Glossary of financial aid terms


- A -

Academic year
The period during which school is in session. For example, an institution's academic year may consist of a fall, winter and spring term. 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
Your or your family's wages, salaries, interest, dividends, etc., minus certain deductions from income as reported on a federal income tax return. Commonly referred to as AGI.

Award Amount
Amount of aid awarded to a student based on the student’s current grant and loan eligibility, enrollment, Expected Family Contribution (EFC), and cost of attendance.

Award Letter
An offer that states the type and amount of financial aid that the Office of Financial Aid is willing to provide if you accept admission and register to take classes at LLU.

Award year
The academic year for which financial aid is used to fund a student’s education.

- B -

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.

A financial plan that helps you track your money, make informed spending decisions, and plan for your financial goals.

- C -

Campus based programs
The Campus-Based Programs include the Federal Work-Study Program (FWS) and the Federal Supplemental Educational Grant Program (FSEOG). These federally funded programs are administered by the LLU Office of Financial Aid and are awarded based on financial need.

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.

The process of adding accrued interest to the principal balance of a loan. 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.

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.

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.

A second credit worthy 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 cost of attendance usually includes tuition, fees, books and supplies, and living expenses. Cost of attendance is determined by each institution. Financial aid resources cannot exceed LLU's established cost of attendance.

- D -

Failure to repay a loan according to the terms agreed to in the promissory note. For most federal student loans, you will default if you have not made a payment in more than 270 days. If you default on a federal student loan, you lose eligibility to receive federal student aid and you may experience serious legal consequences.

A temporary postponement of payment on a loan that is allowed under certain conditions and during which interest generally does not accrue on Direct Subsidized Loans, the subsidized portion of Direct Consolidation Loans, Subsidized Federal Stafford Loans, the subsidized portion of FFEL Consolidation Loans, and Federal Perkins Loans. All other federal student loans that are deferred will continue to accrue interest. Any unpaid interest that accrued during the deferment period may be added to the principal balance (capitalized) of the loan(s).

A dependent student does not meet any of the criteria for an independent student and is required to include parent income information on the Free application for Federal Student Aid (FAFSA).

The release of loan funds. In most cases loans are disbursed in equal installments over an award year (example: $4,500 for award year of three enrollment periods, Period 1 - $1,500, Period 2 - $1,500 and Period 3 - $1,500).

"Loan discharge" generally refers to the cancellation of a borrower's obligation to repay some or all of the remaining amount owed on a loan due to circumstances such as school closure, a school's false certification of a borrower's eligibility to receive a loan, a school's failure to pay a required loan refund, or the borrower's death, total and permanent disability, or bankruptcy. In some cases, a discharge may also entitle a borrower to receive a refund of payments previously made on a loan. Depending on the type of discharge, the amount of a loan that is discharged may be treated as taxable income.

- E -

Expected Family Contribution (EFC)
The EFC is calculated using a needs analysis formula that uses information reported on the FAFSA. This figure is the total amount the student and family could reasonably contribute to the student's education for the academic year and is used to determine the student's eligibility for financial aid.

Eligible non-citizen
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 the financial aid office for more information.

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.

Entrance Counseling
A mandatory information session that takes place before you receive your first federal student loan that explains your responsibilities and rights as a student borrower.

Exit Counseling
A mandatory information session that takes place before you graduate or drop below half-time enrollment that explains your loan repayment responsibilities and when repayment begins.

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.

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 students with part-time employment during the school year. The federal government pays a portion of the student's salary, making it cost-effective 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 (EFC).

Fixed interest
Rate of interest that remains constant over the life of the loan.

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.

The FSA ID is a username and password combination that serves as a student’s or parent’s identifier to allow access to personal information in various U.S. Department of Education systems and acts as a digital signature on some online forms.

- 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. Students only get one grace period.

Financial aid, often based on financial need, that does not need to be repaid (unless, for example, you withdraw from school and owe a refund).

- I -

Your answers to questions on the FAFSA form determine whether you are considered a dependent or independent student. If you’re an independent student, you will report your own information (and, if you’re married, your spouse’s).

Note: Law school and health profession students may be required to provide parent information regardless of their dependency status. The parent information is used in determining eligibility for institutional aid and programs such as Health Professions Student Loans from the U.S. Department of Health and Human Services.

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

A loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender. The expense is calculated as a percentage of the unpaid principal amount 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 -

The organization that made the loan initially; the lender could be the 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.

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.

Loan Rehabilitation
The process of bringing a loan out of default and removing the default notation from a borrower's credit report. To rehabilitate a Direct Loan or a FFEL Program loan, the borrower must make nine voluntary, reasonable, and affordable monthly payments within 20 days of the due date over a consecutive 10-month period. To rehabilitate a Perkins Loan, a borrower must make a full monthly payment (of an amount determined by the school) within 20 days of the due date, for nine consecutive months.

Loan Servicer
A company that collects payments, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a federal student loan on behalf of a lender. If you're unsure of who your federal student loan servicer is, you can look it up in "My Federal Student Aid."

- M -

Master promissory note (MPN)
A binding legal document that you must sign when you get a federal student loan. The MPN can be used to make one or more loans for one or more academic years (up to 10 years). 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 your MPN 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.

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.

My Federal Student Aid
This feature, available at, provides access to information on federal grants and loans as stored in the National Student Loan Data System (NSLDS®) database. "My Federal Student Aid" contains information on how much aid you've received, your enrollment status, and your loan servicer(s). You can access "My Federal Student Aid" using your FSA ID.

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

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.

The disbursement of more federal student aid funds to a student than he or she is eligible to receive. A student’s overpayment alert in "My Federal Student Aid" will let him or her know whom to contact to resolve the aid overpayment.

- P -

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. The amount borrowed may be up to the full cost of attendance, less the amount of any other financial aid received. PLUS Loans may be applied to replace the EFC. There is a minimal credit check required for the PLUS loan, so a good credit history is required. If a PLUS loan is denied, the student should contact the Office of Financial Aid to discuss their options.

Pell grant
Pell grants are awarded based on demonstrated financial need to every eligible undergraduate student who hasn't already earned a bachelor's or professional degree. The amount of the Pell grant will depend on financial need, college costs, and enrollment status. The funds can be used for tuition, fees, and living expenses.

Primary Care Loan (PCL)
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.

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.

Private loans
A nonfederal loan made by a lender such as a bank, credit union, state agency, or school. Private loans should only be considered after maximizing any financial aid for which you may qualify.

- R -

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 (SAP)
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.

Student Aid Report (SAR)
A summary of the information you submitted on your Free Application for Federal Student Aid (FAFSA) form. You receive this report (often called the SAR) via email a few days after your FAFSA form has been processed or by mail within 7-10 days if you did not provide an email address. 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 Stafford Loan
Undergraduate students who demonstrate financial need may be eligible for a subsidized loan, 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.

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Title IV
Title IV of the Higher Education Act of 1965 (HEA) covers the administration of the United States federal student financial aid programs.

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

- U -

Unmet need
The difference between the cost of attendance and the EFC is the unmet need. The Office of Financial Aid will attempt to cover the unmet need with a variety of aid sources, such as grants and scholarships, work study and federal student loans.

Unsubsidized Stafford Loan
Direct Unsubsidized Loans are available to undergraduate and graduate students; there is no requirement to demonstrate financial need. 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.

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

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