Glossary of Financial Aid Terms
A
Account Access
This is our secure, online borrower portal. Sign in to your personal student loan account to make payments, update your contact information, and more.
Get more details about Account Access.
Accredited
The college or career school meets certain minimum academic standards as defined by an authorizing body recognized by the U.S. Department of Education. Schools must be accredited to be eligible to participate in federal student aid programs.
Accrued Interest
The interest that accumulates and is payable on the unpaid principal balance of a loan.
Adjusted Gross Income (AGI)
A figure based on tax return information is used to determine eligibility for an Economic Hardship Deferment and Income-Driven Repayment (IDR). It would include taxable income such as:
- Income from employment
- Unemployment income
- Dividend income
- Interest income
- Tips
- Alimony
It does not include untaxed income such as Supplemental Security Income, child support, or federal or state public assistance.
Allocation
Payment allocation is how payments are distributed across each loan when a borrower has multiple loans.
Learn more about how payments are allocated.
Amount Past Due
The first day after you miss a student loan payment, your loan becomes past due or delinquent. This is the total amount that remains unpaid.
Application
Payment application is the process of applying a payment to the interest, principal, and late fees (if applicable) on a loan, not necessarily in that order. We cannot make a borrower payment satisfy principal only if outstanding interest exists.
Learn more about how payments are applied.
Authorized Official
A school official, such as a member of the registrar's office, authorized to provide enrollment certification.
B
Borrower
This individual is responsible for repaying a loan. The borrower has agreed to the loan's terms and conditions by signing a promissory note or credit agreement.
Business Office
Also called the bursar's, student account, student aid, or comptroller's office, this office is usually responsible for billing and collecting the school's charges.
C
Capitalization
This is the addition of unpaid accrued interest to the principal balance of a loan. Capitalization increases the outstanding principal amount due on the loan. After capitalization, interest accrues based on the increased balance, which could add additional expense to the loan.
Consolidation
Through consolidation, you can combine numerous student loans into a single loan with a new first disbursement date, repayment schedule, and interest rate.
Consolidation Loan Group
Subsidized and unsubsidized portions of a federal consolidation loan may be assigned individual loan numbers. However, these subsidized and unsubsidized portions are serviced together and considered a single consolidation loan.
Co-Maker
Any person who signs the promissory note agrees to be jointly and separately responsible for repaying the loan. This means the borrower and co-maker have equal rights and responsibilities for loan repayment.
Co-Signer
The need for a co-signer varies by type of loan and lender. You may benefit from a creditworthy co-signer if you do not meet the minimum credit criteria for certain private education loans. Having a co-signer may increase your chances that the loan will be approved, and you may receive a better interest rate. Co-signers are equally liable, along with the primary borrower, for loan repayment.
Cost of Attendance (COA)
The COA is the total cost of college, usually expressed as the amount for 1 academic year. Federal law determines what costs comprise the COA, such as tuition and fees, on-campus room and board (or a reasonable allowance for off-campus students), and allowances for books, supplies, transportation, loan fees, and, if applicable, dependent care. The COA also includes costs related to a disability and other personal expenses, such as an allowance for the documented rental or purchase of a personal computer.
Current Principal Balance
This is the remaining principal amount due on the loan, including any capitalized interest. This does not include accrued interest and unpaid fees (if applicable).
Current Due
This is the total amount due for the billing cycle. The amount listed may include principal, accrued interest, and any unpaid fees (if applicable). This should not be considered a pay off amount.
D
Date Disbursed
The date that a lender or U.S. Department of Education releases the loan funds to a student or school.
Default
Default is the failure to repay a loan according to the terms agreed upon when signing the promissory note or credit agreement. Default occurs after a predetermined number of days of nonpayment, depending on the lender and loan type.
Deferment
This authorized temporary suspension of repayment is granted only under certain circumstances. For subsidized federal loans, the government pays the interest during a deferment. For most private education loans, the borrower is responsible for paying the interest that accrues during a deferment.
Delinquency
Delinquency is the failure to make scheduled monthly loan payments when they are due. Also, see Amount Past Due.
Direct Debit
When you sign up for Direct Debit, we automatically withdraw your student loan payments from your checking or savings account.
Learn how to get Direct Debit.
Direct Loan
A loan that is part of the William D. Ford Federal Direct Loan Program (FDLP). Eligible students and parents borrow Direct Loans directly from the U.S. Department of Education. The FDLP includes subsidized and unsubsidized Stafford Loans, PLUS Loans to parents of dependent students, PLUS Loans to graduate and professional students, and Consolidation Loans.
Disbursement
Disbursement is the transfer of loan funds from a lender or U.S. Department of Education to a school or to a student.
