University of Pittsburgh BradfordAdmissions
Financial Aid Glossary

We understand financial aid can be complicated. We want to help. Below is a glossary of the most-used financial aid terms to help you better understand the process.   

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Accrual 
The date interest charges on an educational loan begin to accumulate or accrue.

Assignment (of loans)
Assignment occurs when a new lender assumes an educational loan from a previous lender. See also subrogation

Award Letter
A letter that comes from the financial aid office and lists all of the financial aid awarded to you.

Bankruptcy
A legal proceeding in which an insolvent person (i.e., someone who cannot pay debts) may be relieved of financial obligations, but loses control over bank accounts and future financial options. Bankruptcy is a last resort for those with debt problems, and although some debts may be discharged, bankruptcy affects a person's credit rating and financial opportunities for many years. Student loans, including alternative student loans, cannot be discharged through bankruptcy.

Borrower
A borrower is the person who has signed and agreed to the terms in the promissory note, and must repay the loan.

Budget
A budget is a plan for the coordination of resources (income, checking/savings accounts, etc.) and expenses, to prevent spending more than available resources.

Campus-based Aid
Financial aid programs that are administered by the university. The federal government provides the university with a fixed amount, which is awarded by the financial aid office. Keep in mind that there is no guarantee that every eligible student will receive financial aid through these programs.  These programs include:  Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (SEOG), and Federal Work Study.

Cancelation
Some loan programs provide for cancelation (i.e., waiver of your requirements to repay the loan) under certain circumstances, such as death or permanent disability of the borrower. Some federal student loan programs have additional cancelation provisions. For example, students who become teachers in certain national shortage areas may be eligible for cancelation of all or part of the balance of their educational loans. See also forgiveness.

Please check with your loan servicer to determine if you are eligible for partial or total cancelation. The following is a list of occupations, professions, and situations that may be eligible for cancelation: (Note: You may lose these privileges if you consolidate.)

  • Teacher--low income school, special education, or shortage in specified field (i.e., math or science)
  • Head Start Administrator
  • Law enforcement or corrections officer
  • Military service in area of hostility
  • Peace Corps volunteer
  • Full-time nurse or medical technician
  • Full-time employee of family services organization working with high-risk children
  • Totally and permanently disabled
  • Death

 

Capitalize
Capitalizing interest means that all interest accrued is added to the principal amount of your loan. Additional interest would then be based upon the higher principal amount. In other words, you would be paying interest on interest. If you are borrowing a Federal Direct Stafford Loan that is unsubsidized, you will be able to indicate on your master promissory note (MPN) whether you choose to pay your interest quarterly or have the interest capitalize while you are in school. Choosing to pay your interest quarterly will minimize your loan debt.

Career Maximum Stafford Loan Limit
A student's career maximum Stafford loan limit is the total amount of Stafford loan, both subsidized and unsubsidized, that a student can borrow in all years while pursuing a degree(s). Also referred to as Aggregate Limit.

Certification (of a loan)
When an educational institution certifies a loan, they notify and provide the lender with various pieces of information to complete the loan application including the student's enrollment status, expected graduation date, year in school, loan period, and cost of attendance.

College-Level Examination Program (CLEP)
A series of examinations that demonstrate your proficiency in a subject area, for which you can receive college credit.

Combined Total (Stafford Loan)
In some scenarios, the subsidized and unsubsidized portions of a Federal Direct Stafford Loan are added together to give you a combined total. This helps you to easily see your total (aggregate) loan borrowing without having to add up the subsidized and unsubsidized components.

You can find combined Stafford Loan amounts on the student portal of the National Student Loan Data System NSLDS 

Commuter Student
One who does not live on campus. Typically, "commuter" refers to a student living at home with his or her parents, but it can also mean any student who lives off campus.

Compounded Interest
Interest that is paid on both the principal balance of the loan and on any accrued (unpaid) interest. Capitalizing the interest on an unsubsidized Stafford loan is a form of compounding.

Consolidation Loan
Enables a borrower who has different types of loans to obtain a single loan with one interest rate and one repayment schedule. A consolidation loan pays off the existing loans. Then the borrower repays the consolidated loan.

Cosigner
A term referring to a person, other than the principal borrower, who signs an agreement to repay a loan. The cosigner assumes equal liability for repayment of the loan. 

Cost of Attendance
Includes tuition and fees, room and board, allowances for books and supplies, transportation, and personal and incidental expenses. This is also known as the cost of education or budget.

