Academic year – If your college is on a semester calendar, the academic year is divided into two terms (usually fall and spring). If your college is on a tri-mester calendar, the academic year is divided into three terms. The academic year is divided into four periods of about 12 weeks each if your college is on a quarter system. You will be offered financial aid based on your college’s academic year and your enrollment status.
Assets – Assets include cash on hand, in checking and savings accounts, trusts, stocks, bonds and other securities, real estate holdings (other than the family home), income-producing property, business equipment and business inventory. You will need to report your own and/or your parents’ assets on the Free Application for Federal Student Aid (FAFSA). Assets are considered in determining your Expected Family Contribution (EFC).
Award Letter or Notice – See Financial Aid Award Letter.
Borrower – The person who signs the promissory note to take out a loan. The borrower is the person responsible for repaying that loan.
Capitalization – When you borrow money through an unsubsidized loan and do not make interest payments while you are in school or during your grace period, the interest that accumulates during those periods is added to the principal balance of your loan. This is called capitalization. Capitalization increases the amount of your monthly payments and the total amount you will have to repay on that loan.
COA – See Cost of Attendance
Colorado Commission on Higher Education (CCHE) – The State of Colorado commission that administers state financial aid programs and establishes other criteria for public institutions of higher education.
Colorado Department of Higher Education (CDHE) – The mission of the Department of Higher Education is to improve the quality of, ensure the affordability of, and promote access to, post-secondary education for the people of Colorado. In pursuing its mission, the Department of Higher Education will act as an advocate for the students and institutions of post-secondary education and will coordinate and, as needed, regulate the activities of the state's post-secondary education institutions.
Collateral – An item of value (such as a house or a car) that is pledged as security for a loan. The lender can repossess the collateral if the loan is not repaid.
College Assist™ – The designated guarantor of student loans for the State of Colorado, College Assist™ administers the Federal Family Education Loan Program (FFELP). This program provides federal Stafford, PLUS and Consolidation loans to students and parents through private lenders. College Assist™ is a division of the Colorado Department of Higher Education.
Consolidation – The action of combining several loans or liabilities into one loan. Put another way, debt consolidation is the process of taking out a new loan to pay off a number of other debts.
Contract or binding contract – A contract is a legally binding exchange of promises or agreement between parties that the legal system will enforce.
Cosigner – An individual or entity that signs a legal document on an equal basis with the signer. On a promissory note, all cosigners are individually and jointly liable for repayment of the full debt.
Cost of attendance (COA) – COA is an estimate of the amount it will cost you to attend college for one academic year. COA varies by college and/or by program within a college. Your COA may be different than a friend’s COA even if you are both going to the same college. COA includes: Tuition & Fees + Room & Board + Books & Supplies + Miscellaneous Expenses = Cost of Attendance (COA)
In addition, child care and costs related to a disability may be included when appropriate.
Credit bureau – A credit bureau is an organization that maintains information on your credit history. If you default on a student loan it will be reported to all credit bureaus and that default will appear on your credit report. Credit bureaus report your credit history to companies and organizations that wish to know about your financial history when making a decision whether to lend you money. For example, if you wish to obtain a loan to purchase an expensive item like a car or home or when you apply for a credit card, lenders will request your credit report. A poor credit rating will negatively affect your ability to borrow money.
Default – If you fail to repay the money you borrowed as promised when you signed a promissory note or Master Promissory Note (MPN), your loans will go into default. Student loan default has serious consequences.
- Default will be reported to credit bureaus which will damage your credit rating
- You will lose any options to defer future monthly payments
- Your federal and state tax refunds can be seized
- You can be sued by
- Your wages can be garnished
- You will not be eligible for other federal and state student aid until you make arrangements to repay your loans
Deferment – A period of time that you can suspend (defer) the monthly payments on your loan. To do this, you must first contact your lender and be approved for the deferment. For subsidized loans the federal government will pay the interest during a period of deferment. However, on unsubsidized loans the interest will continue to accrue and will be added (capitalized) to your principal loan amount. The repayment period for the loan will be extended by the length of the deferment period.
Delinquent – Loans go into a delinquent status if you fail to make a payment when it is due.
Dependent student – In general, if you are an undergraduate student under the age of 24, you are considered a dependent student for financial aid purposes. See the definition of Independent Student for exceptions to this rule.
