Financial Aid Glossary
1040 Form, 1040A Form, 1040EZ Form
The Federal Income Tax Return. Every person who has received income during the previous year must file a form 1040 with the IRS by April 15.
1098T ( a tuition statement)
A form used by eligible educational institutions to report information about their students to the IRS
If you receive a 1099-C form from a creditor, you must report the amount of the canceled debt as income to the IRS even though you have not actually received the money. The amount shown in Box 2 of the 1099-C form is the amount that must be reported as income.
A popular type of retirement fund. It is legal to borrow money from your 401(k) to help pay for your childrens' education.
As provided in the Taxpayer Relief Act of 1997, borrowers may be eligible to claim a deduction for interest paid on qualified student loans for educational expenses. Form1098-E (supplied to the student at the end of each calendar year) reflects the amount of qualifying interest paid to the Lender during the applicable tax period. This same information will also be transmitted to the Internal Revenue Service.
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A period of time usually consisting of two semesters or three quarters or trimesters, each with a certain amount of credit hours.
Interest on loans that accumulates and must be paid at a later date, usually when the principal becomes due.
A schedule of repayment which includes payments consisting of both principal and interest.
Cash on hand in checking and savings accounts; trusts, stocks, bonds, other securities; real estate (excluding home), income-producing property, business equipment, and business inventory. Considered in determining Expected Family Contribution (EFC).
The degree granted by two-year colleges.
An official document issued by a school's financial aid office that lists all of the financial aid awarded to the student. This letter provides details on their analysis of your financial need and the breakdown of your financial aid package according to amount, source and type of aid. The award letter will include the terms and conditions for the financial aid and information about the cost of attendance. You may be required to sign a copy of the letter, indicating whether you accept or decline each source of aid, and return it to the financial aid office. Some schools might refer to the award letter the "Financial Aid Notification (FAN)".
The undergraduate degree granted by four-year colleges and universities.
A legal action in which a person who is unable to meet the financial obligations is declared bankrupt by a decree of the court under Federal Bankruptcy Law. Federal student loans, however, cannot normally be discharged through bankruptcy.
The tax year prior to the academic year (award year) for which financial aid is requested. The base year runs from January 1 through December 31. Financial information from this year is used to determine eligibility for financial aid.
Person responsible for repaying a loan that has agreed to the terms and signed a promissory note.
A list of reasons and advantages why an individual would be interested in a student loan product from a particular lender. Read more about the borrower benefits offered by SC Student Loan.
The university office that is responsible for the billing and collection of university charges. This may also be referred to the Business Office or Student Accounts Office.
Clause in which a portion or all of a student's loans can be canceled. Promissory notes outline the circumstances under which loans can be canceled.
This occurs when unpaid interest is added to the principal of the loan, increasing the monthly payment and the total balance of the loan.
A cosigner on a loan assumes responsibility for the loan if the borrower should fail to repay it.
Cost of Attendance (COA)
An estimate of the student's education expenses for a specified period of enrollment. COA usually includes tuition and fees, room and board (or a housing and food allowance for off-campus students), and allowances for books, supplies, transportation, loan fees, and dependent care expenses if applicable. It also covers miscellaneous and personal expenses, including an allowance for the rental or purchase of a personal computer. Costs related to a disability may also be covered.
A numerical score based on credit limits, balances, and personal information assigned by credit bureaus and credit reporting agencies to determine an individual's ability to pay back loans and credit cards.
Failure to repay a loan according to the terms agreed to when you signed a promissory note. Default may also result from failure to submit requests for deferment or cancellation on time.
The temporary postponement of loan payments for a limited period of time. Deferments, allowed for specific borrower activities, extend the loan repayment period by the length of the deferment period. You must meet the conditions of eligibility set forth by the federal government. During deferment, interest will continue to accrue on any unsubsidized loans, but not on any subsidized loans. Any outstanding unsubsidized interest at the end of the deferment period will be added to the principal balance. Click here to review and download available deferment forms.
This occurs when loan payments are late or missed, as specified in the terms of the promissory note and the selected repayment plan.
The federal government determines the criteria which define dependent status. To determine your dependency status, complete the online Dependency Status Worksheet.
Costs that the college or university directly bills to the student. Tuition and fees are direct costs.
The release of loan funds. In most cases loans are disbursed in two equal installments.
To release the borrower from his or her obligation to repay the loan.
A statement from a lender to a borrower that provides the borrower with information about the terms of the loan and the consequences of defaulting on that loan.
Electronic Funds Transfer (EFT)
The process of electronically transferring loan proceeds from the lender to a school's account or the school's financial institution.
Electronic Student Aid Report
An electronic form of the Student Aid Report.
