SFL – Subsidized Federal Direct Loan
USFL – Unsubsidized Federal Direct Loan
Grad PLUS – Graduate Professional Plus Loan
ALP – Private Alternative Loan Program
FAFSA – Free Application for Federal Student Aid
EFC – Expected Family Contribution
COA – Cost of Attendance
DOEd – Department of Education
SAR – Student Aid Report
MPN – Master Promissory Note
PCL – Primary Care Loan
SMA – Standard Maintenance Allowance
NHSC – National Health Service Corps
Glossary of Finanical Terms
Academic Period - The period of time necessary to complete one academic level.
Accrued Interest - Interest that is accumulated for payment in installments later (usually when the principal is due).
Balloon Note - Monthly or quarterly loan payments do not fully cover this type of loan. A larger lump sum is due at the end of the loan period. This type of loan is not available in all states.Borrower - An individual who has obtained something (in your case, money) on the promise to return it.
Cancellation - Some student loans may be canceled if the borrower dies or becomes permanently disabled.
Capitalization - The addition of unpaid accrued interest to the principal balance of a loan. Capitalization of interest results in a higher principal balance and additional finance charges over the course of repayment and may cause your monthly payment amount to increase.
Commercial Bank - An institution that has a primary function of making loans to individuals and businesses.
Compound Interest - Interest calculated on interest accumulated as well as on the principal amount of the loan.
Credit bureau - An agency that complies and distributes credit and personal information to creditors. You have the right to examine your credit file, and to explain or correct information.
Debt - Something owed; an obligation or liability to pay or render something to someone else.
Debtor - One who owes something to another.
Default - Failure to make loan payments at stipulated times; defaults are recorded on your permanent record and can result in prosecution.
Deferment - A specified and limited time period during which payments on your loan do not have to be made; deferments may be extended for unemployment, studying in an approved graduate fellowship or rehabilitation programs for the disabled and economic hardship.
Deferred Interest - Interest payments that are delayed while a borrower is not gainfully employed; when the borrower again becomes a wage earner, the interest payments are resumed.
Demand Note - A written, signed promise to pay (I.O.U.) where interest payments are due on a schedule basis and the principal is due in a lump sum at a specified date.
Endorser - A person who signs a promise to pay (Promissory Note) as guarantor for the repayment in the case you become delinquent or in default.
Expected Family Contribution (EFC) - The amount of financial support a student and/or the student's family is expected to contribute to the educational and living costs of the student. The EFC is calculated by completion of the FAFSA and is required to determine eligibility for all financial aid programs.
Free Application for Federal student Aid (FAFSA) - The federal document used to collect family financial data for the purpose of conducting needs analysis to calculate an expected family contribution (EFC).
Fixed Interest - A rate of interest that does not change during the life of the loan; it is determined when the loan is negotiated.
Forbearance - A period of time when principal payments are not due. When you are willing but unable to make such payments.
Grace Period - A length of time sometimes allowed, i.e. after graduation, for postponed payment of loans; the borrower incurs no penalty or loss during this period.
Installment Note - A loan that is to be repaid in equal installments (usually due monthly or quarterly) over a set period of time (one to ten years is most common).
Interest - The price paid for the use of borrowed money.
Lender - One who provides money temporarily on the condition that the amount borrowed will be returned, together with an interest fee.
Liability - Something for which one is liable; an obligation of debt.
Line of Credit - Similar to a "charge account" at the bank. Your credit limit is set and as your expenses come due, you draw on your line of credit to pay them. All charges are consolidated into one loan and a repayment method is determined.
Loan Consolidation - The Re-authorization Bill created a loan consolidation program effective 10/17/86. This bill allows borrowers to consolidate Stafford (subsidized and unsubsidized) FSLS, Grad PLUS, NDSL, HPSL and HEAL loans into one debt at a weighted average interest rate of the loans consolidated and may extend repayment time to a maximum of 30 years.
Loan Disclosure Statement - A document that lists details of the repayment agreement, where, when, and what size installments will be owed, interest terms, types of credit insurance, and other items relevant to the loan.
Loan Servicing - Most lending institutions contract with loan servicing organizations to take responsibility for tracking and collecting your loans.
Maturity Date - The date a Promissory Note becomes due.
Needs Analysis - The process of analyzing the student and family's financial data to determine an expected family contribution. The formula for needs analysis calculations are established by the Federal Government.
Primary Rate - The interest rate that the banks charge their customers. Loans whose interest rates are tied to the prime rate cost more because the interest fluctuates. Prime is usually determined by a large banking institution; other banks follow suit.
Principal - The "face value" of a loan; the amount upon which interest is charged.
Promissory Note - A contract between the lender and the borrower that includes all the terms of the loan and is signed by both parties when the loan is made.
SAR - Student Aid Report - the output document resulting from completion of the FAFSA. The SAR indicates the student's EFC and is sent to the student for verification. It must be maintained by the borrower in the event the school requests a copy.
Simple Interest - Interest calculated only on the original principal.
Variable Interest - Rates of interest that are tied to a certain index and change as the index changes.
Verification - The process of requiring a student to verify financial data submitted on a FAFSA. Students selected for verification must complete a verification worksheet, attaching required documents and return it to the MCOM Financial Aid Office before financial aid checks can be disbursed.