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Loan Sözlüğü
A C D E F G H I L M N O P R S T U V W
A
The period during which school is in session, consisting of at least 30 weeks of instructional time. The school year typically runs from the beginning of September through the end of May at most colleges and universities.
Alternative financing includes alternative payment options available to families to pay remaining costs not paid by the financial aid award. Alternative financing typically refers to payment plans and alternative loan programs such as the PLUS and MEFA Loan which allow families to borrow up to the full cost of attendance less financial aid received toward college expenses.
The APR reflects the total cost of borrowing money over the life of the loan, considering not only the interest rate, but also the effect of other fees on the total cost of repaying the amount financed.
An appeal is a formal request to have a financial aid administrator review your aid eligibility and possibly use Professional Judgment to adjust the figures. For example, if you believe the financial information on your financial aid application does not reflect your family's current ability to pay (e.g., because of death of a parent, unemployment, or other unusual circumstances), you should definitely make an appeal. The financial aid administrator may require documentation of the special circumstances or of other information listed on your financial aid application.
An asset is an item of value, such as a family's home, business, and farm equity, real estate, stocks, bonds, mutual funds, cash, certificates of deposit (CDs), bank accounts, trust funds, and other property and investments.
An award letter is an official document issued by the 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 are 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 call the award letter the "Financial Aid Notification (FAN)".
C
Campus-based financial aid programs are administered by the university. The federal government provides the university with a fixed annual allocation, which is awarded by the financial aid administrator to deserving students. Such programs include the Perkins Loan, Supplemental Education Opportunity Grant, and Federal Work-Study.
Note that there is no guarantee that every eligible student will receive financial aid through these programs, because the awards are made from a fixed pool of money. This is a key difference between the campus-based loan programs and the Direct Loan Program. Do not confuse the two, even though both loans are issued through the schools.
In a cooperative education program, the student spends some time engaged in employment related to their major in addition to regular classroom study.
A cosigner on a loan assumes responsibility for the loan if the borrower should fail to repay it.
The cost of attendance (COA), also known as the cost of education or "budget", is the total amount it should cost the student to go to school. This amount includes tuition and fees, room and board, and allowances for books and supplies, transportation, and personal and incidental expenses. Loan fees, if applicable, may also be included in the COA. Childcare and expenses for disabilities may also be included at the discretion of the financial aid administrator. Schools establish different standard budget amounts for students living on-campus and off-campus, married and unmarried students, and in-state and out-of-state students.
A credit rating is an evaluation of the likelihood of a borrower to default on a loan. Credit Bureaus and Credit Reporting Agencies provide credit information to creditors, such as banks and businesses, to help them decide whether to issue a loan or extend credit. This information 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 negatively impact your credit rating. A good credit rating is not required for most educational loans, with the exception of the PLUS Loan. However, students who have defaulted on previous educational loans may be required to agree to repay the loan and begin making payments before they can become eligible for further Federal aid.
If a student's parents are divorced or separated, the custodial parent is the one with whom the student lived the most during the past 12 months. Much of a student's need analysis is based on financial information supplied by the custodial parent.
D
Deferment occurs when a borrower is allowed to postpone repaying the loan. If you have a subsidized loan, the federal government pays the interest charges during the deferment period. If you have an unsubsidized loan, you are responsible for the interest that accrues during the deferment period. You can still postpone paying the interest charges by capitalizing the interest, which increases the size of the loan. Most federal loan programs allow students to defer their loans while they are in school at least half time. If you don't qualify for a deferment, you may be able to get a Forbearance. You can't get a deferment if your loan is in default.
A student's dependency status determines to what degree the student has access to parent financial resources. A parent refusing to provide support for their child's education is not sufficient for the child to be declared independent.
An independent student is one who is at least 24 years old as of January 1, is married, is a graduate or professional student, has a legal dependent other than a spouse, is a veteran of the US Armed Forces, or is an orphan or ward of the court (or was a ward of the court until age 18). All other students are considered dependent.