EFC – See Expected Family Contribution
Eligible Non-citizen – You are an eligible non-citizen for federal financial aid purposes if you are:
- A permanent U.S. resident who has a Permanent Resident Card (I-151);
- A conditional permanent resident (I-551C); or
- The holder of an Arrival-Departure Record (I-94) from the Department of Homeland Security showing one of the following designations:
- Refugee
- Asylum granted
- Parolee (paroled for a minimum of one year and your status has not expired)
- Conditional entrant (valid only if issued before April 1, 1980)
- Cuban-Haitian entrant
Entrance Counseling Session – A session you must attend, either in person or online, if you borrow through a Federal Stafford Loan or Perkins Loan. You will learn your rights and responsibilities as a borrower, how to manage your loans while you are in college as well as after you graduate and begin repayment. Your loan proceeds will not be disbursed until you complete this counseling session. You will be advised by your financial aid office how to fulfill this requirement.
Equity – In real estate, equity is the difference between the fair market value of a property and the amount of any mortgage debt or liens against the property that are still outstanding. In business, equity is the excess of a firm's assets over its liabilities. The term is also used to refer to the ownership interest of stockholders in a company and to the value of the investments raised by the stock offerings.
Exit Counseling Session – A session you must attend, either in person or online, when you graduate from college if you borrowed through a Federal Stafford or Perkins Loan. You will be reminded of your rights and responsibilities as a borrower and will receive information on how to manage repayment of your loans after college. You will be advised by your financial aid office how to fulfill this requirement.
Expected Family Contribution (EFC) – An EFC is the amount a student and his or her family may reasonably be expected to contribute toward the student's postsecondary education costs for purposes of determining financial aid eligibility. No matter what college you attend, your EFC is the same. Colleges often offer students an unsubsidized loan and parents a Parent Loan for Undergraduate Students (PLUS) loan to replace the EFC.
FAFSA – See Free Application for Federal Student Aid
FAFSA PIN – See PIN
Federal Parent Loan for Undergraduate Student (PLUS) Loan – See PLUS Loan
Federal Pell Grant – See Pell Grant
Federal Perkins Loan – See Perkins Loan
Federal Stafford Loan – See Stafford Loan
Federal Supplemental Educational Opportunity Grant (FSEOG) – A federal grant for undergraduate students with exceptional financial need who have not completed their first baccalaureate degree. If you receive a Pell Grant, you will be given priority to receive a FSEOG. Awards must be given to Pell Grant recipients. Eligibility is determined by the college from the information on your FAFSA and how much funding is available.
FDL Program – There are two programs that offer federal loans to students and parents. Federal Direct Loan Program (FDL Program) and Federal Family Education Loan (FFEL) Program. Both programs offer federal Stafford Loans to undergraduate students, PLUS loans to parents of undergraduate students and Graduate PLUS loans to graduate students. Under the FDL Program loans are borrowed directly from the federal government. Under the FFEL Program loans are financed by private lenders and insured by Guaranty Agencies. If you borrow a federal loan under the FDL Program you will repay the federal government through the U.S. Department of Education’s loan servicer. If you borrow a federal loan under the FFEL Program you will repay a bank or other lender. Regardless of the program, federal loans have the same terms and conditions. Check with your college if you are interested in knowing which loan you will be offered.
FFEL Program – There are two programs that offer federal loans to students and parents. Federal Family Education Loan (FFEL) Program and Federal Direct Loan Program (FDL Program). Both programs offer federal Stafford Loans to undergraduate students, PLUS loans to parents of undergraduate students and Graduate PLUS loans to graduate students. Under the FFEL Program loans are financed by private lenders and insured by Guaranty Agencies. Under the FDL Program loans are borrowed directly from the federal government. If you borrow a federal loan under the FFEL Program you will repay a bank or other lender. If you borrow a federal loan under the FDL Program you will repay the federal government through the U.S. Department of Education’s loan servicer. Regardless of the program, federal loans have the same terms and conditions. Check with your college if you are interested in knowing which loan you will be offered.
Financial aid – Money awarded to you from a college based on financial need, or other criteria. Types of financial aid are scholarships, grants, work-study programs and student and parent loans. You are offered financial aid based on the information you submit on the FAFSA, your COA and EFC, applications submitted and your enrollment status.
Financial Aid Award Letter – Notification from the financial aid office of a college regarding the amount and types of financial aid you have been offered to allow you to attend a particular college for an academic year. The financial aid award letter you receive from your college may not include scholarships you have been awarded from an outside organization. Your financial aid award (sometimes called a financial aid package) is based on the information you submitted on the FAFSA, your EFC and COA and your enrollment status.
