The basis on which students without high school diplomas or GEDs may qualify for federal student aid. If your school fails to verify your ATB, or does so inappropriately, you can file an ATB application to discharge federal aid you borrowed to attend that school.
The time period between your school year’s official start and end dates. Your school defines how long the academic year is, and your financial aid package is based on a single academic year.
The income you earn in a year that is eligible to be taxed after certain deductions have been accounted for. Your AGI (which is typically lower than your gross income) helps determine if you're eligible for certain student loan tax benefits and how much federal financial aid money (grants or loans) you can receive. You can find your AGI on your tax return.
The process of paying off your loans in regular installments over a period of time.
The maximum loan amount you can borrow during a single academic year. Annual loan limits vary by loan type, grade level, and other factors.
A letter you receive before your semester begins that details the types of financial aid you are eligible for. This includes details about the student loans, grants, and scholarships you've been awarded. You'll receive an award letter every year you attend school if you apply for financial aid.
A legal status that discharges many of the debts you owe (meaning you don't have to pay them back). If you declare bankruptcy, you may have to give up some of your assets—such as your home, car, etc.—and your credit rating will likely take a big hit for years. Also, it can be tough (but not impossible) to cancel student loans in bankruptcy.
The person responsible for the repayment of a loan. If you took out a loan, you’re a borrower. If you co-signed or endorsed a loan, you're a co-borrower or endorser. Borrowers, co-borrowers, and endorsers share the responsibility for repaying any loans they sign for.
The office on campus responsible for the billing and collection of charges. This is where your tuition check goes. If you need more money to pay for your tuition, visit your school’s financial aid office to find out about loans, grants, work-study, and scholarships.
Federal financial aid programs administered directly by schools. The federal government provides eligible schools with a fixed amount of campus-based aid each year. Financial aid administrators at the school then award those funds to needy students in the form of Perkins loans, supplemental education opportunity grants, and work-study.
The process that occurs when unpaid interest is added to the principal balance of your loan (increasing the overall principal balance that your future interest will accrue on). For federal loans, capitalization happens at the end of a grace, deferment, or forbearance period, and when a loan is consolidated or goes into default, as well as other circumstances.
A second person who shares the responsibility for a loan’s repayment with the primary borrower. That second person co-signs the loan and becomes both the co-signer and co-borrower (or endorser).
The agency a lender hires to recover loans that have not been paid. If you skip your loan payments, you may get a lot of calls from a collection agency. They specialize in the collection of delinquent or defaulted loans.
Costs your loan holder incurs while collecting on your defaulted student loan that are charged to you. Collection costs may be from 16% to 25% of your total principal balance.
A single, new loan that borrowers take out to replace their existing student loans. Consolidation loans make it easier to keep track of all your payments by reducing the amount of loans you have. You can't consolidate federal loans with private loans unless you consolidate with a private lender—which eliminates all of your federal student loan benefits. You may consolidate different private loans together.
An estimate of all the educational costs your school thinks you'll need while you're there. This includes tuition and fees, as well as other expenses including room and board, health insurance, books, and transportation.
A way to pay for items via a link to a line of credit issued by a financial institution. When paying with your credit card, the card issuer pays the merchant and you go into debt to the card issuer for the amount charged. If you repay the issuer on time and in full for the amounts you charge each billing cycle, you don’t have to pay interest on the funds you use. If you don’t repay your entire balance each billing cycle, you can incur interest. The issuer can also charge you fees for paying late, missing payments, and several other conditions.
An indicator of your ability to repay your debt. Your rating takes into account how well you've paid back any debts you've had in the past and how much debt you currently have. Lenders use this credit score to determine whether you're eligible to receive certain types of education loans, like PLUS loans and private loans. Your score is also used to establish your interest rate for credit cards, mortgages, auto loans, and more.
A way to make payments that’s linked to your bank account. When paying with your debit card, money is withdrawn directly from your account to pay the merchant.
Federal Direct and FFELP loans generally enter default status if monthly payments are more than 270 days past due. Private loans and some federal student loans may have different time frames for default. A loan can also go into default if you fail to meet other terms of your promissory note or written agreements with the loan holder. Refer to your loan's promissory note to determine its default time frame.
