Bachelor's Degree

The undergraduate degree granted by four-year colleges and universities.

Balloon Payment

A balloon payment is a larger than usual payment used to pay off the outstanding balance of a loan without penalty. Not all loans allow balloon payments. Simple interest loans, like many educational loans, generally do allow balloon payments.

Bankruptcy

When a person is declared bankrupt, he is found to be legally insolvent and his property is distributed among his creditors or otherwise administered to satisfy the interests of his creditors. Federal student loans, however, cannot normally be discharged through bankruptcy.

Base Year

The tax year prior to the academic year (award year) for which financial aid is requested. The base year runs from January 1 of the junior year in high school through December 31 of the senior year. Financial information from this year is used to determine eligibility for financial aid.

Resources for Blind and Visually Impaired Students

www.colorado.edu/finaid/vir.html This page reviews the information resources offered by FSA for blind and visually impaired students considering enrolling in or currently enrolled in education beyond high school.

Borrower

The person who receives the loan.

Budget

See Cost of Attendance.

Bursar's Office

The Bursar's Office or Student Accounts Office is the university office that is responsible for the billing and collection of university charges. (www.colorado.edu/bursar)

Campus-based Aid

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.

Cancellation

Some loan programs provide for cancellation of the loan under certain circumstances, such as death or permanent disability of the borrower. Some of the Federal student loan programs have additional cancellation provisions. For example, if the student becomes a teacher in certain national shortage areas, they may be eligible for cancellation of all or part of the balance of their educational loans.

Repayment assistance is available if you serve in the military. The military pays off a portion of your loans for every year of service. There's more information on studentaid.ed.gov

Capital Gain

A capital gain is an increase in the value of an asset such as stocks, bonds, mutual funds, and real estate between the time the asset was purchased and the time the asset was sold.

Capitalization

The practice of adding unpaid interest charges to the principal balance of an educational loan, thereby increasing the size of the loan. Interest is then charged on the new balance, including both the unpaid principal and the accrued interest. Capitalizing the interest increases the monthly payment and the amount of money you will eventually have to repay. If you can afford to pay the interest as it accrues, you are better off not capitalizing it. Capitalization is sometimes called compounding. See also Unsubsidized Loans. http://www.colorado.edu/finaid/eligibility.html#citizenship

Citizenship

You must be a citizen or an eligible non-citizen to receive financial aid. www.colorado.edu/finaid/eligibility.html#citizenship

Collateral

Collateral is property that is used to secure a loan. If the borrower defaults on the loan, the lender can seize the collateral. For example, a mortgage is usually secured by the house purchased with the loan.

Collection Agency

A collection agency is often hired by the lender or guarantee agency to recover defaulted loans.

College Board

The College Board is a nonprofit educational association of colleges, universities, educational systems, and other educational institutions. For more information, see College Board Online (CBO).

Commuter Student

A student who lives at home and commutes to school every day. They have a different budget than a student who lives on campus.

Compounded Interest

Compounded interest is interest that is paid on both the principal balance of the loan and on any accrued (unpaid) interest. Capitalizing the interest on an unsubsidized Stafford loan is a form of compounding.

Consolidation Loan

A consolidation loan combines several student loans into one bigger loan from a single lender. The consolidation loan is used to pay off the balances on the other loans. Consolidation loans offer the following benefits:

• Consolidation loans often reduce the size of the monthly payment by extending the term of the loan beyond the 10 year repayment plan that is standard with Stafford loans. Depending on the loan amount, the term of the loan can be extended from 12 to 30 years. The reduced monthly payment may make the loan easier to repay for some borrowers. Of course, extending the term of a loan increases the total amount of interest paid.

• Consolidation loans also simplify the repayment process by allowing a single payment to one lender instead of several payments to different lenders.

• In certain circumstances - when one or more of the loans was being repaid in less than 10 years because of minimum payment requirements - a consolidation loan may decrease the monthly payment without extending the overall loan term beyond 10 years. In effect, the shorter term loan is being extended to 10 years. Of course, this means that the total amount of interest paid will increase. On the other hand, if you consolidate and opt to pay the same monthly payment as before, the total amount of interest paid will decrease.

Some graduate students have found it necessary to consolidate their educational loans when applying for a mortgage on a house.

