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Glossary of Terms
A period of time schools use to measure a quantity of study. For example, a school’s academic year may consist of a fall and spring semester during which a full-time undergraduate student must complete 30 semester hours. The beginning and ending dates of academic years vary from school to school and even from educational program to educational program at the same school. The typical academic year at UMB begins with the summer semester (if student is not taking summer courses, then it beings with the fall semester) and ends with the spring semester.
The process in which interest accumulates on a loan. When "interest accrues on a loan," the amount of interest due by the borrower is being calculated and charged. Any interest not paid is capitalized.
An award letter from Financial Aid states the type and amount of financial aid UMB is willing to provide assuming the student is registered for the appropriate number of credits. This is available on your SURFS account.
The person responsible for repaying a loan who has signed and agreed to the terms in the promissory note.
The borrower is responsible for paying interest as it accrues on subsidized loans (only if in forbearance), unsubsidized loans, or PLUS Loans. If the interest is not paid during the period of forbearance or during a deferment or in-school period for an unsubsidized loan, the interest is capitalized (added to the principal balance). Interest that is capitalized and, therefore, added to the original amount of the loan subsequently accrues interest, adding an additional expense to the loan.
The process of combining multiple loans into a single new loan. Please note that consolidated loans are not subject to a grace period and will go into repayment within 60 days if a student drops below half-time status; otherwise, repayment begins 60 days after discharge of prior loans (certain deferments are authorized).
The total calculated amount it will cost you to attend your program for that academic year, this is also the maximum you can receive in all forms of financial aid (including federal and private Loans) combined. It is determined using rules established by law. The COA includes tuition and fees, living expenses, and allowances for books, supplies, transportation, loan fees, and, if applicable, dependent care. It also includes miscellaneous and personal expenses. Costs related to a disability also are covered.
Failure to repay a loan according to the terms agreed to when you signed a promissory note. For the FFEL and Direct Loan programs, default is more specific — it occurs if you fail to make a payment for 270 days if you repay monthly (or 330 days if your payments are due less frequently). The consequences of default are severe. Your school, the lender or agency that holds your loan, the state, and the federal government may all take action to recover the money, including notifying national credit bureaus of your default. This may affect your credit rating for at least seven years. For example, you might find it difficult to borrow money from a bank to buy a car or a house. In addition, the Internal Revenue Service can withhold your U.S. individual income tax refund and apply it to the amount you owe, or the agency holding your loan might ask your employer to deduct payments from your paycheck. Also, you may be liable for loan collection expenses. If you return to school, you’re not entitled to receive additional federal student financial aid. Legal action also might be taken against you. In many cases, default can be avoided by submitting a request for a deferment, forbearance, discharge, or cancellation and by providing the required documentation.
The temporary postponement of loan payments. As with forbearance, deferred students do not have to make principal payments on their loans; however, interest continues to accrue on all unsubsidized loans. For unsubsidized loans, interest is capitalized if payments are not made. However, unlike forbearance, interest does not accrue on subsidized loans during periods of deferment.
A student who does not meet any of the criteria for an independent student. An independent student must be one of the following: at least 24 years old, married (before submission of their original FAFSA transaction), a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents (for whom you provide more than 50 percent of their support) other than a spouse.
Incidents of late or missed loan payments, as specified in the terms of the promissory note and the selected repayment plan.
William D. Ford Federal Direct Loan (Direct Loan) Program. Loans made through this program are referred to as Direct Loans. Eligible students and parents borrow directly from the U.S. Department of Education at participating schools. Direct Loans include subsidized and unsubsidized Direct Stafford Loans (also known as Direct Subsidized Loans and Direct Unsubsidized Loans), Direct PLUS Loans, and Direct Consolidation Loans. You repay these loans directly to the U.S. Department of Education.
Process in which lenders send approved loan funds to schools. During consolidation, this term refers to sending payoffs to the loan holders of the underlying loans being consolidated.