If the financial aid administrator believes that you are not an independent student they can require you to provide proof of independent status to qualify, and their decision on your status is generally not subject to appeal.
For details on what constitutes a veteran, please see Veteran below.
See your financial aid administrator if you have any special circumstances. The FAA may be able to do an override of your dependency status on the FAFSA, if warranted by involuntary dissolution of the family or other very unusual situations. Special circumstances that are sometimes sufficient for an override include:
· A legal restraining order has been issued against your parents because of abusive behavior.
· Both of your parents have been incarcerated.
· Your parents live in another country and you have been being granted refugee status by the US Immigration Service.
· Your parents live in a country where they cannot easily leave or get money out.
You do not qualify for independent status just because your parents have decided to not claim you as an exemption on their tax returns or are refusing to provide support for your college education. You must provide documentation to the satisfaction of the financial aid administrator that you are truly self-supporting for them to override your dependency status. A few financial aid offices may require that you have a minimum annual income of $10,000 to establish self-sufficiency.
[Several financial aid books suggest that all one needs to do for a student to become independent is for them to not be listed as a dependent on their parents' tax return for the past two years and for them to have earned at least $4,000 per year during the same period. This is the OLD definition of independence, and is no longer valid.]
For a child or other person to be considered your dependent, they must live with you and you must provide them with more than half of their support. Spouses do not count as dependents in the Federal Methodology. You and your spouse cannot both claim the same child as a dependent.
The William D. Ford Federal Direct Loan Program (a.k.a. the Direct Loan Program) is a federal program where the school becomes the lending agency and manages the funds directly, with the federal government providing the loan funds. Not all schools currently participate in this program. Benefits of the program include a faster turn-around time and less bureaucracy than the old "bank loan" program. The terms for Direct Loans are the same as for the Stafford Loan program.
Disbursement is the release of loan funds to the school for delivery 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 for payment of tuition, fees, room and board, and other school charges. Any excess funds are then paid to the student in cash or by check. Unless the loan amount is under $500, the disbursement will be made in at least two equal installments."
Lenders are required to provide the borrower with a disclosure statement before issuing a loan. The disclosure statement provides the borrower with information about the actual cost of the loan, including the interest rate, origination, insurance, and loan fees, and any other kinds of finance charges.
E
Employer-Provided Education Assistance
The tax relief bill extends section 127 of the tax code for three years for undergraduate education (for courses beginning prior to June 1, 2000). This provision allows workers to exclude up to $5,250 of employer — provided education benefits from their income.
The Expected Family Contribution (EFC) is the amount of money that the family is expected to be able to contribute to the student's education, as determined by the Federal Methodology need analysis formula approved by Congress. 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. The difference between the Cost of Attendance (COA) and the EFC is the student's financial need, and is used in determining the student's eligibility for need-based financial aid.
If there are unusual financial circumstances, such as high medical expenses, loss of employment, or death of a parent, that may affect your ability to pay for your education, tell your financial aid administrator (FAA). He or she can adjust the COA or EFC to compensate. See Professional Judgment.
F
Refinancing multiple federal student loans into one new loan with a new repayment term, interest rate, and a monthly payment. For more information about MEFA's U.Consolidate Program, please visit www.uconsolidate.org or call 1800-449-6332.
Federal Direct Student Loan Program (FDSLP)
The Federal Direct Student Loan Program (FDSLP) is similar to the Federal Family Education Loan Program (FFELP). The funds for these loans are provided by the US government directly to students and their parents through their schools. Benefits of the program include a faster turn-around time and less bureaucracy than the old "bank loan" program. The Federal Direct Student Loan Program (FDSLP) includes the Federal Direct Stafford Loan (Subsidized and Unsubsidized) and the Federal Direct Parent Loan for Undergraduate Students (PLUS).