Consolidation loans usually result in a lower interest rate. The interest rate on a consolidation loan is a weighted average of the interest rates on the consolidated loans. Consolidation can also eliminate deferment benefits, so it is unwise to consolidate while you are still in school. Once a group of loans has been consolidated, that grop cannot be reconsolidated. There is more information on studentaid.ed.gov

Consumer Rights and Responsibilities

www.colorado.edu/finaid/randr.html

Contact CU-Boulder Finanial Aid

www.colorado.edu/finaid/contact.html

Cooperative Education

In a cooperative education program, the student spends some time engaged in employment related to their major in addition to regular classroom study.

Cosigner

A cosigner on a loan assumes responsibility for the loan if the borrower should fail to repay it.

Cost of Attendance

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. Child care 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. See our Cost of Attendance page for more detail.

Credit Rating

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. You can find out who holds your defaulted loan on nslds.ed.gov. The three major credit reporting agencies are Experian, Transunion, and Equifax.

CU Promise Program

A program guaranteeing that eligible Colorado residents from low-income families will be able to afford the academic costs of a university education without going into debt. www.colorado.edu/finaid/promise.html

Custodial Parent

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. The student's need analysis is based on financial information supplied by the custodial parent.

Default

A loan is in default when the borrower fails to pay several regular installments on time (i.e., payments overdue by 270 days) or otherwise fails to meet the terms and conditions of the loan. If you default on a loan, the university, the holder of the loan, the state, and the federal government can take legal action to recover the money, including garnishing your wages and withholding income tax refunds. Defaulting on a government loan will make you ineligible for future federal financial aid, unless a satisfactory repayment schedule is arranged, and can affect your credit rating. To find out who is the Guarantee Agency of your defaulted loan, please visit nslds.ed.gov.

Deferment

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. There is more information on studentaid.ed.gov.

Delinquent

If the borrower fails to make a payment on time, the borrower is considered delinquent and late fees may be charged. If the borrower misses several payments, the loan goes into default.

Dependency Status

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 (e.g., born before January 1, 1982 for academic year 2005-06), 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 were 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. They 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're 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.]

Dependent

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.

Direct Loans

The William D. Ford Federal Direct Loan Program (aka the Direct Loan Program), is a new federal program where the school becomes the lending agency and manages the funds directly, with the federal government providing the loan funds.

Disbursement

Disbursement is the release of loan funds to the school for delivery to the borrower. 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. The disbursement will be made in at least two equal installments.

Discharge

To discharge a loan is to release the borrower from his or her obligation to repay the loan. See also Cancellation.

Disclosure Statement

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.

Doctorate (PhD)

One of several degrees granted by graduate schools.

Due Diligence

If a borrower fails to make payments on their loan according to the terms of the promissory note, the federal government requires the lender, holder, or servicer of the loan to make frequent attempts to contact the borrower (via telephone and mail) to encourage him or her to repay the loan and make arrangements to resolve the delinquency.

Electronic Funds Transfer

Electronic Funds Transfer (EFT) is used to wire funds for Stafford and PLUS loans directly to participating schools without requiring an intermediate check for the student to endorse. The money is transfered electronically instead of using paper, and hence is available to the student sooner. Most Alternative Loan lenders use EFT.

Eligible Non-Citizen

Someone who is not a US citizen but is nevertheless eligible for Federal student aid. Eligible non-citizens include US permanent residents who are holders of valid green cards, US nationals, holders of form I-94 who have been granted refugee or asylum status, and certain other non-citizens. Non-citizens who hold a student visa or an exchange visitor visa are not eligible for Federal student aid.

Emancipated

Declaring a child to be legally emancipated is not sufficient to release the parents or legal guardians from being responsible for providing for the child's education. If this were the case, then every parent would "divorce" their children before sending them to college. The criteria for a child to be found independent are much stricter. See Dependency Status for details.

Endowment

Funds owned by an institution and invested to produce income to support the operation of the institution. Many educational institutions use a portion of their endowment income for financial aid. A school with a larger ratio of endowment per student is more likely to give larger financial aid packages.

Enrollment Status

An indication of whether you are a full-time or part-time student. Generally you must be enrolled at least half-time (and in some cases full-time) to qualify for financial aid.

Entitlement

Entitlement programs award funds to ALL qualified applicants. The Pell Grant is an example of such a program.

Entrance Interview

See Loan Interviews.

Equity

Equity is the dollar value of your ownership in a piece of property. See, for example, Home Equity below.

Exit Interview

See Loan Interviews.

Expected Family Contribution

The Expected Family Contribution (EFC) is an index number related to 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 COA and the EFC is the student's financial need, and is used in determining the student's eligibility for need-based financial aid. There is more information about the EFC on our Overview page.

