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Glossary of Financial Aid Terms
The following terms are loosely defined for the reader's comprehension on this site and should not be taken as legal definitions.
Accrued Interest - The interest on a student loan that begins to accrue (accumulate) after a student completes school. This interest is charged on the principal (dollar) amount of the loan.
Award letter - A document provided by the school, informing the applicant of the estimated amount of assistance for which the student is eligible; this offer could include scholarships, grants, work-study, and/or loans. The student must indicate to the school which, if any, of the items available he/she wishes to accept. Any changes in financial situation, address changes, etc. after the student has filled out the FAFSA must be reported to the school. The award letter is valid only for the upcoming year unless otherwise noted.
Borrower - Person responsible for repaying a loan who has signed and agreed to the terms in the promissory note.
Capitalizing Interest - Adding accumulated interest to the loan principal rather than having the borrower make monthly interest payments. Capitalizing interest increases the principal amount of the loan and, therefore, the total cost of the loan.
Cohort - Borrowers who enter repayment in a given fiscal year.
Consolidation Loans - Consolidation occurs when a borrower with multiple loans requests that all of his or her loans be consolidated into one loan. Repayment begins 60 days after discharge of prior loans; certain deferments are authorized.
Cost of attendance - Allowances in the student budget for the following expenses that the student may incur: tuition, room and board, fees, books, travel, miscellaneous, and loan fees. The total amount of a student's financial aid cannot exceed the cost of attendance.
Default - Failure to repay a loan in accordance with the terms of the promissory note.
Deferment - The temporary postponement of loan payments.
Delinquency - Incidents of late or missed loan payments, as specified in the terms of the promissory note and the selected repayment plan.
Dependent Student - A student that is financially dependent upon a parent or legal guardian or a student who does not meet certain criteria from the U.S. Department of Education for being classified as independent (see Independent Student).
Disbursement - The process in which the school pays funds directly to the student's school account from either internal or external aid sources, which is different from a refund. Aid sources include scholarships, grants, loans and other aid.
Discharge - The release of a borrower from their obligations to repay their loans. Borrowers must meet certain requirements to be eligible for discharges.
Entrance counseling - An informative online session for first-time loan borrowers. It ensures that students know they are borrowing funds for their education and that they are expected to repay the loans.
Exit counseling - An informative online session for students who cease to maintain at least half-time enrollment whether by graduation or withdrawal. The session outlines the amount of money in loans the student owes and the available repayment options.
Expected Family Contribution (EFC) - The amount that a family is expected to contribute toward college costs according to federal financial aid formulas.
Extended Repayment Plan - 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.
Federal Direct Loan Program (FDLP) - The William D. Ford Direct Loan Program, also referred to as the Direct Loan Program, is a federal program that was authorized under the Student Loan Reform Act of 1993. FDLP provides low-interest loans to students. These loans are originated by participating institutions with capital provided directly through the U.S. Department of Education, which is the sole lender. Several loan programs exist under the umbrella of FDLP. These loans are the Stafford Subsidized loan program, the Stafford Unsubsidized loan program, the Parent Loan for Undergraduate Students (PLUS), and Consolidation loans.
Federal Family Education Loan (FFEL) Program - The Federal Family Education Loan (FFEL) Program is formerly know as Guaranteed Student Loans (GSL). Loan funds are provided primarily by commercial lenders, but principal and interest are guaranteed by the federal government through federally-funded guarantee agencies. The same loan programs that exist under FDLP also existed under FFEL: the Stafford Subsidized program, the Stafford Unsubsidized program, the Parent Loans for Undergraduate Students (PLUS), and Consolidation loans.
Federal Pell Grant - Federal money that does not have to be repaid; based on the EFC and cost of attendance. Pell Grant is only awarded to qualifying undergraduate students.
Federal Student Aid ID (FSA ID) - Students, parents, and borrowers are required to use an FSA ID, made up of a username and password, to access certain U.S. Department of Education websites. Your FSA ID is used to confirm your identity when accessing your financial aid information and electronically signing your federal student aid documents.
Federal Supplemental Educational Opportunity Grant (FSEOG) - A federal grant available to undergraduate students with exceptional financial need. Priority is given to students receiving the Federal Pell Grant with a zero EFC at Liberty University.
Federal Work Study Program - Provides part-time jobs for undergraduate and graduate students who have financial need as established by the FAFSA.