Higher Education Financing Dictionary
a · b · c · d · e · f · g · h · i · j · k · l · m · n · o · p · q · r · s · t · u · v · w · x · y · z
529 College Savings Plan
529 plans are more than just savings accounts. These state-sponsored college savings plans were established by the federal government in Section 529 of the Internal Revenue Code to encourage families to save more for college. They have important benefits you can’t get from other savings plans, making them one of the best ways to save for college
Academic Year
period of time used to measure a quantity of study. Many schools’ academic years are nine months and include two semesters: fall and spring term. However, academic years vary by school.
Account
When used in reference to a 529 plan, account means your individual College Savings account to which the money you contribute will be allocated. You may open more than one Account for the same Student.
Account Application
When used in reference to a 529 plan, refers to the Direct Portfolio College Savings Plan, Stable Value Plus College Savings Plan or Scholars Choice College Saving Program Account Application.
Account Owner
When used in reference to a 529 plan, refers to the individual or entity signing the Account Application and opening an Account.
ACG
Academic Competitiveness Grant – A Federal Grant that is awarded based on a rigorous high school curriculum. To be eligible for this grant a student must meet the guidelines for Pell Grant eligibility, be enrolled full time and be a US citizen. $750 is awarded the first year and $1,300 is awarded the second year.
AGI
Adjusted Gross income – Total income, including wages, interest, capital gains, income from retirement accounts and alimony paid to you; adjusted downward by specific deductions, including contributions to deductible retirement accounts, alimony paid by you; but not including standard and itemized deductions.
Alternative Loan
These credit-based loans can help cover the difference between other financial aid and the cost of education. Interest rates are variable and set by lenders. Generally, you are limited to borrowing up to the cost of attendance minus any other financial aid, and most lenders offer several repayment options. Also known as Private Loans.
Auto-debit
Repayment of a loan by auto-debit occurs when the borrower sets up an agreement with the loan servicer to deduct monthly loan payments directly from the borrower’s bank account. Lenders may offer a slight interest rate reduction for this type of payment.
Award Letter
After your EFC (Expected Family contribution) is determined and your SAR (Student Aid Report) is sent to your colleges, they will assess your need and generate an award letter that will explain the financial aid package that they are able to offer you. Most award notifications are electronic. The school will publish instructions on how to access the award notification.
Beneficiary or Student
The person you identify on the Account Application as the beneficiary of the Account whose Qualified Higher Education Expenses will be paid from the Account.
Borrower Benefit
These incentives are offered by lenders to help lower the total cost that a borrower pays for their loan. Common borrower benefits include interest rate reductions and principal balance reductions.
» back to top
Capitalization/Capitalized
Interest capitalization occurs when loan interest has accrued and was not paid, and the accrued interest is added to the outstanding principal balance of the loan. From that point forward, interest is assessed on the new, higher principal balance. Some loans accrue interest while a borrower is in school or during periods of deferment or forbearance, and offer an option for the borrower to pay the interest during those periods. If the borrower does not pay the interest during those periods, the accrued interest is usually capitalized when the loan goes into repayment. Note: Some lenders capitalize interest quarterly or yearly instead of at repayment, Check with your lender.
COF
College Opportunity Fund – All Colorado residents who attend a public college or university are eligible for this stipend. But, you must register for it. For more info and to sign up, visit www.collegeincolorado.org.
CollegeInvest
CollegeInvest, a division of the Colorado Department of Higher Education of the State of Colorado. CollegeInvest is the administrator of the Direct Portfolio College Savings Plan, Smart Choice College Savings Plan, Stable Value Plus College Savings Plan, and Scholars Choice College Savings Program.
Consolidation Loan
Student and parent borrowers can consolidate (combine) multiple federal student/parent loans into one loan. Consolidation loans lock in an interest rate for any variable interest rate loans and can extend the repayment period, which can lower the monthly payments. The interest rate is a weighted average of the interest rates on all of the loans you consolidate, rounded up to the nearest one-eighth of one percent.
Co-Signer
A person who signs his or her name to a loan agreement, lease or credit application. If the primary debtor does not pay, the cosigner is fully responsible for the loan or debt. Many people use cosigners to qualify for a loan or credit card. Lenders may require a cosigner when considering a loan for a student or someone with a poor credit history.
Cost of Attendance
The total cost of college, including: tuition, fees, books and room and board based on State and Federal guidelines.