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.

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. CU-Boulder does not participate in the FFELP.

Federal Methodology

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.

Federal Work-Study

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. For mor information see our Student Employment page.

Fellowship

A form of financial aid given to graduate students to help support their education. Some fellowships include a tuition waiver or a payment to the university in lieu of tuition. Most fellowships include a stipend to cover reasonable living expenses (e.g., just above the poverty line). Fellowships are a form of gift aid and do not have to be repaid.

Financial Aid

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).

Financial Aid Administrator

A Financial Aid Administrator (FAA) is a college or university employee who is involved in the administration of financial aid.

Financial Aid Package

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.

Financial Need

See Need below.

First-Time Borrower

A first-time borrower is a first-year undergraduate student who has no unpaid loan balances outstanding on the date he or she signs a promissory note for an educational loan. First-time borrowers are subjected to a delay in the disbursement of the loan funds. The first loan payment is disbursed 30 days after the first day of the enrollment period. If the student withdraws during the first 30 days of classes, the loan is canceled and does not need to be repaid. Borrowers with existing loan balances aren't subject to this delay.

Fixed Interest

In a fixed interest loan, the interest rate stays the same for the life of the loan.

Forbearance

During a 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, loans, work-study, and other financial aid. As the name suggests, no fee is charged to file a FAFSA. For speed and accuracy, we recommend the online version; www.fafsa.ed.gov.

Garnishment

Garnishment is the practice of withholding a portion of a defaulted borrower's wages to repay his or her loan, without their consent.

Grace Period

The grace period is a short time period after graduation during which the borrower is not required to begin repaying his or her student loans. The grace period may also kick in if the borrower leaves school for a reason other than graduation or drops below half-time enrollment. Depending on the type of loan, you will have a grace period of six months (Stafford Loans) or nine months (Perkins Loans) before you must start making payments on your student loans. The PLUS Loans do not have a grace period.

Graduate Assistantship

There are two types of graduate assistantships: teaching assistantships (TA) and research assistantships (RA). TAs and RAs receive a full or partial tuition waiver and a small living stipend. TAs are required to perform teaching duties. RAs are required to perform research duties, not necessarily related to the student's thesis research.

Graduate Student

A student who is enrolled in a Masters or PhD program.

Graduated Repayment

Under a graduated repayment schedule, the monthly payments are smaller at the start of the repayment period, and gradually become larger.

Grant

A grant is a type of financial aid that does not need to be repaid. To learn more about grants, see our Types of Aid page.

Gross Income

This is income before taxes, deductions, and allowances have been subtracted.

Guarantee Agency or Guarantor

Guarantee agencies are responsible for approving student loans and insuring them against default. Guarantee agencies also oversee the student loan process and enforce federal and state rules regarding student loans.

If a borrower defaults on an educational loan, the guarantee agency assumes responsibility for collecting the loan and repays the lender, usually at 98 cents on the dollar. (Legislation is pending to reduce this amount to 95 centers on the dollar.) This means that guaranteed educational loans are extremely low-risk loans for the lender, despite being unsecured. To find out who is the Guarantee Agency of a certain loan, please visit nslds.ed.gov. See also the State Guarantee Agencies page.

Guarantee Fee

A guarantee fee is a small percentage of the loan that is paid to the guarantee agency to insure the loan against default. The insurance fee is usually 1% of the loan amount (and by law cannot exceed 3% of the loan amount).

A guaranteed loan is a loan that is insured against default. In the case of guaranteed student loans, the Federal government agrees to repay the loans in case of default. Each loan is charged a guarantee fee to cover the costs of defaulted loans.

Half-Time

Most financial aid programs require that the student be enrolled at least half-time to be eligible for aid. Some programs require the student to be enrolled full-time.

Holder

The holder is the lender, institution, or agency that holds legal title to a loan. The holder may be the bank that issued the loan, a secondary market that purchased the loan from the bank, or a guarantee agency if the borrower defaulted on the loan.

Home Equity

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. For a conservative estimate of your home's market value, try using the Federal Housing Index Calculator. See also Equity.

In-State Student

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. See the Registrar's Residency Page to learn more.

Income

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).

Income Contingent Repayment

Under an income contingent repayment schedule, the size of the monthly payments depends on the income earned by the borrower. As the borrower's income increases, so do the payments. The income contingent repayment plan is not available for PLUS Loans.

Independent Student

See Dependency Status.

Individual Retirement Account (IRA)

The IRA is one of several popular types of retirement funds. Consult your tax advisor to see how borrowing from your IRA to pay for your children's education effects financial aid.