A period of time in which you can postpone your loan repayment if you meet certain eligibility requirements. Subsidized loans do not accrue interest while in deferment
The status a loan enters if you fail to make even a single full payment on it. If you miss a few payments, your loan will most likely remain in delinquency until it enters default. You should contact your lender or servicer right away if you fall behind on your repayment. You probably still have time to get your loan back on track before it defaults—but your lender or servicer may charge you delinquency fees.
For financial aid purposes, being a dependent student means that your school's financial aid office expects you to provide your parents' income tax information on the EFC will be based on that information. You're considered a dependent student unless you're over 24 years old, in graduate school, married, homeless, a veteran or active duty military service member, legally emancipated, or a parent yourself.
The most common way to get federal loans. As of June 30, 2010, all federal Stafford loans and PLUS loans are part of the DL program. For DL loans, the federal government lends money directly to students (instead of going through a private bank as FFELP loans once did).
The process that occurs when your school receives your financial aid money and applies it to your tuition bill and school-related fees. If you consolidate your student loans, the disbursement is the money sent to your old loan holders to pay off your old loans.
The official name of the cancellation of some or all of your student loan debt due to certain circumstances like a school closure, death of the borrower, or total and permanent disability.
The amount of money you have left over after paying for your basic expenses. You may need to provide this information when applying for certain student loan repayment plans that determine your monthly payment amounts based on how much you earn.
Note: The government defines discretionary income in different ways for different repayment plans.
A way to temporarily postpone your monthly student loan bills for up to 3 years. If you have a low income, are receiving federal or state welfare benefits, or are volunteering in the Peace Corps, you may be eligible to use economic hardship deferment
An individual who is not a U.S. citizen but is eligible for federal student aid. Eligible non-citizens include U.S. permanent residents who are holders of valid green cards, U.S. nationals, and holders of form I-94 who have been granted refugee or asylum status. Non-citizens who only hold a student visa or an exchange visitor visa are not eligible for federal student aid.
An online or in-person session, offered by your school that provides information on topics like loan repayment and debt management. Before you can get your first federal student loan, you're required to participate in an entrance counseling session.
Your school’s estimate of your total financial aid package for a single loan period (usually one academic year). It may include federal, state, and other scholarships, grants, work-study, and loans.
Your best guess of how much money you or your family will make in the upcoming year. If you’re filling out the FAFSA, you may have to use this figure when they ask you for your income. You can base your estimate on your previous year’s tax return.
An online or in-person session, offered by your school that provides information on topics like loan repayment and debt management. If you have student loans, you're required to participate in exit counseling before you graduate from college.
The federal government’s best guess of how much money you, your spouse, and your family need to contribute toward your education during an academic year. Your EFC is calculated based on the information you provide on your FAFSA
A federal student loan repayment plan that can significantly reduce the amount you owe each month by extending your repayment period for up to 25 years. Because it extends the repayment period, this plan will also likely increase the total amount of interest you'll have to pay. You need to have more than $30,000 in federal student loans to be eligible for this plan.
Pre-printed application and promissory note sent to you for your signature.
A repayment program only available for health professions faculty from disadvantaged backgrounds. It provides those students with funding to help repay their federal student loans. The faculty loan repayment program is run by the Health Resources and Services Administration (HRSA).
The primary provider of Stafford, PLUS, SLS, and Consolidation loans prior to July 1, 2010 (all federal loans made after this date are with the DL program). FFELP loans were made by private lenders with government backing—which is why, if you had FFELP loans, a private bank’s name was associated it.
Free money provided by the federal government to students with exceptional financial need at participating schools. The amount awarded also depends on when the student's application is submitted, how much other aid the student is awarded, and how much FSEOG funding the school has.
A program that provides undergraduate and graduate students with part-time employment during the academic year to help cover school-related expenses.
Financial support for graduate students that also tracks their academic progress.
The entire combination of grants, scholarships, loans, and work-study funding you receive from all sources (federal, state, institutional, and private). Your financial aid package is detailed in the financial aid award letter you receive each academic year.
Your money savvy, or the knowledge you have about money—specifically budgeting, financial planning, saving, managing debt, and investing.
Your cost of attendance minus your EFC. This determines your eligibility for financial aid such as Stafford loans, Perkins loans, work-study, grants, and scholarships.
