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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.
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Achievement tests
Tests required by some colleges to measure student achievement in specific
areas of study such as English, Math or Science.
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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.
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Advanced Placement Test
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.
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Age requirement
Credit cannot be granted to anyone under the age of 18 without a parent or guardian as a co-signer.
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Aid package
The combination of financial aid (loans, scholarships, grants, work study) determined by the financial aid office of a college or university.
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Amount due
Generally, the minimum monthly payment you must make, not the total amount you owe.
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Annual Percentage Rate | APR
The total annual cost of a loan, including all fees and interest.
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Available credit
The unused portion of the credit that falls within the consumer's applicable credit limit.
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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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Borrower
The individual who applies for a loan and receives the proceeds of the loan.
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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
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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.
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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.
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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.
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COA | Cost of Attendance
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.
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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. The form can
also be downloaded or completed online at www.commonapp.org.
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Consolidation
Combining several loans from multiple lenders into a single loan to reduce the
monthly payment amount and/or increase the repayment period.
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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.
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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.
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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.
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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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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.
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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.
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Delinquency
Failure to make monthly loan payments when due. Delinquency begins with the first
missed payment.
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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.
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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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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.
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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).
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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.
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EFC | Expected Family Contribution
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.
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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.
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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.
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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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FAA | Financial Aid Administrator
A college or university employee who is involved in the administration of
financial aid.
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FAFSA | Free Application for Federal Student Aid
The free form that must be completed by students and parents applying for
Federal student aid.
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FDLP | Federal Direct Loan Program
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.
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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.
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FFELP | Federal Family Education Loan Program
The Federal Family Education Loan Program. Stafford and PLUS loans are financed
by private lenders and guaranteed by the federal government.
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Finance charge
The percentage charge that is applied to the daily or monthly balances as described in the credit agreement.
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Financial aid
Financial assistance including scholarships, grants, work-study and loans for
education.
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Financial aid award letter
A letter detailing total amount of financial aid for which a student is
eligible.
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Financial need | eligibility
The difference between the Cost of Attendance (COA) at a college and the
Expected Family Contribution (EFC).
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Forbearance
Forbearance
allows temporary cessation of payments or smaller payments for a specific
length of time.
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GED | General Education Development Certificate
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.
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Gift aid
Financial aid, such as grants and scholarships, that doesn't need to be repaid.
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GPA | Grade Point Average
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).
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Grace period
Specified period of time between the date a student graduates or drops below
half-time status and the date loan repayment begins.
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Grants
Financial aid awards that don't have to be repaid. Grants are available through
the federal government, state agencies and colleges.
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Guarantee
An agreement between a Lender, a Guarantor, and the federal government that states
if a borrower defaults on a loan, the Guarantor will reimburse the lender for 98
percent of the principal amount of the loan. If the Guarantor fails to honor the
agreement, the federal government will honor it for them.
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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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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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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.
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Income
The amount of money received from employment, profit or other sources
(welfare, disability, child support, Social Security and pensions).
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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.
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Institutional loan
Loans specific to a college, university or other post-secondary educational
institution.
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Interest
An amount, calculated as a percent of the principal loan amount, that is
charged for borrowed money.
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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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Lender
A financial institution, agency or school that provides the money to make a
loan to a borrower.
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Life-of-Loan Servicing
Some lenders will promise the borrower that it will never change the servicer on the
loan even if the loan is sold, unless the servicer is failing in its duties. If the
loan is sold, the buyer must warrant to the original lender that it also will not change
the original servicer of the loan (i.e., the promise not to change servicers follows the
loan even if it is sold). This ensures consistent service to the borrower, whose primary
contact is with the servicer once the loan is disbursed.
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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.
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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.
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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.
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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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Merit-based
A means of determining eligibility for certain types of financial aid using
merit, such as talents or accomplishments, as the determining factor.
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Minimum monthly payment
The smallest payment you can make to maintain your account on current status.
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MPN | Master Promissory Note
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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Need
The difference between the Cost of Attendance and the Expected Family Contribution
(EFC) is the student's financial need.
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Need-based
A means of determining eligibility for certain types of financial aid using
financial need as the determining factor.
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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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Pell Grant Program
The largest federal grant program. Eligibility and award amounts are determined
by each college based on federal
guidelines.
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Perkins Loan Program
A federal loan available to undergraduate and graduate students. The loan is
a campus-based low interest loan funded by the federal government and administered
by the school. How much you can receive under the program depends on your financial
need and on the availability of funds at your school. The Perkin's loan interest
accrues at the lowest rate (5 percent) of all government-sponsored loan programs,
and is recommended if at all possible.
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PLUS Loan | Parent Loans for Undergraduate Students
Federally-insured loans for parents of
dependent students.
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Posting date
The date that a purchase, cash advance, fee, service charge, or payment is recorded on your charge or credit account.
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Private loans
These loans (non-government) are offered by banks or other financial
institutions and schools to parents and students.
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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. Also
known as the MPN (Master Promissory Note).
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PSAT | Preliminary Scholastic Assessment Test
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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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.
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Repayment
The time during which a borrower actively pays towards an education loan.
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SAP | Satisfactory academic progress
A policy determined by schools, in conjunction with federal guidelines and
regulations. Students must maintain academic progress to continue receiving
financial aid, including loans.
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SAR | Student Aid Report
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.
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SAT I | Scholastic Aptitude Test
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.
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SAT II Subject Test
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.
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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.
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Secondary market
Institutions that buy student loans from the institutions that originated or
owns them.
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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.
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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.
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SSN | Social Security Number
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.
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Stafford loans
Loans, both subsidized (need based) and unsubsidized (non-need based),
guaranteed by the federal government and available to students to fund education.
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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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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.
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Tuition
The amount of money colleges charge for classroom and other instruction, and
use of some facilities such as libraries.
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Undergraduate student
A degree-seeking student at a college or university who has not earned a first
bachelor's degree.
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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.
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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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Verification
A process used to make sure that the information students report on their FAFSA
is accurate.
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W2
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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