Installment Loan

An installment loan is a consumer loan in which the principal and interest are repaid on a regular (usually monthly) schedule. The payments are called "installments" and are all for the same amount.

Institutional Methodology

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).

Institutional Student Information Report

The Institutional Student Information Report (ISIR) is the name for the electronic version of SARs delivered to schools by EDExpress.

Insurance Fee

The insurance fee is passed on by the lender to the federal government as insurance against default. The insurance fees are charged as the loan is disbursed, and typically run to 1% of the amount disbursed. See also Guarantee Fee.

Interest

Interest is an amount charged to the borrower for the privilege of using 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. As of October 1, 1992, all new federal loans use variable interest rates that are pegged to the cost of US Treasury Bills. Current rates

Internship

An internship is a part-time job during the academic year or the summer months in which a student receives supervised practical training in a their field. Internships are often very closely related to the student's academic and career goals, and may serve as a precursor to professional employment. Some internships provide very close supervision by a mentor in an apprenticeship-like relationship. Some internships provide the student with a stipend, some don't.

IRS

The Internal Revenue Service (IRS) is the federal agency responsible for enforcing US tax laws and collecting taxes.

Lender

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 now participate in the Federal Direct Loan program and no longer use a private lender, since loan funds are provided by the US Government.

Line of Credit

A line of credit is a pre-approved loan that lets you borrow money up to a pre-set credit limit, usually by writing checks. A line of credit doesn't cost you anything until you write a check, and then you begin repayment just like a regular loan.

Loan

A loan is a type of financial aid which must be repaid, with interest. The Federal Direct Student Loan Program (a.k.a. Direct Loan, or Direct Stafford Loan) is 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. For more information see our Types of Aid page.

Loan Forgiveness

Under certain circumstances, such as practicing medicine in a national shortage area or teaching in a rural region, the federal government will cancel all or part of an educational loan. See studentaid.ed.gov for more information.

Loan Interviews

Students with educational loans are required to meet an 'interview requirement' before they receive their first loan disbursement and again before they graduate or otherwise leave school. During these counseling sessions, called entrance and exit interviews, a website reviews the repayment terms of the loan and the repayment schedule with the student.

Master's Degree

One of several degrees granted by graduate schools. A previous degree makes one ineligible for a Pell Grant.

Maturity Date

The date when a loan comes due and must be repaid in full.

Merit-based

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.

Mortgage

A mortgage is a loan of funds for purchasing a piece of property which uses that property as security for the loan. The lender has a lien on the property and will receive the property if the borrower fails to repay the loan.

National Health Corps Scholarship

The National Health Corps Scholarship (NHSC) is a scholarship program administered by the US Department of Health and Human Services (HHS). It is available to medical students studying allopathic and osteopathic medicine and to dental school students studying dentistry.

Need

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

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 the FAFSA.

Need-Based

Financial aid that is need-based depends on your financial situation. Most government sources of financial aid are need-based.

Net Income

This is income after taxes, deductions, and allowances have been subtracted.

New Borrower

See First-Time Borrower.

Nondegree

See our Nondegree page.

Nursing Student Loan

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.

Origination Fee

The origination fee is paid to the bank to compensate them for the cost of administering the loan. The origination fees are charged as the loan is disbursed, and typically run to 3% of the amount disbursed. A portion of this fee is paid to federal government to offset the administrative costs of the loan.

Outside Resource

A 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 VA educational benefits are examples of outside resources.

Outside Scholarship

An outside scholarship is one that comes from sources other than the school and the federal or state government.

Out-of-State Student

An out-of-state student has not met the legal residency requirements for the state, and is often charged a higher tuition rate at public colleges and universities in the state. See the Registrar's Residency Page to learn more.

Overawards

A student who receives federal support may not receive awards in excess of his or her cost of attendance.

Packaging

Packaging is the process of assembling a financial aid package. See our awarding page.

Parent Contribution

The Parent Contribution 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.

Pell Grant

The Pell grant is a federal grant that provides funds of up to $4,050 based on the student's financial need.

Perkins Loan

The Perkins Loan allows students to borrow up to $4,000/year (5 year max). The Perkins Loan has a 5% interest rate and is awarded by the financial aid administrator to students with exceptional financial need. The interest on the Perkins Loan is subsidized while the student is in school. See our Types of Aid page for more information.

PhD

One of several degrees granted by graduate schools.

