Glossary of Terms | Public Service Loan Forgiveness

Academic Year: This represents the amount of work that you must complete in any given year as well as the expected time in which you are expected to complete it as defined by your particular school. Academic years can change from school to school or even change within programs at the same institution.

Accreditation: Denotes that the school has met the minimum requirements as designated by the U.S. Department of Education. Any institution must be accredited in order to be considered for loan programs.

Adjusted Gross Income (AGI): The sum of you and your family’s income and dividends after certain deductions are made under tax regulations.

Administrative Wage Garnishment: This is a tool that allows the federal government to have your employer keep a certain percentage of your income to pay non-tax debts to the federal government. If your federal loan is in default, up to 15% of your earnings can be withheld to repay what you owe the federal government.

Adverse Credit History: An observation of your credit report that renders you incapable of receiving a direct PLUS loan. The prerequisites for adverse credit history usually check into a period of five years prior to the credit report, looking for things such as default determination, bankruptcy, and repossession.

Associate Degree: An undergraduate degree received after completing a program that involves two years of study, such as community or career colleges.

Award Amount: The amount that an institution may expect to pay based upon a students loan eligibility, expected family contribution, and of course, the tuition of the school in question.

Award Letter: An announcement delivered to the student that states a specific amount of financial aid that will be provided should the student choose to accept and enroll in the program.

Bachelor’s Degree: An undergraduate degree that is received after a student completes a program that typically lasts for four years, such as that of a college or university.

Cancellation: The relief of a student’s responsibility to pay back a portion or all of a loan, usually awarded to those working full time in public service and having made a predetermined amount of payments on the existing loan.

Capitalization: The addition of unpaid interest to a loan’s current balance. When interest isn’t paid, it accumulates over certain grace periods such as when the student is in school. It is possible in this case for the lender to capitalize the interest.

Collection Agency: An organization that recovers unpaid debt that has been defaulted upon.

Common Law Marriage: A marriage agreement agreed upon by living together even without a marriage license. Not all states honor common law marriage, and regulations for the ones that do can vary greatly from state to state.

Consolidation: The process of combining multiple loans into a single loan.

Cost of Attendance: The lump sum of what it will cost you to attend school, usually expressed as a yearly value. This includes tuition, fees, room and board, and certain allowances for food, textbooks, supplies, transportation and loan fees.

Credit Bureau: An entity that tracks and reports your credit, making assessments on your ability to repay future loans.

Data Release Number: The four digit number designated on your FAFSA form that enables you to share your FAFSA information with other schools. Necessary to change information regarding your address and listed institutions.

Default: Failure to repay a loan in the agreed-upon terms. For most federal loans, going without payment for over 270 days will result in a default. Defaulting on a federal loan can result in being unable to receive financial aid and even serious legal consequences.

Default Rate: The percentage of borrowers who default on their loans.

Deferment: A stipulation that allows for a temporary reprieve from loan payment if certain conditions are met. Depending on the type of loan, it may or may not continue to accrue interest over this period of time.

Delinquent: The status of a loan that does not receive payments at the assigned due date.

Dependency Status: The determination of whether a student is dependant or independant. An independent student must be at least one of the following: twenty-four years or older, married, a graduate student, a veteran or a member of the armed forces, an orphan, a ward of the state, or someone who is at risk for homelessness.

Direct Loan: A federal student loan made through the William D. Ford program that allows students to borrow directly from the federal government at participating institutions.

Direct PLUS Loan: A loan made directly from the U.S. Department of Education to either a graduate student or the parents of an undergraduate student. These loans hold the borrower fully accountable for interest regardless of the status of the loan.

Disposable Pay: The amount that remains with an employee after deductions

Early Action: A school policy that allows students to apply and receive word of their admission in an earlier stage.

Educational Service Agency: A regional agency that is allowed by the state to develop programs or provide services for local educational institutions.

Electronic Debit: A service that allows a lender to automatically deduct payments from a bank account.

Eligible Program: A program of study recognized to lead to an academic or professional degree or other recognized credential.

Emancipated Minor: A person under the age of 18 legally recognized as an adult by the court.

FAFSA Form: The free form used to apply for federal student aid.

Federal Student Aid: Financial aid used to help students pay for their schooling at an eligible institution. FAFSA must be completed to apply for this aid.

Federal Work-Study: A federal aid program that allows students to work to save on their tuition.

FFEL Program: Federal family education loan program

Financial Need: The difference between the amount necessary to attend an institution and the expected family contribution. The expected family contribution will not change based on what school you attend.

Forbearance: A period during which your agreed upon monthly payments are temporarily reduced or suspended. Forbearance may be granted by a lender if a borrower finds themselves willing but unable to make payments due to financial straits. Unpaid interest that adds over the time of forbearance may be added to the total.

Grace Period: For certain types of loans, the period after graduation from a program wherein no payments upon the loan are required.

Grant: Financial aid based upon need that doesn’t have to be replaced.

Homeless: An individual who lacks access to adequate and consistent housing, or is staying temporarily with others as a lack of recourse. If you are living in this state and are fleeing an abusive guardian, you may be considered homeless by FAFSA even if you have a guardian who would provide shelter.

Interest: Loan expenses charged at a certain rate for the use of borrowed money and is calculated as a percentage for the sum of the loan.

Lender: The organization or entity responsible for originally making the loan, be it the federal government, a school, or other institution.

Loan Rehabilitation: The process of removing a loan from default and removing the record of the default from a borrower’s credit report.

Merit Based: Based on a student’s skill set, ability, or other recognized merit.

Need Based: Based on a student’s financial need.

Overpayment: The distribution of more financial aid than a student could be reasonably expected to pay back.

Principal: The absolute sum of any money borrowed as well as any interest capitalized upon by the lender.

Private Loan: A non-federal loan made by an entity such as a bank or credit union.

Retention Rate: The percentage of students seeking a bachelor’s degree at a college or university that return after the first semester or quarter.

Subsidized Loan: A loan that is need-based wherein the government typically pays for the accrued interest that develops over the course of the loan.

Teach-Out Plan: A system set in motion to ensure that students stranded at a closing school will receive fair treatment in regards to finishing their program of study. Some plans have written agreements between the closed school and other schools with similar programs.

Total Borrowed: The total amount of a loan that is paid out to a borrower.

Transfer Rate: The percentage of students that transfer to another institution.

Unsubsidized Loan: A loan wherein the borrower is completely responsible for any interest that accumulates over the course of the loan, regardless of its status.

Verification: The process by which an institution determines whether all information presented on a FAFSA form is true and accurate. The school has the authority to contact you based on any information you may have given them, financial or otherwise.

William D. Ford Federal Direct Loan Program: The federal loan program by which students and parents may borrow money directly from the U.S. Department of Education at any school that participates in this program.