Discharged
The release of the obligation to repay a portion or all of your loans. For any portion of your loans that are discharged:
- You will no longer be required to repay the portion that was discharged
- You may be eligible for a refund of payments you have made
- We will report the discharge to all consumer reporting agencies
Discretionary Income
For the Income-Based Repayment plan, discretionary income is the difference between your adjusted gross income and 150% of the poverty guideline for your family size and state of residence.
E
Endorser
For federal student loans, an endorser is any person who is secondarily responsible for repaying a loan if the borrower does not repay it.
Expected Family Contribution (EFC)
The EFC will be referred to as the Student Aid Index (SAI) starting in the 2024-25 award year. Commonly referred to as the family's "ability to pay," the EFC is one component used to determine a student's need for federal student aid or school-based financial aid. The EFC is a dollar amount calculated using a formula established by the federal government. It is based on the information you provide on the Free Application for Federal Student Aid (FAFSA®).
F
Free Application for Federal Student Aid (FAFSA)
The FAFSA is the form students must complete to apply for federal financial aid, most state grants and scholarships, and many school-based student financial aid programs.
Federal Direct Loan Program (FDLP)
The FDLP is a federal student loan program where eligible students and parents borrow directly from the U.S. Department of Education at eligible schools. As of July 1, 2010, FDLP is the sole source of all federal educational loans for students and parents.
Federal Family Education Loan Program (FFELP)
This was a loan program where private lenders (banks, credit unions, savings, and loan associations) provided funds for FFELP Loans, and the federal government guaranteed them against default. FFELP included subsidized and unsubsidized Stafford Loans, PLUS Loans to parents of dependent students, PLUS Loans to graduate and professional students, and Consolidation Loans. The statutory authority for lenders to make new loans under FFELP ended as of July 1, 2010.
Financial Aid Office
This office is responsible for awarding aid and providing counseling.
Financial Aid Notice
A financial aid notice, also called an offer letter, is a way to notify applicants of the financial aid being offered, including the type (grants, scholarships, loans, and other programs) and amount of aid. It also provides specific program information and outlines student responsibilities and the conditions of the award.
Financial Need
Financial need is the difference between the school's cost of attendance and the student's expected family contribution (EFC) or student aid index (SAI). The use of the SAI begins with the 2024-25 award year.
Fixed Interest Rate
A fixed interest rate does not change during a defined period.
Forbearance
This authorized temporary reduction or suspension of repayment is granted only under certain circumstances. The borrower is responsible for paying the interest that accrues during forbearance for subsidized and unsubsidized federal loans. Unpaid interest may be capitalized (added to your loan principal balance) at the end of the forbearance period.
G
Grace Period
Grace is the period before the first payment on a loan is due. The grace period begins the day after the student graduates, leaves school, or drops below half-time status and ends the day before repayment begins. Not all loans include a grace period. For those that do, grace usually is 6 months, but it may be more or less than that, depending on the type of loan.
Graduate PLUS Loan
This is a federal student loan program where eligible, creditworthy graduate or professional students borrow directly from the U.S. Department of Education (ED) at eligible schools. As of July 1, 2010, graduate PLUS loans are disbursed only through ED.
Graduate Student
Graduate or professional students have already earned a bachelor’s degree and are enrolled in a program or course of study beyond the baccalaureate level in a specific field.
Grants
These financial aid awards are generally awarded based on financial need and typically do not have to be repaid.
Guarantor
A state or private nonprofit organization that has an agreement with the U.S. Department of Education to administer the Federal Family Education Loan Program (FFELP) loan guarantee program under the Higher Education Act. A guarantor insures FFELP loans by repaying the loan holder when a loan defaults, then collects the defaulted loan from the borrower.
I
Interest
Interest is how much you must pay to borrow money from a lender or the U.S. Department of Education. The interest that accrues on a loan becomes payable on the loan's unpaid principal balance.
Interest Notice
You receive an interest notice—instead of a bill—if your loan is in deferment, forbearance, or grace.
An interest notice differs from a bill because you're not required to make a payment; however, making payments on your interest notice can minimize the amount of interest that will be capitalized when your account enters repayment.
Interest Rate
This is the rate at which interest accrues on your student loan. Interest accrues daily from when a loan is first disbursed unless there is a period when the federal government subsidizes or pays the interest.
L
Last Payment Received
This is the date we received the last payment you made to us.
Late Fees Assessed
Total amount of late fees assessed as of the billing date.
Lender
A lender is the bank or other institution that provides the money for your student loan. In the case of federal Direct Loans, the lender is the U.S. Department of Education.
Loan Program
The loan type that determines eligibility for repayment plans, deferments, forbearances, etc.
Loan Sequence
Number used to reference a specific loan.
