Academic Year
This is a measure of the academic work to be accomplished by the student. The school defines its own academic year, but federal law and regulations set minimum standards for the purpose of determining student financial assistance awards. For instance, the academic year at a term school must be at least two semesters, two trimesters, or three quarters and include at least 30 weeks of instructional time. Unlike the award year, an academic year does not have to begin and end at the same time for all students.
Accruing Interest
The adding of interest to a loan amount. For some loans, interest charges begin to add up as soon as the loan is made, increasing the total due.
Award Year
The award year begins on July 1st of one year, and extends to June 30 of the next year. Funding for campus-based programs (at PTS this includes Federal Perkins Loans and Federal Work Study funding) is provided on the basis of the award year, thus a student is paid out of funds designated for a particular award year, such as the 2011-2012 award year or the 2012-2013 award year.
Bankruptcy
A legal way to seek relief from creditors. Bankruptcy must be filed for in court and has serious long-term financial implications for a person's credit history. In bankruptcy proceedings, student loans less than five years old can be challenged by the lender.
Campus-Based Programs
The Federal Perkins Loan and Federal Work Study programs are called “campus-based” because the funds are administered directly by the Office of Admissions and Financial Aid, which awards these funds to students using Federal guidelines.
Capitalization
When a lender accrues interest before the borrower goes into repayment, then adds that amount to the principal. Sometimes also called "compounding." Capitalizing increases the total to be repaid and the size of the minimum monthly payment. Students can avoid capitalizing interest by paying the accrued interest. Lenders may capitalize no more often than quarterly; the more frequently interest is capitalized, the greater it becomes.
Consolidation
Combining two or more loans into one new loan that has a longer repayment term and a single monthly payment that is smaller than the sum of previous monthly payments. By consolidating eligible federal student loans and extending the repayment term (up to 30 years, depending on the total loan amount), repayment can be easier. Note that while this may ease the borrower's cash flow, consolidation can add significantly to the amount of overall interest that is paid over time.
Cost of Attendance (also known as Cost of Education)
The student’s cost of attendance includes not only tuition and fees, but also the student’s living expenses while attending school. The cost of attendance is estimated by the Seminary, within guidelines established by federal law. The cost of attendance is compared to the student’s expected family contribution to determine the student’s need for aid.
Default
A borrower's failure to repay a loan according to the terms agreed upon when the promissory note was signed. Default can also occur when a borrower fails to submit requests for deferment or cancellation and is generally referred to as a "technical default." When a borrower defaults on a federal student loan, the school, the organization holding the loan, the guaranty agency, and the federal government can all take action to recover the money. A borrower is considered to be "in default" when payments are 180 or more days overdue and no satisfactory arrangements for deferment or forbearance have been made. Assets, including Internal Revenue Service (IRS) refunds, may be seized and the borrower's credit record or history is negatively affected. Student loan borrowers cannot get out of default until they pay back their loan in full, sign new loan agreements, or reschedule their debt. They are also ineligible for additional federal student aid, including grants and loans.
Deferment
An authorized period of time during which a student loan borrower may postpone making payments on the principal or the principal plus interest. Borrowers must file deferment forms with their lenders and be approved. Deferments are available if borrowers are: enrolled in school at least half-time, enrolled in a graduate fellowship program or rehabilitation training program, disabled, serving in the military or the Peace Corps, volunteering full-time for a not-for-profit organization, teaching full-time in a teacher-shortage area, unemployed, or experiencing demonstrated economic hardship. The federal government makes interest payments on Subsidized Federal Stafford Loans during deferment periods.
Delinquent
When a borrower is late making a payment (i.e., pays after the due date). Late fees can be charged when borrowers are delinquent. After 180 days of delinquency, a student loan borrower is considered to be "in default."
Dependency Status
For purposes of determining eligibility and need, students are determined to be either dependent or independent of parental financial support. Independent students are sometimes also called "self-supporting." For federal student aid programs, dependency status is determined according to federally established guidelines. For purposes of awarding their own funds, some colleges and universities may have stricter definitions of independence.
Disbursement
The release of loan funds by a lender to a borrower. Disbursements for most student loans are made in equal multiple installments, and are usually co-payable to the borrower and the school. Checks are mailed to the institution for delivery to the students. In some cases, disbursements are made by electronic funds transfer (EFT) instead.
Electronic Funds Transfer
Used by lenders to wire funds for Stafford Loans directly to the Seminary without requiring an intermediate check for the student to endorse. Since the money is transferred electronically, it is made available to the student sooner.
Entrance/Exit Interviews
Counseling sessions that borrowers are required to participate in before receiving their first federal loan disbursement and prior to leaving the Seminary.
Estimated Financial Assistance
For the Federal Family Education Loan (FFELP) Programs, the amount of student financial aid the student can expect from federal, state, school, or other sources, including grants, loans, or need-based work programs. The school must report this estimate when certifying a FFELP loan application.
Expected Family Contribution (EFC)
The amount that the student’s family is expected to contribute towards the cost of attendance. This figure is derived from the family’s base year income and assets. The EFC is used to award aid for campus-based programs and Federal Stafford Loan funds.
Federal Family Education Loan Programs
The Federal Family Education Loan Program (FFELP) was formerly known as the Guaranteed Student Loan (GSL) Program. The FFELP program includes Federal Stafford Loans , Federal PLUS Loans, and Federal Consolidation Loans. Funds for these programs are provided by private lenders and the loans are guaranteed by the federal government.
Federal Work Study (FWS)
Program providing students with part-time employment during the school year. The federal government pays a portion of the student’s salary, making it less expensive for departments to hire the student. Eligibility for FWS is based on need.