The release of borrowers from their obligations to repay their loans. This only happens in very rare occasions such as death of the student, permanent disability, etc.
Students who are graduating, leaving the school, or dropping below half-time status are required to complete exit counseling. All students must complete exit counseling online at the NSLDS website. Additionally, students are required to attend one of the exit counseling sessions offered at the end of the fall and spring semesters, and summer graduates should attend the sessions offered at the end of the preceding spring semester.
Your Expected Family Contribution (EFC) is the number used to determine your eligibility for federal student financial aid. This number results from the financial information you provided in your FAFSA application based on a formula set by Congress. Your EFC is reported to you on your Student Aid Report (SAR).
A plan that requires the borrower to pay at least $50 a month and allows up to 30 years to repay, depending on the amount borrowed.
As a result of the SAFRA Act, which was part of the Health Care and Education Reconciliation Act, beginning July 1, 2010, Stafford, PLUS, and Consolidation Loans are no longer made by private lenders under the Federal Family Education Loan (FFEL) Program.
The total amount of financial aid (federal and nonfederal) a student is offered by the school. Because funds are often limited, an aid package might fall short of the amount a student needs to cover the full cost of attendance. Also, the amount of federal student aid in a package is affected by other sources of aid received (scholarships, state aid, etc.).
Federal student loans (Stafford, Plus, Perkins, Health Professions, and Nursing Loans) carry a fixed interest rate, which means that the primary interest rate will not change for the life of the loan. Please note that students can earn interest rate rebates by meeting certain criteria, such as signing up for auto-pay on the loans; this also can be taken away should the student no longer meet the criteria. However, the interest rate can never exceed the fixed rate.
Students can request forbearance from their lenders when they do not qualify for deferment, resulting in a temporary period of loan non-repayment. During the time of forbearance, students do not have to make principal payments on their loans; however, the lender can require interest payments. Also, interest continues to accrue on all loans, including subsidized loans.
The Free Application for Federal Student Aid (FAFSA) is the document that the Department of Education and UMB use to determine your eligibility for federal student aid as well as University aid. All students seeking financial aid are required to complete the form. Each year, the new FAFSA becomes available on Jan 1 and covers the academic year of that coming summer and fall and the following spring semester. Students should file the FAFSA as close to Jan. 1 as possible (estimates can be used if they are later updated with the correct income information) to improve their chances of receiving limited funding awards (Health Professions and Nursing Loans, University Grants, etc.). The priority deadline for many awards is March 1 (Federal Work-Study, State Awards, etc.), although students who miss the deadline should still apply to receive Stafford Loans, Plus Loans, and Pell Grants.
Full-time students are undergraduate students taking 12 or more credits and graduate students taking 9 or more credits.
After borrowers graduate, leave school, or drop below half-time enrollment, loans that were made for that period of study have several months before payments are due. This is called the grace period. During the grace period, no interest accrues on subsidized loans. Interest accrues on unsubsidized loans during grace periods, and this interest is capitalized when borrowers' loans enter repayment.
A plan that allows monthly payment amounts to start out at one level and then increase every two years during the prepayment period. Borrowers have up to 30 years to repay, depending on the amount borrowed. The minimum payment must cover interest that accumulates monthly and must be at least half of the payment that would be required under the Standard Repayment Plan. The maximum amount may not be more than 1.5 times the payment that would be required under the Standard Repayment Plan.
A need-based award that does not have to be repaid assuming the student meets all qualifications. University grants are awarded by the Financial Aid Office to needy students (based on the results of the FAFSA) in the order the FAFSA is received until funds are exhausted. Therefore, students are highly encouraged to complete the FAFSA as close to Jan. 1 as possible.
The guaranty agency is an organization that administers the Federal Family Education Loan (FFEL) Program in your state. This agency is the best source of information on FFEL Loans. For the name, address, and telephone number of the agency serving your state, you can check the NSLDS database or contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).