An interest rate that doesn’t change—unlike a variable interest rate, which can change based on certain economic or legislative factors.
A way to postpone your student loan payments or reduce them. Unlike deferment, interest accrues on loans while they're in forbearance, which increases the total amount you owe.
The application you need to fill out to apply for any form of federal student aid, including loans, grants, or scholarships. You complete it online.
The time before your first loan payment is due once you stop attending school at least half time (as defined by your school). Different types of loans have different grace periods, so check with your loan servicer to make sure you know your first payment's due date.
PLUS loans that are only available to eligible graduate or professional students. They have a higher interest rate than Stafford loans, but fewer limitations on how much you can borrow. You must apply for these loans, and they take your credit history into account, which Stafford loans do not.
A repayment plan that allows you to make small monthly payments that increase over time, ensuring you still repay your federal student loan within 10 years. However, during those 10 years you will pay more interest than you would with standard repayment.
A type of financial aid that you do not have to repay. You may be able to qualify for grants based on your academic or your financial need.
The total income you earn in a year (including non-job-related income) before deducting any federal or state taxes, credits, exclusions, and other withholdings.
Nonprofit organizations that work with ED, lenders, servicers, and schools under FFELP to ensure student loan borrowers successfully repay their loans.
Your potential enrollment status if you take less than a full course load. If you aren't taking a full course load, check with your school to find out if you're enrolled half time or less. Not every school uses the same standards, and your enrollment status can impact how much financial aid you can receive and when your first loan payment is due.
Institutions, demographics, or geographic regions that have limited access to primary medical, dental, or mental health care providers. Working in a shortage area may qualify you for certain types of financial assistance.
Loans for healthcare professionals specializing in any area other than primary care or nursing. They have a lower interest rate than Stafford loans, and they come with specific repayment benefits. HPSLs are part of Title VII of the Public Health Service Act.
The primary government agency dedicated to improving access to health care for all Americans - especially people who are uninsured, live in areas with few health care resources, or are otherwise vulnerable. The HRSA works under the U.S. Department of Health and Human Services.
An option that allows you to postpone your federal student loan payments until after you graduate from college or until your enrollment status drops below half time (as determined by your school). If you're enrolled in school at least half time, your school's registrar's office should place your loans in an in-school deferment, but it never hurts to check with your school to be sure.
A federal student loan repayment plan for low-income borrowers. It also offers loan forgiveness on any remaining balance after 20 or 25 years of eligible payments (10 years if you work for a nonprofit or public service employer). It also offers loan forgiveness on any remaining balance after 25 years of eligible payments. If you have significant federal student loan debt and/or you don't make much money, you may be eligible for IBR.
A federal student loan repayment plan specifically for low-income borrowers with DL loans. ICR determines your monthly payment amounts based on your income and family size. It also offers loan forgiveness on any remaining balance after 25 years of eligible payments. If you have significant student loan debt from your DL loans and/or you don't earn much money, you may be eligible for ICR.
A group of repayment plans that base federal student loan borrowers’ payments on their income. IDR options include income-based repayment (IBR), Pay As You Earn (PAYE), and income-contingent repayment (ICR). After 20 to 25 years of eligible payments (10 if you work for a nonprofit or public service employer), your remaining balance is forgiven under these plans. Which IDR plan you qualify for will depend on a number of factors; however, each must be reapplied for annually.
A federal student loan repayment plan specifically for borrowers with FFELP loans. ISR allows you to reduce your monthly loan payments for up to 5 years before returning to normal payments. If you use this plan, the amount you'll pay each month will be determined based on your income.
A student who isn't required to provide their parents' tax and income information on the FAFSA. You need to be over 24 years old, in graduate school, married, homeless, a veteran or active duty military service member, legally emancipated, or a parent yourself to be an independent student. Even if your parents refuse to pay for college or refuse to provide their tax information on the FAFSA, you are still considered a dependent student unless you meet these criteria.
The fee a lender charges you for borrowing money. It's a percentage of the amount you owe that accrues and gets added to your principal balance on a regular basis (usually either daily or monthly).