Credit Bureau
Credit bureaus and credit reporting agencies provide banks and businesses with a credit rating, which assists banks and businesses in deciding whether to issue a loan or extend credit. There are three nationwide consumer credit report companies:  

  • Experian - 888-397-3742
  • Equifax - 800-685-1111
  • TransUnion - 800-888-4213
  • To order your Free Annual Credit Report for all three - 877-322-8228

 

Credit Limit/Line of Credit
An arrangement between a bank or credit card company and a customer which allows the customer to borrow up to a pre-specified amount as determined by the lender.

Credit Rating
An evaluation of your likelihood to default on a loan. Credit bureaus and credit reporting agencies provide this information to banks and businesses to help them decide whether to issue a loan or extend credit. Your credit rating may include your payment history, a list of current and past credit accounts and their balances, employment and personal information and a history of past credit problems. People who make all their payments on time are considered good credit risks. People who are frequently delinquent in making their payments are considered bad credit risks. Defaulting on a loan can hurt your credit rating.

Default, Defaulter
A defaulter is a person who fails to meet his or her loan responsibilities. Being labeled a defaulter will stay on your credit history for up to seven years. Defaulters can be denied access to future credit or investments, and the federal government can deduct payments from wages or seize income-tax refunds.

To avoid default, maintain contact with your lender. (To identify your lender, use NSLDS or the Loan Locator.) It is possible for your lender to change during your college career or during repayment (your loans may be sold to a third-party servicing agency). Keep a detailed file of loan information, and notify your lenders as your situation changes. It is your responsibility to contact your lender if there is a change in your name, address, or enrollment status.
See also deferment, forbearance and loan forgiveness

Deferment (of loan)
Allows a borrower to postpone repaying the loan. Most federal loan programs allow students to defer their loans while they are in school at least half time – taking six credits. You can't get a deferment if your loan is in default.

Delinquency
Delinquency occurs when loan payments are late or missed, as specified in the terms of the promissory note and the selected repayment plan.

Dependent Student
One who does not qualify as an independent student by federal regulations and whose parental income and asset information is used in calculating an Expected Family Contribution (see Independent Student).

Disbursement
The release of loan funds to the school to be delivered to the borrower. The payment will be made co-payable to the student and the school. Loan funds are first credited to the student's account to pay for tuition, fees, room and board and other school charges. Anything left over is paid to the student.

Discharge
When a bankrupt person is legally free and clear of any obligation to repay certain debts. Student educational loans can never be discharged under current bankruptcy laws.

Disclosure Statement
A disclosure statement is a statement of the actual cost of a loan, including the interest costs and the loan fee.  

Expected Family Contribution (EFC)
The amount of money a student’s family is expected to be able to contribute to his or her education as determined by a formula approved by Congress. However, this amount is not necessarily what the family will contribute. The EFC includes the parent contribution and the student contribution, and depends on the student's dependency status, family size, number of family members in school, taxable and nontaxable income and assets.

Federal Pell Grant
A grant program for needy students who have not yet received a baccalaureate or first professional degree. It is administered by the U.S. Department of Education.

Federal Perkins Loan
A long-term, low-interest loan program for both undergraduate and graduate students at a current interest rate of 5%.

Federal Direct Parent PLUS Loan
Long-term loans made available to parents of dependent students.  Interest rates may not exceed 7.9%. The annual amount borrowed is limited to the cost of attendance minus estimated financial assistance.

Federal Direct Stafford Loan (subsidized and unsubsidized) 
Long-term, low-interest loans administered by the Department of Education. The loans come in two forms – subsidized and unsubsidized. Subsidized loans are based on need; unsubsidized loans aren't. The interest on the subsidized loan is paid by the federal government while you’re in school. If you receive an unsubsidized loan, you are responsible for paying the interest as soon as you receive the loan even while you’re in school. You may avoid paying the interest while you’re in school by capitalizing the interest, but that will increase the loan amount.

Federal Supplemental Educational Opportunity Grant (FSEOG) 
Grants to undergraduate students who have exceptional financial need and have not completed their first baccalaureate degree. Priority must be given to Federal Pell Grant recipients with the lowest EFC.

Federal Work-Study Program
A part-time employment program that provides jobs for students who need the money to meet a portion of their educational expenses.

Financial Aid
A general term that describes any source of student assistance – besides the student or the student's family – that is awarded to help a student pay for college. These funds are generally awarded on the basis of financial need and include scholarships, grants, loans, and employment.

Financial Aid Award
An offer of financial or in-kind assistance to a student, which may be in the form of a repayable loan, a non-repayable grant, a scholarship and/or student employment.

