Glossary of Terms
Academic Year–The enrollment period beginning on the first day of classes in the Fall Term and concluding on the last day of exams in the Spring Term.
Award Letter–The official document, issued by the Office of Student Financial Aid Services, which lists all of the financial aid awarded to the student.
Cost of Attendance–The total annual amount it should cost a student to attend school. The cost of attendance covers tuition, on-campus room and board (or a housing and food allowance for off-campus students), and an allowance for books and supplies, transportation, and miscellaneous expenses.
Default–The loan repayment status for individuals who do not repay their loans. Severe legal and financial repercussions are involved for borrowers who go into default, such as garnishment of wages, repayment of all principal demanded within a month’s time, and adverse credit ratings.
Deferment–An authorized period during which a borrower may postpone principal and interest payments. Deferments usually are granted for graduate studies, Peace Corps work, and a limited set of other situations. Contact your lender for details.
Eligibility–The determination of whether a student will receive a certain type of funding. This is usually dictated by a student’s Expected Family Contribution, however, some funds/sources use other criteria (such as geography, major, etc.).
Entrance Loan Counseling–A required informational session provided to first-time borrowers concerning their rights and responsibilities as borrowers of a federal loan.
Exit Loan Counseling–A required informational session for students preparing to leave College before graduation, or who are withdrawing from College. Information about total indebtedness, repayment, and deferment is provided to the student at this session.
Expected Family Contribution (EFC)–The federal government’s assessment of a family’s ability to contribute to the student’s education for a given academic year. This amount is determined from information provided on the FAFSA.
Financial Aid Package–The total financial aid a student receives. Federal, state and institutional aid—such as grants, scholarships, loans, and work-study—are combined in a “package” to help meet the student’s need.
First-Time Borrower–Any student who is borrowing through the Stafford or Perkins loan programs for the first time. An entrance loan counseling session is required, and should be completed online at http://studentloans.gov.
Forbearance–An authorized period of time during which the lender agrees to temporarily postpone a borrower’s principal repayment obligation due to some hardship experienced by the borrower, such as unemployment. Interest continues to accrue and usually must be paid during the forbearance period. Forbearance may be granted at the lender’s discretion when a borrower is willing to repay a loan, but is unable to do so in a timely manner.
Free Application for Federal Student Aid (FAFSA)–The aid application all students must file to qualify for federal, state and Berea College’s need-based aid programs.
Gift Aid–Money that does not have to be repaid, such as grants or scholarships.
Loan–A type of funding involving an institution (bank, college, or organization) permitting an individual to borrow a sum of money with the understanding that the individual will repay the amount borrowed plus interest.
Need–Demonstrated eligibility for financial aid as determined by comparing a school’s Cost of Attendance (COA) with the Expected Family Contribution (EFC). Need = COA – EFC. Demonstrated need is a federal term and is the dollar figure that establishes the maximum amount of need-based financial aid that can be provided to a student from all sources.
Need-Based Financial Aid–Resources made available to a student based on demonstrated need.
Origination Fee–A charge for processing a Direct Loan to partially help offset administrative costs. It can be either a flat rate or a percentage of the amount borrowed.
Promissory Note/Master Promissory Note–A legally binding agreement stating the amount an individual borrows and the terms of the loan. The student promises to repay the principal with interest.
Repayment–The period when you are repaying the principal and interest of borrowed money. It usually begins after graduation and lasts for 10 years for students with federal educational loans.
Scholarships–Funds provided based on a student’s ability, achievement, ethnicity, nationality, or involvement in certain activities. Scholarships do not have to be repaid and come from many sources.
Subsidized Direct Loan–A need-based loan on which the interest is paid by the federal government during the in-school, grace, and deferment periods.
Term Bill–A student’s term bill consists of room, board, fees, books (if charged at the book store), and other miscellaneous expenses.
Unsubsidized Direct Loan–A non need-based loan on which the interest is not paid by the federal government. Borrowers are responsible for the interest on all unsubsidized loans from the date the loan is disbursed. Students may choose to pay the interest while they are in school or they may allow the interest to accrue and be capitalized on the principal when they begin repayment.