The process of interest adding up. When student loans are in repayment, interest accrues on them every day, and (depending on the loan type) interest may accrue while they're in deferment and/or while you're in school. If you don't pay the interest accruing on your loans, it may be added (or capitalized) into your principal balance. If that happens, you'll begin being charged interest on your unpaid interest.
An income tax deduction that covers some or all of the money you pay in interest on student loans each year. This means that you don't have to pay taxes on the money you pay in student loan interest. Eligibility for this tax benefit is based on your student loan payments, your income, and other tax factors. Ask your tax professional for details.
A federal student loan postponement for people in an internship or residency program to begin professional practice or service. You may also be able to use this deferment if you're serving in a health professions internship or residency training program that leads to a degree or certificate. To qualify, you need to have borrowed at least one of the FFELP, DL, or Perkins loans you're postponing before July 1, 1993. For HPSL loans, you'll likely be eligible if you borrowed your loan on or after November 13, 1998.
Free money provided by the federal government to students who are not eligible for a Pell grant based on their EFC, but whose parent or guardian was a member of the U.S. military and died as a result of their military service in Iraq or Afghanistan after 9/11. To be eligible, students must also have been under 24 years old or enrolled in college when the parent or guardian died.
Colleges that offer 2-year programs and grant associate degrees, typically. Students sometimes attend junior college before transferring to a 4-year school.
An allowed enrollment break from your school lasting no longer than 180 days within any 12-month period (scheduled semester or spring breaks don't count against the 180 days). Your school must approve your leave of absence. If you're on an approved leave of absence, you're considered continuously enrolled in school for Title IV program purposes.
The process that occurs when the federal government cancels a loan's remaining balance-or a portion of the balance. You must meet specific eligibility requirements to qualify for any form of loan forgiveness.
The company that has possession of your loan. Your loan holder can be your lender, guarantor, or ED.
A process that allows you to repair a defaulted federal student loan. To rehabilitate defaulted loans, you work with your loan holder and make nine on-time, voluntary, reasonable, and affordable payments. When complete, your loan is moved to a new holder and a new servicer, and the default line is removed from your credit history. Note: You can only use rehabilitation once.
Loans that specifically help students from disadvantaged or minority backgrounds pay for an education in healthcare. They have a lower interest rate than Stafford loans, and they come with their own unique repayment benefits.
The document that states the repayment terms of your student loans and acts as your written commitment to repay the money you borrowed, plus interest. You can't receive federal loans without signing an MPN.
Money for college—usually in the form of scholarships or grants—that schools and other organizations award based on your academic and extracurricular achievements, not your financial need.
A way to postpone federal student loan payments while you're serving active military duty or National Guard duty during a war, a military operation, or a national emergency. If you're granted military deferment, it will begin when you enter active duty and it will end 180 days after you're demobilized.
MAGI is a little different from adjusted gross income (AGI), in that it adds back some of your tax deductions—so it’s a higher number than AGI. If you have any questions about what your own MAGI is, contact a tax professional or visit the IRS website.
My Money 101™ is the is the previous name of SALT's series of interactive money modules, now known as SALT Courses. These courses cover topics like budgeting, identity theft, student loans, and more. Many of the schools and organizations we work with recommend these courses for their students and members.
A federal program that focuses on expanding the availability of primary care services in areas with limited access to care. NHSC offers repayment programs that provide financial assistance to help health care workers pay back their student loans.
The central database where ED makes the information about your federal student aid available to you. To find out how much you've borrowed, who your loan servicer is, and more, log on to NSLDS.
The standardized assessment process that schools use to determine your family's need for financial aid.
The amount of your income left after subtracting all federal and state taxes, credits, exclusions, and other withholdings from your gross income.
A repayment program operated by the HRSA. NELRP offers financial assistance to help nurses and nursing faculty working in designated Health Professional Shortage Areas pay off their federal student loans-with preference given to nursing professionals from disadvantaged backgrounds.
Loans specifically for nursing professionals who need to supplement their financial aid for school. These loans have a lower interest rate than Stafford loans, and they come with their own repayment program benefits.
A fee that your lender charges that is subtracted directly from your loan funds.