Financial Aid Award Letter
A notice describing what aid is being awarded and what conditions the recipient must meet or continue to meet to maintain eligibility for the assistance.
Financial Aid Package
A combination of aid from several sources and/or of several types. Typically a student receives a package that includes both gift aid and self-help aid, some public and some private.
Financial Need
The difference between what it costs to attend a particular school and the amount that a student and his/her family can afford to pay towards those expenses. Sometimes also called "demonstrated financial need." The amount that an applicant can be expected to contribute is measured according to standardized formulas. A student is generally eligible for aid equal to the amount of his or her financial need, although an institution does not always have sufficient funds to meet the full need.
Forbearance
An authorized period of time during which the lender agrees to temporarily postpone a borrower's total loan repayment obligation. At the borrower's request, an extension of time or smaller monthly payments may be authorized. Forbearance is granted at the lender's discretion when a borrower demonstrates good intentions of repaying but is temporarily unable to do so. A borrower must request forbearance from the lender. Forbearance does not alter the repayment status of the loan and interest continues to accrue.
Free Application for Federal Student Aid (FAFSA)
The application filled out by the student that collects household and financial information to be used to calculate the expected family contribution. Completion of the FAFSA is required of all federal student aid applicants.
Grace Period
A specified period of time after a student leaves school or drops below half-time status during which he or she is not required to make payments on either principal or interest. The grace period is typically six to nine months, depending on the type of loan. The Federal Subsidized Stafford Loan, for example, has a six-month grace period.
Guarantor
A state, regional, or national organization that acts as an agent for the federal government in the administration and insurance of FFELP loans made by private lenders. Also called "guarantee agency" or "guaranty agency."
Guarantee Fee
A small premium deducted from the loan proceeds prior to disbursement and paid to the guarantor. Also known as an "insurance fee."
Need Analysis
The process of analyzing the household and financial information on the student’s financial aid application and calculating the amount the family can be expected to contribute to educational costs. For the federal student assistance programs, the need analysis system is defined by law and results in a number known as the “Expected Family Contribution”.
Origination Fee
A small fee charged by the federal government and deducted from the proceeds of a loan before disbursement. This fee partially offsets the administrative costs of the FFELP and FDSLP.
Perkins Loan
The Federal Perkins Loan has one of the lowest interest rates and is awarded by the Director of Admissions and Financial Aid to students with exceptional financial need. Students may borrow up to $5,000 per year. The interest on the Perkins Loan is subsidized while the student is in school and during the six months following graduation.
Principal
The original amount borrowed. Origination and guaranty fees are deducted from this amount before disbursement, and interest is computed as a percentage of principal. If a student borrows $2,500 a year for three years of Seminary, the principal is $7,500. The borrower pays interest on the outstanding (or remaining) principal each month until the entire loan is paid off.
Professional Judgement
The method for determining the student’s need for federal student aid is defined in the law. The law does, however, give the financial aid administrator the flexibility to make individual adjustments based on the administrator’s professional judgement. Professional judgement can be used in three areas. The aid administrator can choose to override the student’s dependency status to make the student independent (undergraduate only), can adjust the components of the student’s cost of attendance, and can adjust the data elements used to calculate the student’s Expected Family Contribution. These adjustments must be made on a case-by-case basis, and the reasons for the adjustment must be documented in the student’s file.
FAFSA Application
An application that simplifies the process of reapplying for federal aid. Students that completed the previous year’s FAFSA are mailed a Pin # which allows them to access a Renewal FAFSA application for the upcoming school year on the Internet at www.fafsa.ed.gov. Resources
Other student aid that must be taken into account to prevent an overaward in the campus-based programs, as defined in the regulations for the campus-based programs.
Student Aid Report (SAR)
The federal “output document” printed by a FAFSA processor and mailed to the student. The SAR contains the family’s financial and other information reported by the student on the financial aid application. The student’s eligibility for aid is indicated by the EFC printed on the front of the SAR. Schools that participate in the Electronic Data Exchange and other services offered by the U.S. Department of Education receive the information provided by the Department of Education on the SAR through these services.
William D. Ford Federal Direct Loan
Starting in the 2012-2013 academic year, students will be able to borrow up to $20,500 in Unsubsidized Federal Direct Loans each year, according to need. As of 2012, the federal government is no longer providing Subsidized Federal Direct Loans so only the Unsubsidized Federal Direct Loan will be available. Matriculated PTS students enrolled at least half-time may apply for this loan. Direct Loans are made directly by the U.S. federal government and are originated through the Office of Admissions and Financial Aid.The interest rate for Federal Direct Loans borrowed after July 1, 2006 is fixed at 6.8%. Students will have to pay a small origination fee of 0.5% to process a Federal Direct Loan. There is a six month grace period following the student borrower’s last date of at least half-time attendance before payment is due. After the grace period, loan repayment begins on a monthly basis. With the Unsubsidized Loan, interest accrues while the student is still in school and during other grace and deferment periods. Federal Direct Loans are usually processed in two installments, at or near the start of each semester. PTS students who borrow through this program are required to have an Entrance Interview with the Office of Admissions and Financial Aid prior to their first loan disbursement. This entrance interview can be done in person, or online at www.dl.ed.gov. Students will also need to complete an exit interview before graduating from PTS.
Verification
A procedure whereby the Seminary checks the information the student reported on the FAFSA, usually by requesting a copy of the student’s previous year’s tax return, and if applicable, the student’s spouse. In addition, the Seminary must verify students selected through the federal central processing system, following the procedures established by regulation. The FAFSA processor will print an asterisk next to the EFC (on the Student Aid Report) to identify students who have been selected for verification.