Glossary

Academic Year—The academic year is divided into two semesters (Fall which begins in August and Spring which begins in January) of 15 weeks each and a Summer semester (which begins in May or June).  

   

Accrued Interest - Interest that accumulates on the unpaid principal balance of a loan. 

  

Award Year—The time beginning on July 1 of one year and extending to June 30 of the next year.  Funding for federal student aid is provided on the basis of the award year.  

  

Borrower - Person legally responsible for repaying a loan and who has signed the promissory note. 

  

Cancellation—The release of borrowers from their obligations to repay all or a portion of their federal loans.  Borrowers must meet certain requirements to be eligible for cancellation. 

  

Capitalized Interest—Unpaid, accumulated interest that is added to the loan principal.  Because the principal increases, so does the total cost of the loan. 

  

Collection Agency -- A company that attempts to collect delinquent or defaulted loans.  

  

Consolidation Loan- A loan that combines multiple federal student loans into a single loan with one monthly payment.  Note:  A consolidation loan pays off the existing loans; the borrower then repays the consolidation loan. 

  

Co-signer -- A signer other than the borrower who agrees to assume responsibility for repayment in the event that the borrower fails to repay.  Some lenders may require co-signers. 

  

Cost of Attendance (COA)—A student's cost of attendance includes tuition and fees, room and board, books and supplies, transportation, and miscellaneous expenses.  The school, within the guidelines established by federal law, determines the COA.  The COA is compared to a student's Expected Family Contribution (EFC) to determine the student's need for aid (COA - EFC = student's financial need). 

  

Default—Failure to repay a loan in accordance with the terms of the promissory note.  

  

Deferment - The temporary postponement of loan payments: during this time, the borrower does not have to pay either principal or interest. 

  

Delinquent - Failure to make payments when due, as specified in the promissory note and in the selected repayment plan.  Delinquency can lead to default. 

  

Disbursement -- The release of loan funds by a lender to a borrower. Disbursements for most student loans are made in equal multiple installments, and are usually by electronic fund transfer to the school.  A few instances require paper checks to be mailed to the institution for delivery to the students.   

 

Entrance/Exit Interviews -- Counseling sessions borrowers are required to complete online (www.educaid.com) before receiving their first federal loan disbursement and prior to leaving school or dropping below 6 credit hours. 

  

Expected Family contribution (EFC)—Calculated using a formula established by Congress; the amount that a student's family is expected to contribute toward the student's cost of attendance.  The EFC is used to determine whether a student is eligible for federal student aid.    

  

FAFSA—See Free Application for Federal Student Aid 

  

Federal Family Education Loan Program (FFEL) -- Education loans provided by private lenders and guaranteed by the federal government. Subsidized and Unsubsidized Stafford Loans and PLUS Loans are included. 

  

Federal student aid programs—Programs administered by the Department of Education: 

Federal Pell Grants 

Federal Supplemental Educational Opportunity Grants (FSEOG) 

Federal Work-Study (FWS) 

Federal Perkins Loans 

Federal Stafford Loans 

Federal PLUS Loans (for parents) 

  

Financial Need—The difference between a student's cost of attendance (COA) at a school and the Expected Family Contribution (EFC).  (COA - EFC = student's financial need. 

  

Forbearance - Temporary postponement or reduction of payments because of the borrower's financial difficulties.  Forbearance also may be an extension of the repayment period.  All borrowers are charged interest during forbearance. 

  

Free Application for Federal Student Aid (FAFSA)—An application completed and filed by a student who wishes to receive federal student aid.  The application collects household and financial information used by the federal government to calculate the EFC to postsecondary education costs. 

  

Grace Period -- A specified period of time after a student leaves school or drops below 6 credit hours during which she is not required to make payments on either principal or interest. The grace period is typically six to nine months, depending on the type of loan.   

  

Graduated Repayment -- an arrangement, in which the amount of a borrower's monthly payments increases in a scheduled manner over the term of a loan, permits smaller monthly payments during the early part of the repayment period. 

  

Guarantor -- A state or nonprofit private agency that administers the Federal Family Education Loan (FFEL) Program in each state. 