Federal Family Education Loan Program (FFELP)
The Federal Family Education Loan Program (FFELP) includes the Federal Stafford Loan (Subsidized and Unsubsidized), the Federal Perkins Loan, and the Parent Loan for Undergraduate Students (PLUS). The funds for these loans are provided by private lenders, such as banks, credit unions, and savings & loan associations. These loans are guaranteed against default by the federal government.
The Federal Methodology (FM) is the need analysis formula used to determine the EFC. The Federal Methodology takes family size, the number of family members in college, taxable and nontaxable income, and assets into account. Unlike most Institutional Methodologies, however, the Federal Methodology does not consider the net value of the family residence.
The organization that processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and uses it to compute eligibility for federal student aid. There are two different federal processors serving specific geographic regions.
The Federal Work-Study (FWS) program provides undergraduate and graduate students with part-time employment during the school year. The federal government pays a portion of the student's salary, making it cheaper for departments and businesses to hire the student. For this reason, work-study students often find it easier to get a part-time job. Eligibility for FWS is based on need. Money earned from a FWS job is not counted as income for the subsequent year's need analysis process.
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 Financial Aid Office (FAO) is the college or university office that is responsible for the determination of financial need and the awarding of financial aid.
The financial aid package is 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 them to attend the college or university. Note that unsubsidized Stafford loans and PLUS loans are not considered part of the financial aid package, since these financing options are available to the family to help them meet the EFC.
In a fixed interest loan, the interest rate stays the same for the life of the loan.
During forbearance the lender allows the borrower to temporarily postpone repaying the principal, but the interest charges continue to accrue, even on subsidized loans. The borrower must continue paying the interest charges during the forbearance period. Forbearances 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.
Free Application for Federal Student Aid (FAFSA)
The Free Application for Federal Student Aid (FAFSA) is used to apply for Pell Grants and all other need-based aid. FAFSA may be completed online at www.fafsa.ed.gov.
G
Gift aid is financial aid, such as grants and scholarships, which does not need to be repaid.
A grant is a type of financial aid based on financial need that the student does not have to repay.
H
Health Professions Student Loan
The Health Professions Student Loan (HPSL) is a low interest loan administered by the US Department of Health and Human Services (HHS). It is now known as the Primary Care Loan (PCL).
Home equity is the current market value of the home less the mortgage's remaining unpaid principal. It is based on the market value, not the insurance or tax value.
Students will receive a tax credit of 100% on the first $1,000 of tuition and required fees and 50% on the second $1,000, for a maximum of $1,500 for each eligible dependent.
· This tax credit became available for payments in 1998 for college enrollment after that date.
· Only available for up to two tax years (i.e. Freshman and Sophomore Years).
· This is a tax credit, not a scholarship. Tax credits are subtracted directly from the tax a family owes. If no tax liability, tax credit is "non-refundable".
· A family can claim a tax credit up to $1,500 per tax year for each eligible dependent.
· Eligible taxpayers must file a tax return and owe taxes to claim the credit. The taxpayer must claim the student as a dependent unless the credit is for the taxpayer or the taxpayer's spouse.
· The taxpayer is eligible for maximum benefit with AGI of up to $40,000 for a single taxpayer (or $80,000 for married taxpayers). The credit is phased-out between $40,000-$50,000 for single taxpayers (or $80,000-$100,000 for married taxpayers).
· Credit is available for tuition and required fees less grants, scholarships, and other tax-free educational assistance.
· Cannot be used in the same year as Lifetime Learning Tax Credit.
I
An in-state student has met the legal residency requirements for the state, and is eligible for reduced in-state student tuition at public colleges and universities in the state.
Income is 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).
See Dependency Status.
Individual Retirement Account (IRA)
The IRA is one of several popular types of retirement funds. It is not advisable to borrow money from your IRA to help pay for your children's education. Current IRA New Changes Currently, funds placed in IRA's that are withdrawn prior to age 591/2 are subject to a 10% penalty.