Financial Aid Package
The complete collection of grants, scholarships, loans and work-study employment from all sources (federal, state, institutional and private) offered to a student to enable him or her to attend college.

Financial Need
The difference between the cost to attend college and the family's ability to pay. 

Financial Need Equation
Cost of attendance minus Expected Family Contribution equals financial need.

Fixed Interest Rate
A fixed interest rate is locked in at the origination of the loan and does not change during the term of the loan. See also variable interest rate.

Forbearance 
A lender will allow you to temporarily postpone repaying the principal, but the interest charges continue to accrue. You must continue paying the interest charges during the forbearance period. Forbearance are granted at the lender's discretion, usually in cases of extreme financial hardship or other unusual circumstances when the borrower does not qualify for a deferment. You can't receive a forbearance if your loan is in default.

Forgiveness
Loan forgiveness occurs when the federal government cancels all or part of an educational loan because the borrower meets certain criteria (e.g., is performing military or volunteer service). See also cancelation. (Note: You may lose these privileges if you consolidate.)

Free Application for Federal Student Aid (FAFSA)
The financial aid application document that a student and the student’s parents, if applicable, complete. The FAFSA collects household and financial information. The financial aid office needs the FAFSA to process a loan even for students who don’t qualify for need-based aid. Every student should apply for aid using the FAFSA, regardless of family income.

Full-time
Certain aid programs require full-time enrollment. For undergraduate students, full-time enrollment is at least 12 credits; for graduate students, full-time enrollment is at least 9 credits. Also see half-time

Garnishment of Wages
Garnishment is the practice of withholding a portion of a defaulted borrower's wages to repay his or her loan, without consent.

Grace Period
A short time period after graduation when you are not required to begin repaying your student loans. The grace period may also kick in if you leave school for a reason other than graduation or drop below half-time enrollment (six credit hours). Depending on the type of loan, you will have a grace period of six months to nine months.

Grant
Aid that does not have to be repaid. It is usually awarded on the basis of need, possibly combined with some skills or characteristics the student possesses.

Gross
The term gross refers to an overall total, excluding deductions. Your gross income, for example, is your total income without taxes or other items deducted from it.  The gross amount of your Federal Direct Stafford Loan or Federal Direct PLUS Loan is the full amount you borrow, not including loan origination fees.  Once these fees are deducted, the net amount of your loan will be disbursed into your student account to cover University charges, and any excess will be available as a refund. Also see net.

Half-time
To be eligible for most federal student aid, a student must be enrolled at least half-time. For undergraduate students, half-time enrollment is at least 6 credits; for graduate students, half-time enrollment is at least 5 credits. Also see full-time.

Hold
In the event that a student does not complete specific University-related requirements, a hold may be placed on the student's University record(s), which prevents certain student actions or requests from occurring (e.g., future registration or release of transcripts).

Independent Student:
 A student who:
(a) is 24 years old or who:
(b) is an orphan or a ward of the court;
(c) is a veteran;
(d) is married or is a graduate or professional student;
(e) has legal dependents other than a spouse; or
(f) presents documentation of other unusual circumstances demonstrating independence to the financial aid office;
(g) is serving on active duty in the U.S. Armed Forces;
(h) has children that receive more than 50% of their support from you;
(i) is homeless or at risk of being homeless;
(j) is an emancipated minor;(k) in foster care since turning 13;
(l) currently in legal guardianship.

Interest
Interest on loans is a fee the lender charges for borrowing money. Interest is charged on loans from the time the loan is disbursed until the time you completely repay the loan. See interest rate information for Federal Direct Stafford, Federal Direct Parent PLUS, and Federal Perkins loans.

Interest Rate
The interest rate is the annual percentage of the loan or credit card amount that is charged for its use. For Federal Direct Stafford and Federal Direct Parent PLUS Loan interest rates, please see interest rates on loans. 

Judgment
A court order to pay a party a certain amount of money due to previous lack of payment.

Lender
A lender is the financial institution that provides the money to be borrowed through a student loan program. The lender approves the loan and applies for the loan guarantor. See also loan servicer. Credit card companies are also lenders in that they extend credit to borrowers who agree to repay the balance for items charged or cash advances on a credit card.

Lien
The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.

Loan
Aid that must be repaid, usually with interest.

Loan Interviews
Students with educational loans are required to complete online interviews or counseling sessions before they receive their first loan disbursement and again before they graduate or otherwise leave school. The online session reviews the repayment terms of the loan and the repayment schedule with the student and other important information.

Loan Origination
Loan origination is the process by which a lender brings a loan into existence. It involves certification of the loan, guaranty, and completion of the master promissory note (MPN).