Financial Aid Office – The best source for financial aid information at the college you plan to attend. The financial aid office at your college is available to answer your financial aid questions and can make adjustments to your financial aid award if you have unusual circumstances.
Financial need – The difference between your cost of attendance (COA) at a college and your expected family contribution (EFC). In other words: COA - EFC = Financial Need.
Fixed (interest rate) – An interest rate that will remain at a predetermined rate for the entire term of the loan.
Forbearance – If you are unable to make monthly payments on a student loan after you graduate, you may be granted a forbearance. During the forbearance period, you may not have to make any principal or interest payments on your loan; however, the interest will continue to accrue and will be added (capitalized) to your loan balance. To request a forbearance, you must contact your lender in writing.
Free Application for Federal Student Aid (FAFSA) – This is the application you must complete to be considered for federal student aid including student loans, state funding and most institutional awards. Most colleges require students to complete the FAFSA. The financial aid office at your college will use the information in the FAFSA to determine the types of financial aid for which you are eligible.
FSEOG – See Federal Supplemental Educational Opportunity Grant
Full-Time Enrollment (or Attendance) – In general, full-time enrollment means taking a minimum of 12 semester or quarter hours per academic term at a traditional college or 24 clock hours per week at colleges that use clock hours to measure progress.
Garnish wages – When wages are garnished, money to make payments on defaulted loans is automatically taken from your paycheck every time you are paid.
Gift aid – Grants and scholarships are types of financial aid that are considered gift aid because they do not have to be paid back.
Grace period – When you graduate or if you drop below half-time enrollment at your college, you have a period of time called the grace period, before you must begin making monthly payments on federal loans money you borrowed. If you borrowed through a Stafford loan, the grace period is 6 months. If you borrowed through a Perkins loan the grace period is 9 months.
Graduate or professional student – A graduate or professional student is someone working on a degree beyond a Bachelor’s degree, for example, a Master’s, Law or Doctorate degree.
Grant–- A type of financial aid that is considered gift aid because it does not have to be repaid. Grants are also considered need-based because they are awarded to students who do not have the financial means to attend college. Your eligibility for a grant is determined by your EFC (calculated from the information provided on your FAFSA) and the amount of funding available at your college.
Guarantee Agency – A guaranty agency insures federal loans for private lenders under the Federal Family Education Loan (FFEL) Program. The designated guaranty agency for the state of Colorado is College Assist™, a division of the Colorado Department of Higher Education.
Half-time Enrollment (or Attendance) – In general, this means attending at least six, but less than 12, semester or quarter hours per academic term at a traditional school and 12 clock hours per week for institutions that use clock hours to measure progress.
Independent Student – You are considered an independent student for financial aid purposes if you will be 24 years old by December 31 of the financial aid award year for which you wish to receive funding or you are not yet 24 but meet at least one of the following criteria:
- Married
- A graduate or professional student
- A veteran
- Have legal dependents
- You are an orphan or ward of the court
- Have unusual circumstances that can be documented to a financial aid counselor
Interest or interest payments – When you borrow a loan you are charged an amount for use of that money. The percentage of interest you are charged and when interest begins to accrue on your federal loan is determined by the type of loan you use.
Loan – Borrowed money. This type of financial aid is considered self-help because loans must be repaid under the terms and conditions of the promissory note you sign when you request the loan.
Master Promissory Note (MPN) - The promissory note you sign when you borrow money through a Federal Stafford or Perkins loan. The MPN is a legal document by which you promise to pay back loans as dictated by its terms and conditions. A MPN simplifies the borrowing process because you may be able to receive additional loans without signing a new promissory note each academic year.
Merit-Based Aid
– Financial Aid for which you may be eligible based on a particular skill, achievement, talent or characteristic. Merit aid is usually given in the form of scholarships. The most common scholarships are based upon academic or athletic achievement. You must apply for most scholarships by completing an application and often writing an essay about yourself.
Need-Based Aid – This type of financial aid is based upon financial need. You will be offered need-based financial aid if you cannot afford to go to college using only your own or your family's financial resources. Financial need is determined by subtracting your expected family contribution (EFC) from your cost of attendance (COA) at a college. The most common forms of need-based financial aid are grants, work-study, subsidized Federal Stafford loans and Perkins loans.