· The law has changes so that the penalty does not apply for amounts the taxpayer uses to pay qualified educational expenses.
· Such expenses of the taxpayer, taxpayer's spouse, child or grandchild of either taxpayer or taxpayer's spouse, all may be paid through an IRA early withdrawal without a penalty.
Many colleges and universities offer their own grant funds to assist students with college expenses called institutional grants. Institutional grants are typically awarded based on the college's own criteria.
If a college or university uses its own formula to determine financial need for allocation of the school's own financial aid funds, the formula is referred to as the Institutional Methodology (IM).
Interest is an amount charged to the borrower for the use of the lender's money. Interest is usually calculated as a percentage of the principal balance of the loan. The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan.
The Internal Revenue Service (IRS) is the federal agency responsible for enforcing US tax laws and collecting taxes.
L
A lender is a bank, credit union, savings & loan association, or other financial institution that provides funds to the student or parent for an educational loan. Note: Some schools participate in the Federal Direct Loan program and no longer use a private lender, since loan funds are provided by the US Government.
A family may claim a tax credit of up to $1,000 per tax year (until January 1, 2005) and $2,000 per tax year after that date for the taxpayer, taxpayer's spouse, or any eligible dependents for an unlimited number of tax years.
· This is a tax credit available to an individual taxpayer in an amount not to exceed 20% of $5,000 of qualified tuition and related expenses paid each year through 2002 and for the first $10,000 thereafter.
· A maximum of $1,000 per taxpayer return is available (Does not vary based on number of students in a taxpayer's family).
· Cannot be used in the same year as a HOPE Scholarship.
· Available for tuition and required fees less grants, scholarships, and other tax-free educational assistance for amounts paid on or after July 1, 1998, for post secondary enrollment beginning on or after July 1, 1998.
· Tax credit is phased-out for single filing taxpayers with AGI between $40,000-$50,000 ($80,000-$100,000 for joint returns).
A loan is a type of financial aid, which must be repaid with interest. The federal student loan programs (FFELP and FDSLP) are a good method of financing the costs of your college education. These loans are better than most consumer loans because they have lower interest rates and do not require a credit check or collateral. The Stafford Loans and Perkins Loans also provide a variety of deferment options and extended repayment terms.
M
The MassGrant is need-based grant funding awarded by the Commonwealth of Massachusetts for state residents. It is available to families based on residency requirements, financial need, and by completing the FAFSA by the required filing date. For more information, contact the Massachusetts Office of Student Financial Assistance at (617) 727-9420 or visit their website at www.osfa.mass.edu
Financial aid that is merit-based depends on your academic, artistic, or athletic merit, or some other criteria, and does not depend on the existence of financial need. Merit-based awards use your grades, test scores, hobbies, and special talents to determine your eligibility for scholarships.
N
The difference between the COA and the EFC is the student's financial need — the gap between the cost of attending the school and the student's resources. The financial aid package is based on the amount of financial need. The process of determining a student's need is known as need analysis.
Cost of Attendance (COA)
- Expected Family Contribution (EFC)
-----------------------------------------
= Financial Need
Need analysis is the process of determining a student's financial need by analyzing the financial information provided by the student and his or her parents (and spouse, if any) on a financial aid form. The student must submit a need analysis form to apply for need-based aid. Need analysis forms include the Free Application for Federal Student Aid (FAFSA) and the Financial Aid PROFILE.
Financial aid that is need-based depends on your financial situation. Most government sources of financial aid are need-based.
Under need-blind admissions, the school decides whether to make an offer of admission to a student without considering the student's financial situation. Most schools use a need-blind admissions process. A few schools will use financial need to decide whether to include marginal students in the wait list.