PLUS Loans

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. There is a minimal credit check required for the PLUS loan, so a good credit history is required. 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. See our Types of Aid page for more information.

Prepaid Tuition 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 when tuition rates will have doubled.

Prepayment

Paying off all or part of a loan before it is due.

Principal

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.

Private Loans

Private loans are education loan programs established by private lenders to supplement the student and parent education loan programs available from federal and state governments. Some private loan programs offer terms that are highly competitive with those of the PLUS and unsubsidized Stafford loans. Most, however, are somewhat more expensive. See our Alternative Loan page to learn more.

Professional Degree

A professional degree is a degree in a field like law, education, medicine, pharmacy, or dentistry.

Professional Judgment

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). See colorado.edu/finaid/pj.html for more information.

Professional Student

A student pursuing advanced study in law or medicine.

Promissory Note

The promisory note is the binding legal document that must be signed by the student borrower before loan funds are disbursed by the lender. The promisory note states the terms and conditions of the loan, including repayment schedule, interest rate, deferment policy, and cancellations. The student should keep this document until the loan has been repaid. For speed and accuracy, we now recommend that students fill out an electronic master promissory note at dlenote.ed.gov.

Refund

If you receive financial aid in excess of your university bill, a refund will be owed to you. Starting fall 2008, all students are required to sign up for direct deposit. When you set up direct deposit with the Bursar's Office, your excess financial aid funds will be deposited directly into the bank account of your choice. Please see the Bursar page for details and to set up direct deposit. For more information see our Receiving Funds page.

Renewable Scholarships

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.

Repayment Schedule

The repayment schedule discloses the monthly payment, interest rate, total repayment obligation, payment due dates, and the term of the loan. For more information on repayment, please visit studentaid.ed.gov.

Repayment Term

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. For more information on repayment, please visit studentaid.ed.gov.

Research Assistantship

A form of financial aid awarded to graduate students to help support their education. Research assistantships usually provide the graduate student with a waiver of all or part of tuition, plus a small stipend for living expenses. As the name implies, an RA is required to perform research duties. Sometimes these duties are strongly tied to the student's eventual thesis topic.

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. SAP

Sallie Mae

Sallie Mae, formerly known as the Student Loan Marketing Association (SLMA), is the nation's largest secondary market and holds approximately one third of all educational loans.

Scholarship

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. Sholarship Services

Scholarship Search Service

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 achievement test

The achievement tests are a collection of tests that measure the student's proficiency and accumulated knowledge of specific subject areas. Different schools require different achievement tests as part of their admissions requirements. Please see www.collegeboard.com for details.

Secondary Market

A secondary market is an organization that buys loans from lenders, thereby providing the lender with the capital to issue new loans. Selling loans is a common practice among lenders, so the bank you make your payments to may change during the life of the loan. The terms and conditions of your loan do not change when it is sold to another holder. Sallie Mae is the nation's largest secondary market and holds approximately one third of all educational loans.

Secured Loan

A secured loan is backed by collateral. If you fail to repay the loan, the lender may seize the collateral and sell it to repay the loan. Auto loans and home mortgages are examples of secured loans. Educational loans are generally not secured.

Selective Service

Selective Service is registration for the military draft. Male students who are US citizens and have reached the age of 18 and were born after December 31, 1959 must be registered with Selective Service to be eligible for federal financial aid. If the student did not register and is past the age of doing so (18-25), and the school determines that the failure to register was knowing and willful, the student is ineligible for all federal student financial aid programs. The school's decision as to whether the failure to register was willful is not subject to appeal. Students needing help resolving problems concerning their Selective Service registration should call 1-847-688-6888 or visit www.sss.gov.

Self Help Aid

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.

Servicer

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, respond to borrower inquiries, and ensure that the loans are administered in compliance with federal regulations and guarantee agency requirements. EduServ is the largest private servicer of student loans in the US. The Direct Loan Service Center services all Direct Loans. On ther website you can make payments, view your account, and enroll in other electronic services.

Simple Interest

Simple interest is interest that is paid only on the principal balance of the loan and not on any accrued interest. Most federal student loan programs offer simple interest. Note, however, that capitalizing the interest on an unsubsidized Stafford loan is a form of compounded interest.

Simplified Needs Test

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. Details on the eligibility requirements appear on the Simplified Needs Test Chart.

Stafford Loans

Stafford Loans are federal loans that come in two forms, subsidized and unsubsidized. Subsidized loans are based on need; unsubsidized loans aren't. The interest on the subsidized Stafford Loan is paid by the federal government while the student is in school and during the 6 month grace period.

