of an educational loan. To qualify, a student must perform volunteer work, perform military service, teach or practice medicine in selected communities, or meet other criteria. For more information, see FinAid's loan forgiveness information.


M -

Master promissory note
A promissory note is the legal agreement a student signs with a lender accepting student loan funds. The MPN states the terms and conditions of the loan, including repayment schedule, interest rate, deferment policy and cancellations. The MPN is a simplified method of applying for and receiving Federal Stafford Loan funds.

Merit-based financial aid
Financial aid that is merit-based depends on your academic, artistic, or athletic merit or some other criteria, and does not depend on the existence of financial need. Merit-based awards use your grades, test scores, hobbies, and special talents to determine your eligibility for scholarships.


N -

Need analysis
Method of determining expected student and family contribution toward the cost of education and subsequent calculation of a student's financial need. Need is determined by subtracting the expected family contribution, via the FAFSA, from LLU's established cost of attendance.

Need-based financial aid 
Financial aid that relies upon financial need as the criterion for eligibility.

Net
The term net is used to refer to the amount remaining after all charges or fees have been deducted from the total. For example, net income is the total income minus the amount of taxes paid. The net amount of a student's Federal Stafford Loan or PLUS Loan is the amount that they borrowed (i.e., the gross amount), with 1.072-4.288% loan processing fees deducted.

Non need-based financial aid 
Financial aid that does not require financial need as a criterion for eligibility. This type of aid is based on other criterion such as merit.

Notice of eligibility
An official document issued by the Office of Financial Aid notifying a student of the amount of money awarded to them. Notice of eligibility has to be signed and returned to the Office of Financial Aid before any loans are processed.


O -

Origination fee 
A fee charged by the lender for administration of some student loans. This fee is deducted from the loan prior to disbursement. Origination fees are charged as the loan is disbursed.


P -

Parent loans for undergraduate students (PLUS)
Federal loans available to parents of dependent undergraduate students to help finance the child's education. Parents may borrow up to the full cost of their children's education, less the amount of any other financial aid received. PLUS Loans may be used to pay the EFC. There is a minimal credit check required for the PLUS loan, so a good credit history is required. Students should check with your local bank to see if they participate in the PLUS loan program. If a parent's application for a PLUS loan is turned down, the student may be eligible to borrow additional money under the Unsubsidized Stafford Loan program.

Pell grant 
Pell grants are awarded solely on demonstrated financial need to every eligible undergraduate student who hasn't already earned a bachelor's or professional degree. The amount of your Pell grant will depend on your financial need, your college costs, and whether you're attending college full time or part time. The funds can be used for tuition, fees, and living expenses. For the 2014-2015 award year, Pell grants for full-time students range from $602 to $5,730.

Perkins loan 
Formerly the national direct student loan program, the Perkins loan allows students to borrow up to $4,000/year (five year max) for undergraduate school and $6,000/year for graduate school (six year max). The Perkins loan has one of the lowest interest rates and is awarded by the financial aid administrator to students with exceptional financial need. The interest on the Perkins loan is subsidized while the student is in school.

Primary Care Loan (PCL)
Formerly the health Professions Student Loan (HPSL), the Primary Care Loan is a low interest loan administered by the US Department of Health and Human Services (DHHS). It is available to full-time, financially needy students who pursue a degree in medicine.  To be eligible for this loan, the student must commit to working in the field of primary care.

Prime rate
Varying interest rate that banks charge to their customers.

Principal
The term principal refers to a sum of money borrowed, due, or used as a fund. The principal amount of a student's Stafford Loan is the total amount they have borrowed and must repay, with interest charges. If the student has chosen to capitalize the interest on an Unsubsidized Stafford Loan (rather than paying it quarterly as it accrues), the principal will include the amount they originally borrowed plus interest that has capitalized. When the student graduates and uses their grace period, they will then begin payments of principal and interest.

For students who are using a Subsidized Stafford Loan, the government will pay the interest on the principal amount while they are in school. Once they graduate and use their six-month grace period, they will then begin payments of principal and interest.

Private loans
Education loan programs established by private lenders to supplement the student and parent education loan programs available from federal and state governments.


R -

Renewal FAFSA
A renewal FAFSA will be generated for most students who completed a FAFSA. It is a simpler method of applying for federal financial aid. Much of the required information will be preprinted for students, all the student has to do is verify the preprinted information, make correction, fill in all blanks, and check LLU in section "H." If a student receives a renewal FAFSA, they may complete it instead of a FAFSA.

Repayment schedule
Discloses the borrower's total repayment obligations: monthly payment, interest rate, due dates, and length of time for repaying the loan.


S - 

Satisfactory Academic Progress 
The academic progress standards are established by LLU and are required by the federal government. Students must meet these standards each year in order to receive financial aid funds. 

Simple interest
Interest computed only on the original loan amount.

Student Aid Report (SAR)
The student aid report is sent to the student after submitting the FAFSA to the federal processor.

Subsidized Stafford Loan 

Undergraduate students who demonstrate financial need may obtain the loan on a subsidized basis, which means no interest accrues on the loan while the borrower is in school at least half time. Once a student graduates or leaves school and their six-month grace period has expired, they will begin making monthly payments on both the interest and the principal.


T -

Title IV
Department of Education's federal student aid programs.

Title VII
Department of Health and Human Service's health professions student aid programs.


U -

Unmet need 
In an ideal world, the Office of Financial Aid would be able to provide each student with the full difference between their ability to pay and the cost of education. Due to budget constraints, the Office of Financial Aid may provide the student with less than the student's need. This gap is known as the unmet need.

Unsubsidized Stafford Loan 
Students may obtain loans on an unsubsidized basis. The Unsubsidized Stafford loan accumulates interest from the day the money is disbursed. The interest may be capitalized as long as the student is attending school at least half-time. Payments of principal and interest begin once the six-month grace period expires.


V -

Variable interest
Rates of interest that change periodically during the life of the loan.

Verification
Verification is the random process by which the office of student aid reviews student's FAFSA information to make sure it is accurate. A student may be selected if the Social Security Number, veteran status, or citizenship status reported on the FAFSA does not match the federal government's data. Students may also be selected if they estimated their income or that of their parents or if it seems that there may be an error on the FAFSA. If a student is selected for verification, they will be asked to submit documentation (e.g., US Federal Tax Return Transcript) or to complete a form.