Federal student loans that provide borrowers with funds to meet their school's cost of attendance, minus any other aid they receive. There are two types of PLUS loans: Parent PLUS and Grad PLUS. Eligible parents of dependent students can borrow Parent PLUS loans to help cover their children's college costs. Graduate students can borrow Grad PLUS loans to help finance their advanced degrees. PLUS loans take the borrower's credit history into account, so you may need an endorser to qualify.
Your enrollment status if you take less than a full course load. Not every school uses the same standards, so check with your school to find out your enrollment status.
An eligibility requirement for the IBR and Pay As You Earn repayment plans—though it's calculated differently for each of these plans. For IBR, your federal student loan payments must exceed 15% of your discretionary income. Only loans that are eligible for IBR are figured into the calculation. For Pay As You Earn, your federal student loan payments have to exceed 10% of your discretionary income.
A repayment plan that allows you to make payments of no more than 10% of your discretionary income. Pay As You Earn is similar to IBR, but more generous. After 20 years of qualified, on-time payments (10 years if you work for a nonprofit or public service employer), any remaining outstanding balance on your federal student loans may be forgiven. Several restrictions apply.
Free money provided by the federal government to students with the greatest financial need. You must complete and submit the FAFSA to be considered.
Federal student loans that schools award directly to students with exceptional financial need. Perkins loans have a 5% fixed interest rate and come with more deferment and cancellation options and a longer grace period than Stafford loans. You must submit the FAFSA to be considered. As of October 1, 2015, only current Perkins loan borrowers at participating schools are eligible to receive new Perkins loans. In addition, no further Perkins loans will be disbursed after September 30, 2020.
A payment postponement for those called into service for the military or National Guard. You’ll likely qualify for this deferment if you were called to federal or state active duty within 6 months of being enrolled at an eligible school. This deferment will postpone your monthly payments for up to 13 months after you return from qualifying active duty—or until you re-enroll in school (when you can likely start using in-school deferment instead).
Loans that help make the cost of college more affordable for medical students specializing in primary care. These loans have a lower interest rate than Stafford loans, as well as specific repayment program benefits. There are very strict rules associated with borrowing PCLs, so make sure that these loans are right for you before you sign on the dotted line.
The total amount you currently owe, minus any interest that’s yet to accrue. Every time you make a payment, a portion of that money goes toward the interest that is accruing on your loan and any fees you may have been charged, and the rest is used to pay down your principal balance.
Student loans provided by private lenders (like banks or other financial institutions) instead of the federal government. They usually have fewer repayment options, strict repayment terms and conditions, and higher interest rates than federal loans.
A federal program that allows DL borrowers who work full time for certain public service or nonprofit employers to apply for loan forgiveness after making 10 years of qualifying payments after October 1, 2007.
The length of time you have to repay your student loans. The standard repayment period for Stafford loans is 10 years, but if you need to pay less each month, you can extend this through other repayment plans. In general, the longer you take to repay your loans, the more you’ll wind up paying in interest over the course of your repayment period.
Your formal agreement with your servicer that details how you'll repay your student loans. Your repayment plan determines how much you pay each month, when you make your payments, and how long you have to complete your repayment.
A list of your student loan rights and responsibilities, including your monthly payments. Your lender is required to disclose your repayment terms to you before you commit to borrowing a loan.
Revised Pay As You Earn (REPAYE) is an income-driven repayment option for federal Direct student loans. Most federal student loan borrowers can qualify for REPAYE, which can reduce monthly payments to no more than 10% of discretionary income. After 20 years of eligible payments under REPAYE, a borrower’s remaining balance would be forgiven (25 years if he or she has any loans from grad school), but that amount is taxable.
SALT's interactive money courses (formerly known as My Money 101™) that cover topics like budgeting, identity theft, student loans, and more to help you borrow smart to pay for college and find more money for life. Many of the schools and organizations we work with recommend these courses for their students and members.
Money you’re awarded to attend an academic institution. You don’t have to repay scholarships—they’re free money.
The organization that sends you your student loan bills, collects your loan payments, and provides customer service on behalf of your lender. In other words, they handle the billing for your loan.
Note: Servicers are not the same as collection agencies.
The interest that accumulates only on the principal balance of your loan—not including any accrued interest that has capitalized.
The most common type of federal student loans. The repayment terms of your Stafford loans can vary based on whether they are subsidized or unsubsidized and when you borrowed them.