The No Interest Loan Program is an interest-free loan for students awarded to Massachusetts State residents. It is based on residency requirements, financial need, funds availability, and by completing the FAFSA by the required filing date. For more information, contact the Massachusetts Office of Student Financial Assistance at (617) 727-9420 or visit their website at www.osfa.mass.edu
The Nursing Student Loan (NSL) is a low interest loan administered by the US Department of Health and Human Services (HHS) and available to students enrolled in nursing programs.
O
The origination fee is paid to a lender to compensate them for the cost of administering the loan. The origination fees are charged as the loan is disbursed, and typically represent a percentage of the amount disbursed. A portion of this fee is paid to federal government to offset the administrative costs of the loan.
An outside resource is something that is available because a student is in school and is counted after need is determined. Outside scholarships, prepaid tuition plans and veterans educational benefits are examples of outside resources.
An outside scholarship is one that comes from sources other than the school and the federal or state government.
P
Packaging is the process of assembling a financial aid package.
The Parent Contribution (PC) is 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.
Payment plans are available through most colleges and universities where payment due may be divided over a period of 12 or fewer monthly payments. For example, a payment due of $1000 may be paid at $100 per month for 10 months. Payment plans typically charge a small fee and may offer additional insurance. See your school for details.
The Pell grant is a federal grant that provides funds of up to $4,000 based on the student's financial need.
Formerly the National Direct Student Loan Program, the Perkins Loan allows students to borrow up to $3,000/year (5 year max) for undergraduate school and $5,000/year for graduate school (6 year max). The Perkins Loan has one of the lowest interest rates and is awarded by the financial aid administrator to students with exceptional financial need. The student must have applied for a Pell Grant to be eligible. The interest on the Perkins Loan is subsidized while the student is in school.
Parent Loans for Undergraduate Students (PLUS) are federal loans available to parents of dependent undergraduate students to help finance the child's education. Parents may borrow up to the full cost of their children's education, less the amount of any other financial aid received. PLUS Loans may be used to pay the EFC. There is a minimal credit check required for the PLUS loan, so a good credit history is required. Check with your local bank to see if they participate in the PLUS loan program. If your application for a PLUS loan is turned down, your child may be eligible to borrow additional money under the Unsubsidized Stafford Loan program.
Prepaid Tuition Plan (U. Plan)
A prepaid tuition plan is a college savings plan that is guaranteed to rise in value at the same rate as college tuition. For example, if a family purchases shares that are worth half a year's tuition at a state college, they will always be worth half a year's tuition, even 10 years later regardless of how much tuition has since increased.
The principal is the amount of money borrowed or remaining unpaid on a loan. Interest is charged as a percentage of the principal. Insurance and origination fees will be deducted from this amount before disbursement.
For need-based federal aid programs, the financial aid administrator can adjust the EFC, adjust the COA, or change the dependency status (with documentation) when extenuating circumstances exist. For example, if a parent becomes unemployed, disabled, or deceased, the FAA can decide to use estimated income information for the award year instead of the actual income figures from the base year. This delegation of authority from the federal government to the financial aid administrator is called Professional Judgment (PJ).
The CSS PROFILE is an additional financial aid application that is required at many private colleges and universities. It asks additional family income and asset information for the purpose of awarding institutional funding. There is a fee to register for the PROFILE and a fee for each school that you send PROFILE information. The form can be completed online at www.collegeboard.org/profile.
The promissory note is 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 borrower should keep this document until the loan has been repaid.
R
A renewable scholarship is 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 progress to a degree.
The repayment schedule discloses the monthly payment, interest rate, total repayment obligation, payment due dates, and the term of the loan.
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.
The Roth IRA is much like a traditional IRA in that investors may contribute up to $2,000 per year into the account. However, here are some new advantages:
· Contributions to a Roth IRA are not deductible — but investment earnings are tax-free.
· When money is withdrawn no additional tax is paid.
· No penalties for withdrawing Roth IRA funds before age 591/2 if used for higher education purposes.