Loan Servicer
A loan servicer is a company hired by your lender to process loan repayments.

Master Promissory Note (MPN)  

  • The Federal Direct Stafford Loan MPN is the loan application for your Federal Direct Stafford Loan. It is valid for 10 years while you are enrolled as a student. Once you complete the Federal Direct Stafford Loan MPN, you will not need to sign another one to borrow in future years.  Also see promissory note.  

  • The Federal Direct Parent PLUS Loan MPN is a parent's loan application for the Federal Direct Parent (PLUS) Loan. Once a parent completes the PLUS Loan MPN, he/she will not need to sign another one to borrow in future years as long as he/she continues to borrow each year. If a parent has two students attending college, a separate MPN is required for each student. Likewise, if a mother and father both borrow a Parent PLUS Loan for one student, a separate MPN is required for each borrower.

  • The Federal Perkins Loan MPN is the legally binding document of a borrower's indebtedness to a school. If awarded a Perkins or University Loan, you must complete an online MPN and entrance counseling session before loan finds are credited to your account.

Maturity
The maturity date is when the grace period on a loan has ended and the loan officially moves to repayment status. 

Merit-based Aid
Aid that takes into account your academic, artistic or athletic merit or some other criteria, and does not depend on your financial need. Merit-based awards use your grades, test scores, hobbies and special talents to determine your eligibility for scholarships.  Division 3 schools do not award scholarships based on athletic ability.

National Student Clearinghouse
The National Student Clearinghouse is a national database, which lenders, loan servicers, guaranty agencies, schools, and students can access to verify student degree and enrollment information.

National Student Loan Data System (NSLDS)
NSLDS is the U.S. Department of Education's central database for student aid. It receives data from schools, agencies that guaranty loans, the Direct Loan program, the Pell Grant program, and other U.S. Department of Education programs. NSLDS provides a centralized, integrated view of Title IV loans and Pell grants that are tracked through their entire cycle; from aid approval through closure.

Need
The difference between the cost of attendance and the expected family contribution. It’s the gap between the cost of attending the school and the student's resources.

Need-based Aid
Assistance awarded because a student's financial circumstances would not permit him or her to afford the cost of education.

Net
The term net is used to refer to the amount remaining after all charges or fees have been deducted from the total. For example, your net income is your total income minus the amount of taxes you pay. The net amount of your Federal Direct Stafford Loan is the amount that is disbursed to your student account to cover University charges. It is the amount that you borrowed (i.e., the gross amount), with origination fees deducted. Also see gross. 
 
Non Need-based Aid
Aid based on criteria other than need. Also, refers to federal student aid programs where the expected family contribution is not part of the need equation.

Packaging
The process of assembling a financial aid package.

Parent Contribution
An estimate of the portion of your educational expenses that the federal government believes your parents can afford. It is based on their income, the number of parents earning income, assets, family size, the number of family members currently attending a university and other relevant factors. Students who qualify as independent are not expected to have a parent contribution.

Parent Loans for Undergraduate Students (PLUS)
Federal loans available to parents of dependent undergraduate students to help finance their education. Parents may borrow up to the full cost of education, less the amount of any other financial aid received. There is a minimal credit check required for the Parent PLUS loan, so a good credit history is required.

If the application for a Federal Direct Parent PLUS loan is denied, students may be eligible to borrow additional unsubsidized Federal Direct Stafford Loan funds.

Pell Grant 
A federal grant that provides funds of up to $5,645 based on your financial need.

Federal Perkins Loan 
Formerly the National Direct Student Loan Program, the Federal Perkins Loan allows students to borrow up to $4,000 per year for up to 5 years for undergraduate school. The Federal Perkins Loan has one of the lowest interest rates (5%) and is awarded by the financial aid office to students with exceptional financial need. The interest on the Federal Perkins Loan is subsidized while you’re in school.

Personal Identification Number (Federal Student Aid PIN) 
Federal Student Aid Personal Identification Number, or PIN, is a unique number assigned to students by the Department of Education. Students can use the PIN to securely access online resources and applications relating to student aid. Parents can also apply for a PIN so they can complete portions of the FAFSA.

Prepayment
Prepayment loans indicate that the borrower is paying off all or part of a loan before it is due.

Principal (of a loan)
The amount of money borrowed through a loan and does not include interest or other charges, unless they are capitalized.

Private Loans
Education loan programs established by private lenders to supplement the student and parent education loan programs available from federal and state governments.