Credit-Based
Credit-based lending considers past credit history and income to determine eligibility for a loan. Repayment history, delinquencies, and length of time accounts have been established are considerations in determining a borrower's ability to obtain a loan. The credit history of both the student (if he or she has a credit history) and the co-applicant will be reviewed. PLUS, Grad PLUS and private loans are credit based.
Credit Score
Your credit score is a number based on the information in your credit file that shows how likely you may be to pay a loan back on time — the higher your score, the less risk you represent.
Default
Failure to repay a loan according to the terms agreed to when the promissory note was signed. Default on Federal Student and Parent loans occurs after 270 days of nonpayment. Defaulting on a student or parent loan can result in loss of federal aid eligibility, will affect your credit rating for up to 7 years and may incur other legal ramifications.
Deferment
A postponement of repayment under various, specific circumstances. Student borrowers may request specific periods of deferment based on economic hardship, an in-school status, or an inability to find employment. The Federal government pays the interest on all subsidized federal loans during a qualified deferment period.
Dependent Student
A student who does not meet the criteria for an “Independent Student” and must therefore include their parent’s information when filling out the FAFSA. Dependent students meet all of the following criteria: under the age of 24, not enrolled in a masters or doctoral study program, not married, does not have children who receive more than half of their support from the student, is not an orphan or ward of the court, is not a veteran of the US armed forces.
Direct Loan
The William D. Ford Federal Direct Student Loan Program is the U.S. Department of Education lending program. When using the Direct lending program, the federal government is lending you your student loan directly, without an intermediary lender.
Disbursement
Disbursment refers to the actual exchange of funds when all or a portion of your total loan amount is relinquished to your school. Some loans may be disbursed in full at one time (if student is enrolled only one term) but most will have multiple disbursements (i.e. at the start of each term).
» back to top
EFC
Expected Family Contribution – The number that’s used to determine your eligibility for Federal student financial aid and the amount of aid that you will receive. This number results from the financial information you provided on the FAFSA.
Eligible Educational Institutions
Institutions of higher education that are described in Section 481 of the Higher Education Act of 1965 (20 USC. 1988), as in effect on August 5, 1997, and are eligible to participate in a program under Title IV of such Act.
Eligible student
In order to be eligible for federal student financial aid the student: Must demonstrate financial need; must be a US Citizen or eligible non citizen with a valid social security number; must be working towards a degree or certificate in an eligible program; and must show by one of the following means, that you’re qualified to obtain a postsecondary education:
Enrollment Status
Your educational institution's own classification of your attendance, important to your eligibility for student loans. Federal Stafford, Grad PLUS and private loans require that you be enrolled at least half time.
FAFSA
Free Application for Federal Student Aid – The first step in getting aid for college, this free application will ask for demographic and financial information to determine the family EFC. Colleges use the results of the FAFSA to award aid.
FAFSA4caster
The FAFSA4caster, provided by the U.S. Department of Education, provides students and families with the opportunity to get an early estimate of their eligibility for federal student aid. Students and families may use this tool during the student's junior or senior year in high school, or earlier, to help in college planning. Completing the FAFSA4caster will also reduce the time it takes to complete FAFSA on the Web.
Financial Aid Package
The total amount of financial aid (federal, state and non federal) a student is offered by the school. The financial aid administrator combines various forms of aid into a “package” to help meet the student’s education costs. Using the available resources to give each student the best possible package of aid is one of the aid administrator’s major responsibilities. Because funds are often limited, an aid package may fall short of the amount a student needs to cover the full cost of attendance.
Fixed Interest Rate
A fixed interest rate loan will carry the same interest rate for the life of the loan. A fixed interest rate will not vary based on market conditions.
Forbearance
Similar to a deferment, a lender may grant a borrower a forbearance in certain circumstances, which would delay payment of their loan, lower the payment amount or allow interest-only payments. Such circumstances include, serving in a national service position or economic hardship. Parent PLUS loan borrowers may be granted forbearance while their children are enrolled in college at least half time.
Funds
Mutual funds in which the Portfolio assets may be invested from time to time and which are managed by the Manager’s affiliates or other entities not affiliated with the Manager. The Manager recommends to CollegeInvest for its approval the particular Funds, if any, in accordance with the Policy Statement.
» back to top
Grace Period
A six-month period between the time that a student separates from school (graduates, or drops down to less than half time) and the date that their repayment begins.