· Individuals may only contribute a maximum of $2,000 per year to all of his or her IRA's combined.
· Individuals of any age with adjusted gross income below $110,000 (single) or $160,000 (joint) will be eligible while contributions begin to phase-out at $95,000 (single) and $150,000 (joint).
· Can use up to $10,000 as a first-time homebuyer with no penalties for early withdrawal and no tax.
S
Satisfactory Academic Progress
A student must be making Satisfactory Academic Progress (SAP) in order to continue receiving federal aid. If a student fails to maintain an academic standing consistent with the school's SAP policy, they are unlikely to meet the school's graduation requirements.
A form of financial aid given to undergraduate students to help pay for their education. Most scholarships are restricted to paying all or part of tuition expenses, though some scholarships also cover room and board. Scholarships are a form of gift aid and do not have to be repaid. Many scholarships are restricted to students in specific courses of study or with academic, athletic, or artistic talent.
A scholarship search service charges a fee to compare the student's profile against a database of scholarship programs. Few students who use a scholarship search service actually win a scholarship.
Scholastic Aptitude Test (SAT I)
The SAT is one of the two national standardized college entrance examinations used in the US. The other is the ACT. The SAT is administered by the Educational Testing Service (ETS). Most universities require either the ACT or the SAT as part of an application for admission.
Self-help aid is financial aid in the form of loans and student employment. If every financial aid package is required to include a minimum amount of self-help aid before any gift aid is granted, that level is known as the self-help level.
The US Air Force Academy, US Coast Guard Academy, US Merchant Marine Academy, US Military Academy, and US Naval Academy. Admissions is highly selective, as students must be nominated by their Congressional Representative in order to apply.
A servicer is an organization that collects payments on a loan and performs other administrative tasks associated with maintaining a loan portfolio. Loan servicers disburse loans funds, monitor loans while the borrowers are in school, collect payments, process deferments and forbearances and respond to borrower inquiries.
If the parents have an adjusted gross income of less than $50,000 and every family member was eligible to file an IRS Form 1040A or 1040EZ (or wasn't required to file a Federal income tax return), the Federal Methodology ignores assets when computing the EFC. If you filed a 1040 but weren't required to do so, you may be eligible for the simplified needs test.
Stafford Loans are federal loans that come in two forms, subsidized and unsubsidized. Subsidized loans are based on need; unsubsidized loans aren't. The federal government pays the interest on the subsidized Stafford Loan while the student is in school and during the 6-month grace period. The Subsidized Stafford Loan was formerly known as the Guaranteed Student Loan (GSL). The Unsubsidized Stafford Loan may be used to pay the EFC. Undergraduates may borrow up to $23,000 ($2,625 during the freshman year, $3,500 during the sophomore year, and $5,500 during the third, fourth, and fifth years) and graduate students up to $65,500 including any undergraduate Stafford loans ($8,500 per year). These limits are for subsidized and unsubsidized loans combined. The difference between the subsidized loan amount and the limit may be borrowed by the student as an unsubsidized loan. Higher unsubsidized Stafford loan limits are available to independent students, dependent students whose parents were unable to obtain a PLUS Loan, and graduate/professional students. Undergraduates may borrow up to $46,000 ($6,625 during the freshman year, $7,500 during the sophomore year, and $10,500 during each subsequent year) and graduate students up to $138,500 including any undergraduate Stafford loans ($18,500 per year). These limits are for subsidized and unsubsidized loans combined. The amounts of any subsidized loans are still subject to the lower limits.
State Student Incentive Grants
The State Student Incentive Grants (SSIG) program is a state-run financial aid program for state residents. The states receive matching funds from the Federal government to help them fund the program.
The Student Aid Report (SAR) summarizes the information included in the FAFSA and must be provided to your school's FAO. The SAR will also indicate the amount of Pell Grant eligibility, if any, and the Expected Family Contribution (EFC). You should receive a copy of your SAR four to six weeks after you file your FAFSA. Review your SAR and correct any errors on part 2 of the SAR. Keep a photocopy of the SAR for your records. To request a duplicate copy of your SAR, call 1-8004FED-AID (1-800-433-3243).