  

In-School Status -- The period during which student loan borrowers are attending school at least half-time or are in the grace period. The federal government pays the interest on a Subsidized Federal Stafford Loan during this period. 

  

Interest - A loan expense charged a borrower for the use of borrowed money.  Interest is calculated as a percentage of the principal of the loan, which includes the original amount borrowed and any capitalized interest.  

   

Lender -- A financial institution such as a bank, a savings and loan association, a credit union, or a qualified program that makes FFELP and/or private loans.  

  

Loan Holder - The organization that made the loan initially; the lender could be a bank; credit union, or other lending institution.  The lender is College of Saint Mary if you have a Perkins or Nursing Loan from CSM. 

  

  

Loan Principal—The total sum of money borrowed.  Loan principal includes the original amount borrowed plus any interest that has been capitalized. 

  

Master Promissory Note—See Promissory Note. 

  

Minimum Monthly Payment -- The minimum amount a borrower must pay each month on each separate loan. Sometimes abbreviated as "MMP." The amount of the minimum monthly payment is based on the total loan amount and the repayment term; on student loans, the MMP is usually at least $50 a month per loan. 

  

Origination Fee -- A fee charged by the federal government and deducted from the proceeds of a loan before disbursement.  This is the amount of money taken out of your loan before CSM receives the loan. 

  

Outstanding Balance -- The total amount, including both principal and interest, still to be repaid.  

  

Over award—Generally, any amount of federal student aid that exceeds a student's financial need. 

  

Overpayment—Any payment of Federal Financial Aid that exceeds the amount for which a student was eligible.    

  

Perkins Loan—Low-interest (5 percent) loans made under the Federal Perkins Loan Program to undergraduate students.  Because College of Saint Mary is the lender, students repay either CSM or Campus Partners (the servicing agent). 

 

PLUS Loans - Loans made to the parent of a student.  Parents with good credit histories can borrow to help pay for the education expenses of a child who is a dependent undergraduate student enrolled in at least 6 credit hours.    

 

Promissory Note - A binding legal contract between a loan holder and a borrower.  The promissory note contains the loan terms and conditions, including how and when the loan must be repaid.  By signing the note, the borrower agrees to repay the loan. 

  

Refunds—If a credit balance is created on a student's account by the application of any federal student aid, a refund check will automatically be issued to the student within ten (10) working days.  Refund checks may be picked up in the CSM Express Center (checks not picked up within one day will be mailed). 

  

Repayment Schedule - A statement the loan holder provides the borrower that lists the amount borrowed, the amount of monthly payments, and the date payments are due. 

  

Student Aid Report (SAR)—A federal "output" document sent to a student by the Department of Education.  The SAR contains financial and other information reported by the student on the FAFSA.  The student's EFC is included on the SAR.  All information reported on the SAR is also sent to schools the student listed on the FAFSA. 

  

Secondary Market -An agency that purchases student loans from originating lenders so these lenders can make additional student loans.  The Student Loan Marketing Association (Sallie Mae) is an example of a secondary market.  If such an organization buys the loan, that organization becomes the "loan holder"  (see Loan Holder). 

  

Semester—See Academic Year 

  

Servicer - An agency a school or lender employs to service a student loan account.    

  

Stafford Loans—Loans made to undergraduate and graduate students under the FFEL Program.  These loans are applied to the students account within three (3) working days of disbursement. There are two types of Stafford Loans: 

Subsidized Stafford Loan—A federal student loan made on the basis of the borrower's financial need and other specific eligibility requirements.  The federal government pays the interest on these loans while borrowers are enrolled in at least 6 credit hours, during the grace period, or during authorized periods of deferment.  

Unsubsidized Stafford Loan—A federal student loan made to a borrower meeting specific eligibility requirements, but not based on financial need.  The borrower is responsible for paying all interest that accrues throughout the life of an unsubsidized loan.  During in-school status, deferment, and forbearance periods, the borrower may choose to pay the interest charged on the loan or allow the interest to be capitalized.  

 

Verification—A procedure through which a school checks the information a student reported on the FAFSA, usually by requesting a copy of signed tax returns filed by the student and, if applicable, the student's parent(s) and spouse.  College of Saint Mary must verify information about students selected for verification by the Department of Education, following procedures established by federal regulations.