An indication of whether you are a full-time or half-time student. Generally you must be enrolled at least half-time (and in some cases full-time) to qualify for financial aid.
An educational session that first time Stafford borrowers must fulfill before the loan's proceeds can be disbursed. The entrance counseling session provides first time borrowers basic information about student loans and the terms and conditions of the Stafford, Perkins, or Graduate PLUS Loan programs. Read more about Entrance Counseling.
Exit Counseling Interview
An educational session that Stafford, Perkins, or Graduate PLUS loan borrowers must fulfill around the time of graduation or separation from a college. The exit counseling session provides the borrower detailed information about the loans he/she borrowed, the company that will collect the payment and the available repayment alternatives. Read more about Exit Counseling.
Expected Family Contribution
The out-of-pocket expenses a family and/or student is expected to contribute toward the cost of college, graduate or professional school. The EFC is the basis for financial need.
An Extended Repayment Plan offers a fixed annual or graduated repayment amount paid over an extended period of time, not to exceed 25 years. It is available for new borrowers on or after October 7, 1998 with outstanding Stafford loans exceeding $30,000.
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The Free Application for Federal Student Aid is the federal form that must be completed to be considered for all federal financial aid funds, including Stafford, Perkins, and Graduate PLUS loans.
FAFSA Pin Number
A FAFSA Pin Number is a 4-digit number provided by the U.S. Department of Education. Your PIN identifies you as someone who has the right to access your own personal information, such as to access your FAFSA or to sign a Master Promissory Note.
Federal Pell Grant
A federal grant program for needy postsecondary students who have not received a bachelor's degree or first professional degree.
Federal Perkins Loan
Low interest loans for undergraduate or graduate students.
Federal School Code
The Federal School Code List contains the unique codes assigned by the Department of Education for schools participating in the Title IV federal student aid programs. Students can enter these codes on the Free Application for Federal Student Aid (FAFSA) to indicate which postsecondary schools they want to receive their financial application results.
A form of aid given to graduate students to help support their education. Some fellowships include a tuition waiver or a payment to the university in lieu of tuition. Most fellowships include a stipend to cover reasonable living expenses (e.g., just above the poverty line). Fellowships are a form of gift aid and do not have to be repaid.
Money provided to the student and the family to help them pay for the student's education. Major forms of financial aid include gift aid (grants and scholarships) and self-help aid (loans and work).
The difference between a student's Cost of Attendance and Expected Family Contribution. It is the amount of financial aid the student needs to afford attendance at a particular college.
Fixed Interest Rate
Refers to loan interest rates that will not change throughout the entire life cycle of the loan.
An arrangement to postpone or reduce a borrower's monthly payment amount for a limited and specified period, or to extend the repayment period. The borrower is charged interest during forbearance. Forbearance is usually granted at the discretion of the lender to borrowers ineligible for a deferment.
Full-time status is determined by your school. It usually refers to when a student is taking at least 12 credit hours of class for undergraduate students and nine credit hours for graduate students.
The period of time that begins when a borrower graduates (or ceases to be enrolled at least half-time) and ends when repayment must begin. The grace period for most federal student loans is six months, while private loans typically do not have a grace period.
A student who is enrolled in a Masters or Doctoral program.
A schedule where the monthly payments are smaller at the start of the repayment period and gradually become larger. Payments are increased once every 24 months. This plan provides for the greatest relief from the 'cash crunch' of starting your career.
Educational funds that do not require repayment from present or future earnings.
Income before taxes, deductions and allowances have been subtracted.
Half-time status is determined by your school. It usually refers to when a student is taking at least six credit hours of class. In most cases, enrollment must be at least half-time to qualify for financial aid.
The amount of money received from employment (salary, wages, tips), profit from financial instruments (interest, dividends, capital gains), or other sources (welfare, disability, child support, Social Security and pensions).
Income-Based Repayment (IBR) Plan
This plan is available July 1, 2009 and after for FFELP borrowers who are experiencing a “partial financial hardship."
- Parent PLUS Loans and Consolidation Loans that repaid Parent PLUS Loans are not eligible.
- You may be eligible for forgiveness on your remaining balance after 25 years of eligible
payments. However, at this time, any amount that is forgiven is considered taxable income.
- Estimate your monthly payment amount by using the IBR calculator.
- You are encouraged to contact a representative at our office to discuss all repayment options
prior to downloading and completing an IBR application.
Income Sensitive Repayment
This repayment alternative is available to some federal loan borrowers. Income sensitive repayments base the monthly payment on the borrower's income in relation to total federal loan indebtedness. Under this option, monthly payments can drop to as low as the amount of interest that accrues on the loan's principal balance. Borrowers must apply for this option annually and must provide documentation of income - usually in the form of a federal tax return.