Graduate PLUS Loan
Federal loans for graduate students. Like Stafford loans, are made through the Direct Loan program. PLUS loans are unsubsidized and the federal government sets the interest rate. In the Direct Loan program the interest rate is set at 7.9%. To get a Graduate PLUS loan, you must first take your maximum Stafford eligibility and must also qualify for credit. Graduate students may borrow up to the cost of attendance, minus any other financial aid received.
Grant
Awarded based on need or merit, grants do not need to be repaid. Grants come from federal and state governments, colleges and even private companies or organizations.
Guarantee Agency
An agency that insure student loans against default. If the borrower defaults, dies or becomes totally and permanently disabled, the guarantee agency reimburses the lender for the balance remaining on the loan.
Guarantee Fee
A fee charged for federally backed student loans. Also normally deducted from the gross loan proceeds and paid on your behalf by your lender to the guarantor.
Independent Student
A student is recognized as independent if they meet one or more of the following criteria:Is over the age of 24, is enrolled in a masters or doctoral study program, is married, has children who receive more than half of their support from the student, is an orphan or ward of the court, is a veteran of the US armed forces. Independent students do not need to include their parents’ information on their FAFSA (Free Application for Federal Student Aid).
Interest
A percentage of the total loan amount that a lender charges a borrower for a loan.
» back to top
LIBOR
LIBOR means the London Interbank Offered Rate. LIBOR represents an average of the interest rates on dollar-denominated deposits, also known as Eurodollars, traded between banks in London. LIBOR is among the most common of benchmark interest rate indices used to make adjustments to variable rate loans.
Loan Forgiveness
Special programs that “forgive” a portion of your loan balance, or lower your principal balance. Most programs are created to serve a specific community, such as a specific occupation (teachers, nurses) or a specific geographic region. These programs are often supported by national or local government and are used as incentives to continue on to higher education.
Loan Limits
Limits set, usually by the federal government, to cap the amount of borrowing from a certain type of loan.
Loans
There are federal as well as private loans, and both must be paid back, with interest. Not all loans are the same, so read the fine print!
Manager
Refers to the financial institution selected by CollegeInvest to provide services in connection with each college savings plan. Currently, the managers for the Direct Portfolio College Savings Plan, Smart Choice College Savings Plan, Stable Value Plus College Savings Plan, and Scholars Choice College Savings Program are The Vanguard Group, FirstBank Holding Company, The MetLife Insurance Company, and ClearBridge Advisors, LLC, respectively.
National Student Loan Data System (NSLDS)
NSLDS is database for federal student financial aid where students can find out about the aid they have received. NSLDS receives data from schools, guaranty agencies and US Department of Education programs. By using your PIN you can get information on all outstanding loans, Pell grant amounts and other federal aid. NSLDS www.nslds.ed.gov
Non-Qualified Withdrawal
Means a withdrawal from an Account other than a Qualified Withdrawal.
» back to top
Origination
The steps that a lending institution completes up to the time a loan is placed on its books, including processing of applications and loan closing.
Origination Fee
The fee, charged by the lender, for services provided in connection with the origination and funding of the loan.
Parent PLUS Loan
Federal loans for parents of dependent undergraduate students enrolled at least half time. Like Stafford loans, they’re made through the Direct Loan program. Parent PLUS loans are unsubsidized and the federal government set the interest rate at 7.9%. To get a PLUS loan, you must qualify for credit. Parents may borrow up to the cost of attendance, minus any other financial aid received.
Pell Grant
These make up the majority of federal student grants and are awarded based on need and your eligibility is determined by the results of your FAFSA. The maximum award for the 2007-2008 school year is $4,050. The Pell Grant can be used toward the cost of your undergraduate degree and some specific teaching certificates.
Perkins Loan
These low-interest (5%) loans for students are awarded at participating schools based on financial need. Your school is your lender, and while the loan is made with federal funds, your school contributes a share and you repay your school. The amount you receive depends on when you apply, your financial need, and the funding level at the school. Undergraduates can borrow up to $5,500 each year of undergraduate study (the total you can borrow as an undergraduate is $27,500). For graduate studies, you can borrow up to $8,000 per year (the total you can borrow as a graduate is $60,000 which includes amounts borrowed as an undergraduate). Repayment begins nine months after graduation or nine months after your enrollment drops to less than half time.
PIN
A PIN or Personal Identification Number is used to sign your FAFSA electronically. Both the student and at least one parent must have PIN numbers in order to fill out the FAFSA on the web. Go to www.pin.ed.gov or apply for the PIN while filling out the FAFSA on the web.