Student must have at least 6 credits per semester (including summer) to be considered for most forms of federal student aid. Half-time enrollment is not a requirement to receive aid from the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, and Federal Perkins Loan programs.
A federal student loan repayment option that began July 1, 2009, that caps monthly payments based on income and family size and forgives remaining debt and interest after 25 years. The current formula requires your monthly payment to be no more than 15 percent of your income that is above 150 percent of the poverty line.
Available only for Direct Loans, this plan allows the monthly payment amount to vary with the borrower's income, with any amounts remaining after 25 years being forgiven, or not requiring repayment. The current formula is the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or 20 percent of your income above the poverty line, whichever is lower. If your payment is not enough to cover interest, it will accumulate on the account but interest will not be capitalized past 10 percent of the original loan amount at repayment.
Available only for Federal Family Education loans, this plan allows the monthly payment amount to vary with the borrower's income, except that all principal and interest must be fully repaid within 10 years. The exact formula varies by lender, but the payment must cover at least the interest that is accumulating.
An independent student meets one or more of the following requirements: 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, or someone with legal dependents (for whom you provide more than 50 percent of their support) other than a spouse.
A loan expense charged by the lender and paid by the borrower for the use of borrowed money. The expense is calculated as a percentage of the unpaid principal amount (loan amount) borrowed.
A promissory note is a binding legal document a borrower signs before they can receive a student loan. It lists the conditions under which you’re borrowing and the terms under which you agree to pay back the loan. It will include information on how interest is calculated and what deferment and cancellation provisions are available to the borrower. It’s very 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.
NSLDS is the U.S. Department of Education’s database for federal student financial aid where you can find out about the aid you’ve received. If you’ve only just applied for aid, you won’t find any information on NSLDS yet. NSLDS receives data from schools, guaranty agencies, and Department of Education programs. By using your PIN, you can find information on federal loan and Pell Grant amounts, outstanding balances, the status of your loans, and disbursements made.
You must be one of the following to receive federal student aid:
- U.S. citizen
- U.S. national (includes natives of American Samoa or Swain’s Island)
- U.S. permanent resident who has an I-151, I-551, or I-551C (Permanent Resident Card)
If you’re not in one of these categories, you must have an Arrival-Departure Record (I-94) from U.S. Citizenship and Immigration Services (USCIS) showing one of the following designations:
- 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.)
The following documents are not considered in determining your eligibility for federal student aid:
- If you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), you aren’t eligible for federal student aid.
- If you’re in the United States on certain visas, including an F1 or F2 student visa, or a J1 or J2 exchange visitor visa, you’re not eligible for federal student aid.
- Also, persons with G series visas (pertaining to international organizations) are not eligible.
Citizens of the Federated States of Micronesia, Republic of the Marshall Islands, and Republic of Palau are eligible only for Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, and Federal Work-Study. These applicants should check with their schools’ financial aid offices for more information.
A fee charged by the lender that is taken off the top of the loan before it is disbursed.
Loans taken out by parents of dependent undergraduate students for the purpose of helping to pay for their children’s undergraduate education. Parents are responsible for the principal and accumulated interest charges. The loan value may not exceed the full cost of the student’s education, minus any other financial aid that the student receives.
Part-time students are undergraduate students taking fewer than 12 credits and graduate students taking fewer than 9 credits.
Awarded to undergraduate students who do not already have a bachelor’s degree and who meet specified criteria based on financial need as determined by the FAFSA.
The amount of money borrowed by the student. Interest is charged on this amount.
These are non-federal loans made by private institutions such as banks or credit unions to help students cover the cost of tuition, fees, and living expenses. These loans are subject to Cost of Attendance limitations and must be certified by the school. Students are strongly encouraged to fully exhaust all federal loan options before applying for private loans since their repayment terms are not as generous as federal ooans and the variable interest rate will usually make the loan more costly over the life of the loan.