Non-need-based aid – You are offered non-need based financial aid when: (1) your EFC is equal to or greater than your COA; or (2) when you have been offered as much need-based financial aid as the college can offer (based on your EFC and its funding levels), but there is still a gap between your COA and the amount of need-based financial aid you have been offered. Non-need based aid is almost always an unsubsidized Federal Stafford loan and/or a PLUS Loan.
Parent Loan for Undergraduate Student (PLUS) Loan – A loan available to parents of dependent undergraduate students. This loan is need-based and it may be used to replace your expected family contribution. Parents must be credit-worthy to receive money through this loan.
Pell Grant – A federal grant awarded if you have high financial need (determined by completing the FAFSA). If you qualify for the Pell Grant the federal government ensures you will receive it when you attend an institution of higher education.
Perkins Loan – A low-interest federal loan for both undergraduate and graduate students. Perkins loans are considered need-based financial aid and self-help. Funds for the Perkins are very limited and reserved for students with the highest financial need (determined by completing the FAFSA). No interest accrues on this loan while you are enrolled at least half-time in college or during a Grace Period.
PIN (or FAFSA PIN) – A personal identification number you can use to electronically sign your FAFSA online each year. If you are a dependent student, both you and one parent should have a PIN. Apply for your PIN at the U.S. Department of Education FAFSA PIN website.
PLUS Loan – See Parent Loan for Undergraduate Student Loan
Principal or principal balance – The amount of money you borrow under a loan is called the principal. When you begin making payments on this loan, you will repay the principal balance of the loan plus interest.
Promissory Note – The legal document a borrower signs before receiving money from a loan. The promissory note is called the Master Promissory Note (MPN) if you are borrowing money through a Federal Stafford loan or Perkins loan or if your parent is borrowing through a PLUS loan. The promissory note is a legal document in which you promise to pay back the money received through loan according to its terms and conditions.
Refinance – Replacing an older loan with a new loan offering better terms or when a business or person revises their payment schedule for repaying a debt.
Repayment Terms – The criteria that you must follow regarding how your educational loan will be paid back. Terms include the amount of payments (normally paid on a monthly basis), interest rate and number of years to repay. There are various repayment plans available to help manage your loans. Contact your lender if you are having problems making monthly payments.
Scholarship – A type of financial aid for which the money received does not have to be paid back. Scholarships are considered merit-based aid because they are awarded to students who are eligible based on certain criteria. The most common scholarships are academic and athletic scholarships. You must apply for each scholarship separately by completing an application (supplied by the scholarship donor) and in many cases, by writing an essay about yourself. Scholarships come from a variety of sources including federal and state governments, the college you are attending, churches, professional organizations and businesses.
Self-help financial aid – A type of financial aid that may or may not be need-based. Self-help financial aid includes work-study (you work for the money received) and loans (money which you borrow and must pay back).
Stafford Loan – A low-interest federal loan for both undergraduate and graduate students. Federal Stafford Loans can be subsidized or unsubsidized. The amount you can borrow each year is determined by your grade level, dependency status and total amount borrowed to date. If you have a subsidized Federal Stafford Loan, the federal government will pay the interest while you're in school at least half-time and during a grace period. If you have an unsubsidized loan, you are responsible for interest payments while you are in college and during your grace period. You must fill out the FAFSA to determine eligibility.
Student Aid Report (SAR) – Your copy of the information you submitted on the FAFSA. If you complete a paper FAFSA, the SAR will be mailed to you. If you complete the FAFSA on-line, you will receive an electronic copy of your SAR.
Subsidized Stafford Loan – See Stafford Loan
Terms (or Loan Terms) – see Repayment Terms
Unsubsidized Stafford Loan – See Stafford Loan
Variable (interest) Rate – Any interest rate or dividend that changes on a periodic basis. Variable rates are often used for convertibles, mortgages, and certain other kinds of loans.
Verification – The process a college financial aid office will use to verify the information you submitted on the FAFSA. If your FAFSA is selected for verification, the financial aid office must verify that all information is correct before awarding financial aid. Thirty percent of FAFSAs submitted each year are randomly selected for this process, but note that some colleges verify every FAFSA from applicants.
Work-Study – A part-time employment program that provides jobs for undergraduate and graduate students to assist them to meet a portion of their education expenses. Work-study funding comes from federal and state governments as well as from the college. The results of your FAFSA and funding at your college determine your eligibility.