Plan Disclosure Statement or PDS
The applicable Plan Disclosure Statement for each of CollegeInvest’s College Savings Plans, as amended and supplemented from time to time.
PLUS Loan
Federal loans for parents of dependent undergraduate students enrolled at least half time and for graduate students. Like Stafford loans, they’re made through the Direct Loan program. PLUS loans are unsubsidized and the federal government has set the interest rate at 7.9%. To get a PLUS loan, you must qualify for credit. Parents or graduate students may borrow up to the cost of attendance, minus any other financial aid received.
Policy Statement
Refers to the Investment Policy Statement established by CollegeInvest. The Policy Statement sets forth the policies, objectives and guidelines that govern the investment of Trust assets.
Portfolio
Means one of the investment portfolios of the Trust.
Prime Rate
The Prime Rate is defined by The Wall Street Journal as "The base rate on corporate loans posted by at least 75% of the nation's 30 largest banks." A good website to check loan rates is http://www.primerate.net/.
Principal Balance
The original loan balance that is borrowed, not including any interested that has been capitalized and is now part of that balance.
Principal Balance Reduction
A reduction, usually calculated as a percentage, in the original balance that was borrowed.
Private Loan
These credit-based loans can help cover the difference between other financial aid and the cost of education. Interest rates are variable and set by lenders. Generally, you are limited to borrowing up to the cost of attendance minus any other financial aid, and most lenders offer several repayment options. Also known as Alternative Loans.
Promissory Note
A legally binding document signed when you take out a student or parent loan. The promissory note (sometimes referred to as a “prom note”) lists the conditions under which you’re borrowing and the terms under which you agree to pay back the loan. It will include information on how interest is calculated and what deferment and cancellation provisions are available to the borrower.
» back to top
Qualified Higher Education Expenses
Means tuition, room and board (subject to certain limits), fees, books, supplies and equipment required for enrollment or attendance of the Student at an Eligible Educational Institution, all within the meaning of Code Section 529(e)(3).
Qualified Withdrawal
A withdrawal from an Account to pay the Qualified Higher Education Expenses of the Student.
Satisfactory Academic Progress
To be eligible to receive federal student financial aid the student must meet and maintain the school’s standards of satisfactory academic progress towards a degree or certificate offered by that institution. These standards vary by school, so check with your school for their standards.
Scholarship
Awarded for a variety of reasons, often academic or athletic talent or other personal attributes or affiliations, scholarships do not need to be repaid.
Selective Service Registration
To receive federal student financial aid if you are a male and between the age of 18 and 25 years of age and are not currently on active duty in the US Armed forces, you must register, or arrange to register with the Selective Service System.
Stafford Loan
Federal loans for students are made through the U.S. Department of Education program: the William D. Ford Federal Direct Student Loan Program (Direct Loans). Direct loans can be either subsidized or unsubsidized. The government sets the interest rate and limits the amount students can borrow each year. Independent students and students whose parents do not qualify for a PLUS loan may be eligible to borrow more through the unsubsidized Stafford loan program.
Student Aid Report (SAR)
Determined by the results of your FAFSA (Free Application for Federal Student Aid), your SAR contains your EFC (Expected Family Contribution).
Subsidized
A subsidized loan is based on financial need. You won’t be charged interest while you’re in school or during authorized periods of deferment. The federal government subsidizes the interest during these periods.
» back to top
Trust
The Direct Portfolio College Savings Trust, the Stable Value Plus College Savings Trust, or the Scholars Choice College Savings Trust. The Accounts are part of the Trust, which is administered by CollegeInvest and held in the name of CollegeInvest on behalf and for the benefit of Beneficiaries.
Unsubsidized
An unsubsidized loan is not based on need. You’ll be charged interest from the time the loan is disbursed until it’s paid in full. If you allow the interest to accrue while you’re in school (or during other periods of nonpayment), it will be capitalized—that is, the interest will be added to the principal amount of your loan, and additional interest will be based on that higher amount.
Variable Interest Rate
An interest rate that fluctuates with market conditions. Loans with variable interest rates can have different interest rates (either higher or lower) at different periods in time.
Work-Study
If your school participates in work-study, you may be awarded financial assistance in the form of part-time employment on campus or at designated off campus sites. Work-study funds are earned by you to use toward the cost of your education and do not need to be repaid.
» back to top |