The federal student loan repayment plan that you'll be automatically enrolled in if you don't choose a different one. It allows you to pay the same amount every month for a period of 120 months. If you stick to this schedule, you'll repay your loan in 10 years.
Free money provided to students by their state government. Typically (but not always) eligibility is determined based on financial need. Deadlines and application processes vary by state. Check your state's Department of Education website for more information.
A program that allows eligible health professionals to have some of their federal student loan repaid for them. Not all states offer this benefit, and you must work in a designated Health Professional Shortage Area to qualify. To find out if you're eligible, or if there is a state loan repayment program available in your state, visit the National Health Service Corps website.
A list of all of the financial and personal information that you and your family reported on your FAFSA. You and your school both get a copy of the SAR. After you receive your SAR, you may be able to make corrections or changes to your information before your final award is processed.
Leftover student loan money you get back after your school bills are paid. The bursar’s office at your school is usually responsible for delivering student loan refunds to borrowers.
A program that helps medical students in their last year of school repay their federal student loans. If you participate in this program, you must make a commitment to work in a designated Health Professional Shortage Area.
Loans that the government pays the interest on while you're in school and during approved deferment periods. They will also pay this interest during your grace period if you borrowed these loans before July 1, 2012 or after June 30, 2014. Perkins loans are always subsidized, and Stafford loans can either be subsidized or unsubsidized.
A way to postpone your federal student loan payments if you don't have a remaining grace period but will still be enrolled after a school break. It ensures that your loans won't enter their repayment period between the spring and fall semesters, when your grace period would otherwise be used. You can also use this if you're enrolled at least half time or completing a degree in the spring, then continuing your enrollment at least half time in the fall.
Tax credits lower the total amount you owe in taxes. For example: If you had to pay $3,500 in taxes, claiming a credit of $2,500 would reduce your actual tax bill to $1,000. Credits may also increase your refund, depending on how much of the credit itself is refundable.
Tax deductions lower your taxable income, which could increase your tax refund. For example: say the government takes 10% of the $35,000 you earned ($3,500). If you withheld $4,000 for the year, your refund would be $500 ($4,000 - $3,500 = $500). However, if you qualified for a $2,000 deduction, your taxable income would be lower ($33,000), decreasing that 10% ($3,300) and increasing your refund ($4,000 - $3,300 = $700 … or $200 more!).
Free money provided by the federal government to education students who commit to teaching for at least 4 years within the first 8 years of graduation at an elementary or secondary school in a high-need area or at an educational service agency that serves low-income families. If the required teaching service isn’t completed, this grant becomes a loan equivalent to an unsubsidized Stafford loan.
A program that partially eliminates the federal student loan debt for eligible teachers. Eligibility depends on where you teach and when you borrowed your loans.
The section of the Higher Education Act that authorizes many federal financial assistance programs for higher education in the United States.
Sections of the Public Health Service Act that entitle health professions students (especially those studying certain fields and those from disadvantaged backgrounds) to receive additional federal financial aid. Title VII and VIII aid have special benefits and strict restrictions, so make sure you read the paperwork carefully before you sign on the dotted line.
A penalty of federal student loan default that allows the government to collect your student loan debt by using federal and state payments you would otherwise receive. The most commonly offset payments are federal travel reimbursements, payments from government agencies (including Social Security), and federal and state tax refunds.
The federal department that funds all Title IV financial aid programs and operates the DL program. It is also responsible for federal policy for all levels of education.
A deferment that allows eligible unemployed borrowers to temporarily postpone their monthly federal student loan payments if they meet the eligibility criteria.
Federal student loans that are not based on financial need. You're responsible for paying all interest that accrues on your unsubsidized loans—including interest that accrues while you're in school and during your grace period and deferment periods. PLUS loans are always unsubsidized, and Stafford loans can be either unsubsidized or subsidized.
An interest rate that can change during the life of the loan. Variable rates for federal student loans are usually updated once each year. Federal loans distributed after June 30, 2006 have fixed interest rates, but many private loans have variable interest rates.
The process in which an employer withholds part of an employee's wages to pay for a debt. If you do not pay your student loans, ED has the right to garnish your wages to collect the money you owe.
The date when you formally left school. Your college or university determines the exact date based on their own enrollment standards.