Promissory Note
A binding legal document you must sign before loan funds are disbursed by the lender. The promissory note states the terms and conditions of the loan, including repayment schedule, interest rate, deferment policy and cancelations. You should keep this document until the loan has been repaid.

Renewable Scholarships
A scholarship that is awarded for more than one year. Usually the student must maintain certain academic standards to be eligible for subsequent years of the award. Some renewable scholarships will require the student to reapply for the scholarship each year; others will just require a report on the student's degree progress.

Repayment
A loan in repayment status, after the expiration of the grace period, is being billed by the loan holder and payments are due.

Repayment Schedule
Discloses the monthly payment, interest rate, total repayment obligation, payment due dates and the term of the loan.

Repayment Term
The repayment term of a loan is the period during which the borrower is required to make payments on the loan. When the payments are made monthly, the term is usually given as a number of payments or years.

ROTC Scholarship Program
A competitive scholarship that pays for tuition, fees, books and a monthly living stipend and other benefits in exchange for participating in drills and classes during the academic year, military camp during the summer, and, upon graduation, full-time active duty in the military for at least four years.

Satisfactory Academic Progress (SAP) 
Students must make satisfactory academic progress in order to continue receiving federal aid. See SAP for more detailed information on this policy.

Scholarship
A form of financial assistance that does not require repayment or employment.  It is usually made to students who demonstrate or show potential for distinction, usually in academic performance.

Separation
The date when a student ceases enrollment. This is the time when a loan officially ends its initial "in-school" period, which can occur because of graduation, withdrawal, termination, or enrollment of less than half-time.

Student Contribution
The amount of money the federal government expects the student to contribute to his or her education and is included as part of the EFC. The student contribution depends on the student's income and assets, but can vary from school to school. Usually students are expected to contribute about 20% of savings and approximately one-half of summer earnings above $3,000.

Subsidy
The money the federal government uses to help underwrite student aid programs.

Subsidized Loan
With a subsidized loan, the government pays the interest while students are in school and during any deferment periods. Subsidized loans are awarded based on financial need and may not be used to finance the family contribution.

Federal Supplemental Education Opportunity Grant (SEOG)
Federal grant program for undergraduate students with exceptional need. SEOG grants are awarded by the school's financial aid office, and provide up to $4,000 per year. To qualify, a student must also be a recipient of a Federal Pell Grant.

Taxable Income
Income earned from wages, salaries and tips, as well as interest income, dividend income, business or farm profits, and rental or property income.

Tuition Payment Plans
Payment for present costs of postsecondary education is extended into a future period of time.

Title IV Loans
Also known as the Federal Direct Stafford Loans (Subsidized and Unsubsidized), Federal Direct Parent PLUS Loans and Federal Direct Consolidation Loans.

Title IV School Code
When filling out the FAFSA students need to supply the Title IV Code for each school to which they are applying. Pitt-Bradford’s code is 008815.  It will come up as University of Pittsburgh.

Unmet Need 
The difference between total cost of attendance and total available resources.

Unsecured Loan
A loan not backed by collateral, representing a greater risk to the lender. The lender may require a co-signer on the loan to reduce their risk. If you default on the loan, the co-signer will be held responsible for repayment. Most educational loans are unsecured loans. In the case of federal student loans, the federal government guarantees repayment of the loans. Other examples of unsecured loans include credit card and personal lines of credit.

Unsubsidized Loan 
A federal loan which the government does not pay the interest. Students are responsible for the interest on an unsubsidized loan from the date the loan is disbursed, even while in school. You may avoid paying the interest while you are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need.

Untaxed Income
Income such as workers compensation, disability, Black Lung benefits, Refugee Assistance, untaxed portion of Railroad benefits or wages not subject to taxation by any government.

Variable Interest Rate
A variable interest rate is the rate of interest on a loan that is tied to a stated index and changes annually, every July 1, as the index changes. See also fixed interest rate.

Verification
A review process in which the financial aid office determines the accuracy of the information provided on the FAFSA. During the verification process, students and spouses/parents will need to submit documentation for the amounts listed (or not listed) on the FAFSA. Such documentation may include IRS tax return transcripts and w2s for you, your spouse (if any) and/or your parents, proof of citizenship, proof of registration with Selective Service, and copies of Social Security benefit statements. If you refuse to submit the required documentation, your financial aid package will be canceled and no aid awarded.

Veterans Educational Benefits
Assistance programs for eligible veterans and/or their dependents for education or training.

Yearly Maximum Federal Direct Stafford Loan Limit
The total amount of Federal Stafford Loan, both subsidized and unsubsidized, that a student can borrow each year (fall/spring/summer).