The Student Contribution (SC) is 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 SC depends on the student's income and assets, but can vary from school to school. Usually a student is expected to contribute about 35% of his or her savings and approximately one-half of his summer earnings above $2,500.
Student Loan Interest Deduction
Allows students or their families to take a tax deduction for interest paid for the full length of repayment on student loans.
· The maximum deduction is $2,500
· It is phased out for joint filers with Adjusted Gross Income (AGI)
· Through 2001- $40,000-$55,000 for single filers and $60,000-$75,000 for joint filers
· Through 2002- $50,000-$65,000 for single filers and $100,000-$130,000 for joint filers
· Starting 2003-Income phase-out will adjust for inflation
· Available for all educational loans such as student, parent federal and non-federal loans made before August 1997 when tax cuts became law.
With a subsidized loan, such as the Perkins Loan or the Subsidized Stafford Loan, the government pays the interest on the loan while the student is in school, during the six-month grace period, and during any deferment periods. Subsidized loans are awarded based on financial need and may not be used to finance the family contribution. See Stafford Loans for information about subsidized Stafford Loans. See also Unsubsidized Loan.
Supplemental Education Opportunity Grant
The Supplemental Education Opportunity Grant (SEOG) is a 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 Pell Grant.
T
When you fill out the Free Application for Federal Student Aid (FAFSA) you need to supply the Title IV Code for each school to which you are applying. This code is a six-character identifier that begins with one of the following letters: O, G, B, or E. The Financial Aid Information Page provides a searchable database of Title IV School Codes at www.finaid.org
U
In an ideal world, the FAO would be able to provide each student with the full difference between their ability to pay and the cost of education. Due to budget constraints the FAO may provide the student with less than the student's need (as determined by the FAO). This gap is known as the unmet need.
An unsubsidized loan is a loan for which the government does not pay the interest. The borrower is responsible for the interest on an unsubsidized loan from the date the loan is disbursed, even while the student is still in school. Students may avoid paying the interest while they are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need and may be used to finance the family contribution. See Stafford Loans for information about unsubsidized Stafford Loans. See also Subsidized Loan above.
US Department of Education (ED or USED)
The US Department of Education 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. For more information about these programs, please see the US Department of Education at www.ed.gov.
V
In a variable interest loan, the interest rate changes periodically. For example, the interest rate might be pegged to the cost of US Treasury Bills (e.g., T-Bill rate plus 3.1%) and be updated monthly, quarterly, semi-annually, or annually.
Verification is a review process in which the FAO determines the accuracy of the information provided on the student's financial aid application. During the verification process the student and parent will be required to submit documentation for the amounts listed (or not listed) on the financial aid application. Such documentation may include signed copies of the most recent Federal and State income tax returns for you, your spouse (if any) and your parents, proof of citizenship, proof of registration with Selective Service, and copies of Social Security benefit statements and W2 and 1099 forms, among other things. Financial aid applications are randomly selected by the Federal processor for verification, with most schools verifying at least 1/3 of all applications. If there is an asterisk next to the EFC figure on your Student Aid Report (SAR), your SAR has been selected for verification. Schools may select additional students for verification if they suspect fraud. Some schools undergo 100% verification. If any discrepancies are uncovered during verification, the financial aid office may require additional information to clear up the discrepancies. Such discrepancies may cause your final financial aid package to be different from the initial package described on the award letter you received from the school. If you refuse to submit the required documentation, your financial aid package will be cancelled and no aid awarded.
W
Employers are required by the IRS to issue a W2 form for each employee before February 28. The W2 form lists the employee's wages and tax withheld.
See Federal Work-Study.,
Kaynak: MEFA
