Glossary

Alternative (Private) Loans
Loans from places like banks, insurance companies, foundations, etc. and are usually used in addition to Federal awards.

Capitalized
When interest accrues on a loan, but isn't paid by the borrower, the accrued interest can be added in to the principal of the loan. This makes the loan balance go up, and you are then accruing interest on a larger balance (essentially, accruing interest on interest).

Credit Rating
A record of your integrity regarding matters of borrowing and purchasing. Used by lenders to help judge whether they can trust you to pay them back.

Consolidation Loan
Allows you to combine multiple student loans into a single payment, or improve the terms of a single student loan. This can generally be done only with Federal loans.

Default
Missing a certain number of payments on your loan, either by not making payments as scheduled, or not making arrangements to postpone the payments. When a borrower defaults, the loan costs them more in the long run and has a negative effect on their credit report.

Deferment
A period of time when you can put off making your student loan payments without penalty.

Disbursement
The act of paying out funds to a school for transfer to the borrower.

Department of Education
The government agency responsible for handing student financial aid programs.

Expected Family Contribution (EFC)
The amount your family must contribute out of their own pocket towards education.

Federal Direct Student Loan
A type of Stafford or PLUS loan whereby the funds you borrow come directly from the government.

Federal Family Education Loan (FFEL)
A type of Stafford or PLUS loan whereby the funds you borrow come from private lenders, e.g. banks, insurance companies, foundations, etc.

Federal Loans
Loans provided under the Federal Family Education Loan Program (FFELP). FFELP loans come from the government, and can be either subsidized (needs-based) or unsubsidized.

Financial Aid Packet

Your financial aid packet contains all the paperwork and policies pertaining to financial aid at your school, including what financial aid options are available to you, and the rules that apply toward all sorts of financial aid programs.

Financial Aid Package
The total amount of money from all sources--loans, scholarships, etc.--you can receive from a school's financial aid office.

Financial Gap
The difference between the money you're awarded in a financial aid package and the actual money you'll need to cover your expenses.

Forbearance
A temporary reprieve from making your agreed upon payments due to financial difficulty.

Free Application For Federal Student Aid (FAFSA)
A mandatory form that students and parents fill out when pursuing Federal student aid.

Grant
Financial aid that doesn't have to be repaid.

Graduate Student
A student working on a master's degree or higher.

Interest Rate
The cost of borrowing money, usually calculated as a percentage of the total amount borrowed.

Lender Code
A number referencing the institution of your choice when submitting student loan paperwork. The BrainScratch lender code is 833548.

Loan
Financial aid for either students or parents that has to be repaid with interest.

Master Promissory Note
The application and promissory note signed when receiving a Stafford Loan. This note is good for ten years (doesn't have to be completed again), as long as you stay with the same lender.

Need-Based
Using an applicant's level of financial need as a determinant for financial aid qualification.

Perkins Loan
A Federal loan for students with exceptional need, as determined by their FAFSA information.

PLUS Loan (Parent Loan for Undergraduate Students)
Allows parents who pass a credit check to borrow extra money for each separate dependent’s education.

Prepayment
Loan payments made before your grace period ends and your repayment period begins.

Promissory Note
A written promise to repay the amount of money you borrowed in a specified amount of time.

Repayment
The period of time when the borrower will be making principal and interest payments to the lender that holds the loan.

Scholarship
Exclusive student aid awards based on a variety of criteria. Scholarships are available for academic achievement, athletic ability, interests, career goals, and countless other qualifications. They don't have to be repaid.

Stafford Loan
The most popular form of self-help for students, Stafford loans come in both Direct and FFEL, subsidized and unsubsidized flavors. Whether it will be an FFEL or Direct loan depends on your college.

Student Aid Report (SAR)
A report mailed to people who submit a FAFSA application, confirming the information they provided.

Subsidized Stafford Loan
A need-based loan that does not incur interest until six months after the student has graduated, left school, or dropped below half-time status.

Undergraduate
A college-level student who has not yet earned a bachelor's degree.

Unsubsidized Stafford Loan
The type of Stafford loan that is not based on need. The borrower is charged interest from the date of disbursement until the debt is repaid in full.

Work-Study
Part-time school employment programs that help students cover college expenses.