M
Master Promissory Note (MPN)
A legally binding contract that contains the loan's terms and conditions, including the borrower's responsibilities for repaying the loan.
Monthly Payment
The scheduled installment amount due each month.
O
Original Balance
Total amount for all disbursements when there are multiple disbursements for the same loan. This amount excludes interest and fees.
Outstanding Interest
The amount of interest that has not yet capitalized (been added to your principal balance).
P
Paid Ahead or Partially Paid Ahead
If you make a payment larger than the current monthly installment amount, and satisfy a full future installment, it may result in a "Paid Ahead" status on the loan. As a result, the total amount due on your next bill may reflect $0.
If the additional amount covers a portion of your next monthly installment, it will result in a "Partially Paid Ahead" status on the loan. As a result, the total amount due on your next bill may be the amount not already satisfied.
Learn more about how interest accrues and how payments are applied to a loan.
Paperless Billing
Paperless Billing (eBilling) is a convenient alternative to paper-based billing statements. Get a monthly email payment reminder with a link to your online account. Simply sign in and pay or view your bill.
Learn how to sign up for Paperless Billing.
Parent
For federal student loan eligibility, a “parent” means your legal (biological or adoptive) parent, stepparent, or person the state has determined to be your legal parent. The following people are not your parents unless they have adopted you:
- Grandparents
- Foster parents
- Legal guardians
- Siblings
- Other close relatives
Parent PLUS Loan
This is a federal student loan for eligible, creditworthy parents of dependent undergraduate students who wish to borrow directly from the U.S. Department of Education (ED) at eligible schools. As of July 1, 2010, parent PLUS loans are disbursed only through ED.
Past Due
Total amount unpaid since your last bill (also called Amount Past Due).
Perkins Loan
This is a former student loan program authorized by Title IV of the Higher Education Act that provided low-interest loans to financially needy students attending eligible schools.
Power of Attorney
Power of attorney is a legal document granting authority to a person or entity to act for another in private, legal, or financial matters.
Principal Balance
The principal balance on your billing statement includes the original amount you borrowed plus any applicable loan fees, less any principal payments. It does not include accrued interest but includes interest that was capitalized.
Private Education Loan
This is a non-federal student loan issued through a bank, credit union, school, or an organization affiliated with the school that helps pay for the cost of education not covered by other financial aid. A private education loan may have a fixed or variable interest rate, require a credit check or co-signer, and may not provide the same benefits as federal student loans.
Professional Student
See Graduate Student.
Promissory Note or Credit Agreement
This is a legally binding contract containing a loan's terms and conditions, including the borrower's responsibilities for repaying the loan.
Proportionally
An amount related to part of a whole number.
EXAMPLE: If you have 5 loans for $1,000 each, your total balance is $5,000. Then one loan is 20% of the total portion of your loan balance.
R
Repayment Disclosure
Your loan servicer will send you a Repayment Disclosure when it's time to start repaying your loan. The Repayment Disclosure will detail the amount of your monthly payment, the projected amount of interest, the principal balance, and more.
S
Scholarship
This type of financial award usually does not have to be repaid. It is given to students who demonstrate high achievement in areas such as academics, athletics, music, art, or other disciplines.
Servicer
The servicer is the party who communicates most with you and oversees all loan administration, including processing payments, managing deferments, etc. A servicer can be the original lender, a new lender who has purchased the loan from the original lender, or a 3rd party who administers the loan program on behalf of a lender.
Stafford Loan
This is a common type of federal student loan for students. As of July 1, 2010, all Stafford loans are now disbursed through the U.S. Department of Education.
Student Aid Index (SAI)
Beginning in the 2024-25 award year, the SAI is a number that determines each student’s eligibility for certain types of federal student aid based on a calculation established by the federal government. Certain states or schools may also award financial aid using the SAI. The SAI formulas use information that applicants provide on the Free Application for Federal Student Aid (FAFSA) form, and in most cases, federal tax information (FTI) that is retrieved directly from the Internal Revenue Service (IRS).
Subsidized Loan
The government typically pays the interest during in-school, grace, and authorized deferment periods for this type of federal student loan.
T
Title IV Loan
A category of federal education loans established under the Higher Education Act of 1965, as amended. Title IV loans include loans made under the Federal Family Education Loan Program (FFELP), Federal Direct Loan Program (FDLP), and the former Perkins loan program.
Total Due
The sum of the current due, late fees, and any prior amount past due.
U
Undergraduate Student
This type of postsecondary student is enrolled in a program to pursue a certificate, diploma, associate’s, or bachelor’s degree.
Unsubsidized Loan
For this type of federal student loan, the borrower is responsible for paying the interest that accrues from the date of disbursement until the date the borrower pays the loan in full.
