Glossary of Financial Aid Terms
This electronic letter is the means by which the Financial Aid Office informs a prospective student of the types and amounts of financial aid he or she is eligible to receive.
Direct Cost of Attendance
This includes the billed cost of tuition, fees, and room & board (if on-campus).
Failure to repay a loan according to the terms agreed to when the student borrower signed a promissory note. Default also may result from failure to submit requests for deferment or cancellation on time. The consequences of default are severe.
EFC (Expected Family Contribution)
The result of a standardized formula based on information provided by the family on the Free Application for Federal Student Aid (FAFSA) which is used to help colleges and universities determine a family's ability to pay.
This is simply the difference between the direct cost of attendance and the expected family contribution (EFC). While the costs will vary from school to school, the EFC remains constant. Thus, financial need will vary from school to school.
In general, financial aid refers to those resources (other than the family's personal funds) that are used to pay the costs of attendance. Financial aid consists of grants (usually based on financial need), scholarships (usually based on academic performance or their merits), low interest loans, and on-campus employment (for example, the Federal Work-Study Program). In some cases, financial aid may actually exceed financial need. However, this “over award” situation is not allowed if any of the financial aid is based on financial need. Grants and scholarships are always awarded first. On-campus student employment and need- based student loans are awarded only if unmet need still exists.
Financial Aid Package
The total amount of financial aid a student receives for a single academic year. A financial aid package may include a combination of grants, scholarships, work and/or loans. These awards could be from federal or state governments, the college, or private sources.
Monthly Payment Plan
This plan divides the balance due each semester into five monthly payments after financial aid has been deducted. At Malone College, there is a $25.00 fee per semester for this plan. At some colleges, however, interest charges are assessed on unpaid balances.
Satisfactory Academic Progress
To maintain continued eligibility for student aid, a student must maintain satisfactory academic progress toward a degree or certificate. Aid recipients must meet the school's written standard of satisfactory progress.
Subsidized and Unsubsidized Loans
These terms refer to interest characteristics of loans. The federal government pays the interest while a student is enrolled and during the grace period for a subsidized loan. The student is responsible for the interest on an unsubsidized loan. There are two options for payment of interest on the unsubsidized loan. The student can pay the interest while in school or can allow the interest to accrue and be capitalized prior to repayment. Malone suggests payment of interest to avoid additional loan debt due to capitalization.
The federal government requires a financial aid office to verify the data reported on the FAFSA of selected students. When a file is selected for verification by the federal processor, students and parents will be requested to submit signed copies of federal tax returns to the financial aid office and to complete one or more additional documents.