Chapter 2. Terminology and resources
Terminology for student loans can be very specialized, leaving only those who are familiar with the language the ability to understand the related resources fully. This chapter helps you define the terms of financial aid.
Free Application for Federal Student Aid (FAFSA)
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- A US citizen or permanent resident has to file FAFSA Links to an external site. to be considered for student aid funds
Student's Eligibility
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- Eligibility for certain awards is determined by the information on the application
- It is NOT up to the student to decide his/her eligibility
- Eligibility for certain awards is determined by the information on the application
Cost of Attendance (COA)
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- This is the total amount it will cost for you to go to school—usually stated as a yearly figure\
- COA includes:
- Tuition and fees
- Room and board (or a housing and food allowance)
- Allowances for books, supplies, transportation, loan fees, and dependent care
- Miscellaneous and personal expenses, including:
- Allowance for the rental or purchase of a personal computer
- Costs related to a disability
- Reasonable costs for eligible study-abroad programs
- COA includes:
- For students attending less than half-time, such as adult learners, the COA includes:
- Tuition and fees
- Allowance for books, supplies, transportation, and dependent care expenses
- Room and board for up to three semesters or the equivalent at the institution
- But no more than two of those semesters, or the equivalent, may be consecutive
- Contact the financial aid administrator at your school if you have any unusual expenses that might affect your COA.
- This is the total amount it will cost for you to go to school—usually stated as a yearly figure\
Student Aid Report (SAR)
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- Your Student Aid Report (SAR) is a paper or electronic document that gives you some basic information about your eligibility for federal student aid as well as listing your answers to the questions on your FAFSA
Expected Family Contribution (EFC)
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- This is the number that’s used to determine your eligibility for federal student financial aid
- This number results from the financial information you provide in your FAFSA, the application for federal student aid
- Your EFC is reported to you on your Student Aid Report (SAR)
- This is the number that’s used to determine your eligibility for federal student financial aid
Student's Dependency Status
- This refers to the student as dependent or independent
- It is not a decision the student can make; it is a decision made for the individuals, by the government, based on certain criteria
- A dependent student is a student who:
- Does not meet any of the criteria for an independent student
- An independent student is one of the following:
- At least 24 years old
- Married
- A graduate or professional student
- A veteran
- Member of the armed forces
- An orphan
- A ward of the court
- Someone with legal dependents other than a spouse
- An emancipated minor
- Someone who is homeless or at risk of becoming homeless
Loan Servicer
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- This is 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
Repayment Plan
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- This refers to the various structured methods to pay back student loans
- Most popular are the 'standard payment plan' and the 'income based payment plan'
- A student has to apply and qualify for certain plans to be considered
- This refers to the various structured methods to pay back student loans
Consolidation
- The process of combining one or more loans into a single new loan
- A student who borrows a loan each semester is considered to have borrowed 8 different loans in a 4 year period of attendance
Defaulting
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- Refers to a 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
- You may experience serious legal consequences if you default
Loan Forgiveness Program
- The cancellation of all or some portion of your remaining federal student loan balance
- If your loan is forgiven, you are no longer responsible for repaying that remaining portion of the loan
For additional resources on student financial aid, you can either visit your financial aid office on campus or the Federal Student Aid website Links to an external site. under the US Department of Education.
Practice
Now you know how to speak financial aid. Let's share this financial aid terminology with your friends or family members.
Congratulations! You can move on to Chapter 3. How to be a responsible borrower?
To review the full module on Student loans, click here.