The Public Service Loan Forgiveness Program is available to Direct Loan Borrowers (or loans consolidated into the Direct Loans program). The program allows graduates working for federal, state, local, or tribal governments as well as many nonprofit organizations to have any remaining balance left on their loans forgiven after making 120 on-time payments while also working for an eligible public service organization. Graduates can have their loans in any of the repayment plans eligible under Direct Loans to be eligible for this program.
The period in which a borrower is responsible for repaying his or her loan. In the case of Stafford Loans (and with deferred Plus Loans), this period begins on the day after the last day of the grace period. The standard repayment period is 10 years, not including any authorized deferment or forbearance periods.
When 12 consecutive payments have been made on a formerly defaulted loan, it can become a rehabilitation loan. Once a loan becomes rehabilitated, it becomes a new loan: A borrower again becomes eligible for participation in federal financial aid programs.
Scholarships, like grants, are awards that do not have to be repaid assuming the student meets all qualifications. These awards are usually merit-based or a combination of merit and need or some other factor. The criteria for scholarships vary greatly from scholarships to scholarship, usually determined by the wishes of the donor. At UMB, scholarships are awarded by the individual schools and not Financial Aid. Additionally, student can find many private scholarships to help lower their educational costs administered by entities outside of UMB.
To be eligible for federal student aid, you must register with the Selective Service if:
- You are a male born on or after Jan. 1, 1960.
- You are at least 18 years old.
- You are not currently on active duty in the U.S. armed forces.
Citizens of the Federated States of Micronesia, Republic of the Marshall Islands, or Republic of Palau are exempt from registering.
A repayment schedule that allows up to 10 years to repay student loans, with a minimum monthly payment of $50 a month. This is the default repayment plan for unconsolidated federal student loans, although borrowers can choose other plans.
Your Student Aid Report (SAR) summarizes the information you submit on your Free Application for Federal Student Aid (FAFSA) and provides you with your Expected Family Contribution (EFC).
After you apply for federal student financial aid, you'll get your FAFSA results in an email report by the next business day after your FAFSA has been processed or by mail within seven to 10 days. This report is called a Student Aid Report. Your SAR details all the information you provided on your FAFSA. If there are no corrections or additional information you must provide, the SAR will contain your Expected Family Contribution (EFC), which is the number that’s used to determine your eligibility for federal student aid.
A loan for which a borrower is not responsible for the interest while in an in-school, grace, or deferment status. Subsidized loans include Direct Subsidized, Direct Subsidized Consolidation Loans, Federal Subsidized Stafford Loans, and Federal Subsidized Consolidation Loans.
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. Unsubsidized loans include: Direct Unsubsidized Loans, Direct PLUS Loans, Direct Unsubsidized Consolidation Loans, and Federal Unsubsidized Stafford Loans, Federal PLUS Loans, and Federal Unsubsidized Consolidation Loans.
Most private or alternative loans have a variable interest rate. This means that the rate will fluctuate, both up and down, based on many factors. These factors also vary by lender and by the different loans offered by those lenders, but most rates are based on the LIBOR and PRIME rates. In most cases, the rate will be LIBOR/Prime plus a certain rate (which will vary based on your credit score). Also, it is important to note which LIBOR/Prime rate is being used (daily rate, monthly average, three-month average, etc.) and how often the rate is adjusted (daily, weekly, month, quarterly, etc.). Finally, it is very important to note how high the interest rate can go; many private and alternative loans can exceed 20 percent.
Verification is a process in which UMB confirms the data reported on your FAFSA. Students are selected for verification by the Department of Education for many reasons; some students are selected at random while others are selected due to answers to certain questions. UMB also is required to verify any information that appears to conflict with other information we have available, even if the student is not selected for verification. UMB has the authority to contact you for documentation that supports income and other information that you reported; at minimum, this will include a signed copy of your taxes and the verification worksheet. If you are a dependent, we also will need a signed copy of your parents’ taxes.