The federal government determines the criteria which define independent status. To determine your dependency status, complete the online Dependency Status Worksheet.
The actual amount of simple interest paid by the borrower. Different types include fixed (the interest rate remains the same for the term of the loan) and variable (the rate adjusts according to economic and market conditions on a monthly, quarterly, or annual basis). For loan-specific interest rate information, please visit our Loan Programs page.
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A child or other person (other than a spouse) who lives with and gets more than half of his or her support from the student and will continue to receive that support during the school year.
A court-appointed individual whose guardianship responsibilities include using personal financial resources to support the person in his or her charge.
An entity offering loans to students; it can be a private company or bank, the government (Direct Loans), or an educational institution in the case of Perkins Loans.
Less than half-time student
Enrollment status is determined by your school. It usually refers to an undergraduate student taking less than 6 credits per term or graduate student taking less than 5 credits per term. Students enrolled less than half-time are ineligible for financial aid under most circumstances.
A type of financial aid which must be repaid, with interest.
This occurs when the federal government cancels all or part of an educational loan because the borrower meets certain criteria.
The term of a loan is the period during which the borrower is required to make payments on his or her loans. When the payments are made monthly, the term is usually given as a number of payments or years.
Master Promissory Note (MPN)
A promissory note that can be used to make one or more loans for one or more academic years; currently used to make Subsidized and Unsubsidized Stafford Loans as well as Parent and Graduate PLUS loans.
Need-Based Financial Aid
Financial aid that relies upon financial need as the criterion for eligibility. Need is determined by subtracting the expected family contribution, via the FAFSA, from the institution's established cost of attendance.
This is income after taxes, deductions and allowances have been subtracted.
An upfront fee the borrower pays to the lender for originating a student loan.
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Palmetto Assistance Loan (PAL)
A private loan offered exclusively by SC Student Loan for undergraduate students, graduate students, and parents of eligible students to supplement their federal loans and other financial aid. Read more about our Palmetto Assistance Loan (PAL).
Status that occurs if a monthly bill is still unpaid after its due date.
A need-based financial aid program funded by the federal government. The amount of the award is based on the student's enrollment level (full time, three-quarter time, etc.) and the cost of attendance.
Paying off all or part of a loan before it is due.
The rate at which banks borrow money from each other. A common benchmark for consumer and business loans set by banks, usually at a level 3 percentage points higher than the Fed Funds rate. The rate given to consumers on their loans is often determined as the prime rate plus a certain percentage, which represents the lender's assessment of the risk in lending.
The amount of the loan funds borrowed.
Also called alternative loans, or supplemental loans, private loans are non-government loans offered by non-profit lenders, banks, credit unions and other lenders. They are not based on financial need, but rather on your creditworthiness and ability to repay.
A degree in a field like law, education, medicine, pharmacy or dentistry.
The binding legal document that must be signed by the student borrower 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 cancellations. The student should keep this document until the loan has been repaid.
A statement provided by the lender or servicer of a loan to the borrower that lists the amount borrowed, the amount of monthly payments, and the date payments are due.
Satisfactory Academic Progress (SAP)
The level of academic standing (defined by the school) that a student must maintain to continue receiving federal or state financial aid, including educational loans. Many private educational loans, including the Palmetto Assistance Loan, are also subject to a school's SAP policies.
SC Teachers Loan
A 100% forgivable loan, offered exclusively by SC Student Loan (SCSL), designed to entice talented and qualified students to the teaching profession. Read more about our SC Teachers Loan.
A financial aid award that does not have to be repaid. Scholarships are generally made based on an applicant meeting certain eligibility criteria.
Interest that is paid only on the principal balance of the loan and not on any accrued interest. Most federal student loan programs offer simple interest. Note, however, that capitalizing the interest on an unsubsidized Stafford loan is a form of compounded interest.
Student Aid Report (SAR)
A form sent to the student after submitting the FAFSA to the federal processor.
Standard Repayment Plan
A repayment plan that allows for substantially equal payments over the life of the loan.
Treasury Bill Rate (T-bill rate)
The rate paid by the government on its short-term borrowing. It is adjusted quarterly. Treasury bill rates are indexes used by variable-rate loan programs.
A student who is enrolled in a Bachelors program.
US Department of Education
Government agency that administers several federal student financial aid programs, including the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loans, the Federal Stafford Loans and the Federal PLUS Loans.
Interest rates that can fluctuate. Most variable-interest loans have an annual or maximum cap, which prevents them from exceeding a set amount within a certain period of time.
The process to confirm an individual student's application data. Students and parents must submit tax returns and other supporting documentation to their financial aid office if asked.