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. For more information, see our Types of Aid page.

Statement of Educational Purpose

The Statement of Educational Purpose is a legal document in which the student agrees to use the financial aid for educational expenses only. The student must sign this document before receiving federal need-based aid.

Student Aid Report

The Student Aid Report (SAR) summarizes the information included in the FAFSA. 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.

Student Contribution

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 $1,750.

Student Loan Marketing Association (SLMA)

SLMA is the old name for Sallie Mae.

Subsidized Loan

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. 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.

Teaching Assistantship (TA)

A form of financial aid awarded to graduate students to help support their education. Teaching assistantships usually provide the graduate student with a waiver of all or part of tuition, plus a small stipend for living expenses. As the name implies, a TA is required to perform teaching-related duties.

Term

The term of a loan is the number of years (or months) during which the loan is to be repaid.

Title IV Loans

Part B of Title IV of the Higher Education Act of 1965, as reauthorized by the Higher Education Amendments of 1992, created several education loan programs which are collectively refered to as the Federal Family Education Loan Program (FFELP). These loans, also called Title IV Loans, are the Federal Stafford Loans (Subsidized and Unsubsidized), Federal PLUS Loans, and Federal Consolidation Loans.

Title IV School Code

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. The Financial Aid Information Page provides a searchable database of Title IV School Codes. CU-Boulder's school code is 001370.

Test Of English As A Foreign Language (TOEFL)

Most colleges and universities require international students to take the TOEFL as part of their application for admission. The TOEFL evaluates a student's ability to communicate in and understand English. For more information, see the Kaplan Web page.

Undergraduate Student

A student who is enrolled in a Bachelors program.

Unearned Income

Interest income, dividend income, and capital gains.

Unsecured Loan

An unsecured loan is not backed by collateral, and hence represents greater risk to the lender. The lender may require a co-signer on the loan to reduce their risk. If you default on the loan, the co-signer will be held responsible for repayment. Most educational loans are unsecured loans. In the case of federal student loans, the federal government guarantees repayment of the loans. Other examples of unsecured loans include credit card charges and personal lines of credit.

Unsubsidized Loan

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. See Stafford Loans for information about unsubsidized Stafford Loans. See also Subsidized Loan above.

Untaxed Income

Contributions to IRAs, Keoghs, tax-sheltered annuities, and 401k plans, as well as worker's compensation and welfare benefits.

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 Student Guide or the US Department of Education's home page.

US Department of Health and Human Services (HHS)

The US Department of Health and Human Services (HHS) administers several health education loan programs, including the HEAL and NSL loan programs.

Variable Interest

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

Verification is a review process in which the Financial Aid Office 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.

Veteran

For Federal financial aid purposes such as determining dependency status, a veteran is a former member of the US Armed Forces (Army, Navy, Air Force, Marines, or Coast Guard) who served on active duty and was discharged other than dishonorably (i.e., received an honorable or medical discharge). You are a veteran even if you serve just one day on active duty - not active duty for training - before receiving your DD-214 and formal discharge papers. (Note that in order for a veteran to be eligible for VA educational benefits, they must have served for more than 180 consecutive days on active duty before receiving an honorable discharge. There are exceptions for participation in Desert Storm/Desert Shield and other military campaigns.) Please see our Veteran's Page for more details.

ROTC students, members of the National Guard, and most reservists are not considered veterans.

Since the 1995-96 academic year, a person who was discharged other than dishonorably from one of the military service academies (the U.S. Military Academy at West Point, the Naval Academy at Annapolis, the Air Force Academy at Colorado Springs, or the Coast Guard Academy at New London) is considered a veteran for financial aid purposes. Cadets and midshipmen who are still enrolled in one of the military service academies, however, are not considered veterans. According to the US Department of Education's Action Letter #6 (February 1996), "a student who enrolls in a service academy, but who withdraws before graduating, is considered a veteran for purposes of determining dependency status".

Having a DD-214 does not necessarily mean that you are a veteran for financial aid purposes. As noted above, you must have served on active duty and received an other than dishonorable discharge. If there is a discrepancy regarding your veteran status, the Financial Aid Office will ask you to turn in your DD-214.

Resources for Blind and Visually Impaired Students

www.colorado.edu/finaid/vir.html This page reviews the information resources offered by FSA for blind and visually impaired students considering enrolling in or currently enrolled in education beyond high school.

W2 Form

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.

Work Study

See Federal Work-Study.

Acronyms