Financial Aid terminology
Accrued Interest
If you choose not to make interest payments while in university, in your grace period, or during an authorized period of deferment, the interest will accumulate, and be added to your principal amount at repayment.
Award Year
The 12-month period during which you attend university, and for which your aid has been awarded.
Cohort Default Rate
The percentage of a university’s Stafford borrowers who default before the end of the fiscal year in which they entered repayment on their loans. The U.S. Department of Education calculates this rate annually to determine the default experience of students who attended a particular university during a particular period of time. High default rates can result in the loss of a university’s ability to participate in the FFELP.
Cost of Attendance (COA)
The expenses relating to your attendance at university, which include tuition, accommodation, books and supplies, fees and other living costs. The COA is determined by the University, using federal guidelines.
Default
The failure of a borrower to make instalment payments when due or to meet other terms of the promissory note or other written agreement(s) with the lender under circumstances where the guarantor of the loan reasonably concluded that the borrower no longer intended to honour his/her obligation to repay a loan, provided that this failure persists for the most recent consecutive 270 day period or the most recent 330 day period.
Deferment
A period during which repaying loan principal is suspended as a result of the borrower meeting one or more of a number of situations or categories established by law. The borrower does not pay interest on subsidized loans during deferment; interest continues to accumulate during deferment of an unsubsidized loan.
Delinquency
The failure of a borrower to make a monthly payment within 30 days of the due date.
Disbursement
The lender's payment of loan funds to the University. Payment is made by cheque. Disbursement is usually made in two instalments during the year
Expected Family Contribution (EFC)
The amount that a student and family (if required) are expected to contribute toward the Cost of Attendance (COA). This amount is based on the student’s or the family’s income and assets.
Federal Family Education Loan Program (FFELP)
Program made up of Federal Stafford Loans (Subsidized and Unsubsidized), Federal PLUS loans (for parents) and Federal Consolidated Loans. All of these are long-term loans insured by state or non-profit guarantee agencies that are reimbursed by the U.S. government for all or any part of insurance claims paid by lenders.
Federal PLUS Loan (PLUS)
Parents may borrow this FFELP loan on behalf of their undergraduate, dependent children. Loans are made by lenders such as banks, credit unions, or savings and loan associations. Parents must not have an adverse credit history.
Federal Stafford Loan (Subsidized)
A FFELP loan that provides federally subsidized, low interest loans to students in undergraduate, postgraduate or professional programs. Subsidized loans are awarded on the basis of financial need.
Federal Stafford Loan (Unsubsidized)
A FFELP loan that provides low interest loans to students in undergraduate, postgraduate or professional programs. Unsubsidized loans are not awarded on the basis of financial need.
Financial Need
The difference between the student’s Cost of Attendance (COA) and the Expected Family Contribution (EFC) plus the student’s estimated financial assistance.
Forbearance
The process by which a repayment schedule can be restructured under certain conditions. The amount of the monthly payment may be temporarily reduced or suspended, or months may be added to the repayment term. You must contact your lender directly to receive forbearance.
Free Application for Federal Student Aid (FAFSA)
The form used by universities for the awarding of federal student aid. Information in the FAFSA is analysed according to U.S. deferral guidelines together with Monash University guidelines to determine your family’s financial situation.
Guarantor
The person or agency which verifies your eligibility for a particular federal loan program and provides the insurance for those loans.
Grace Period
A feature of Federal Stafford loans that gives you six months after you leave university or drop below half-time status before you must start making monthly payments on your loan.
Interest
The fee that is charged by the lender in exchange for lending the money. The interest rate, usually expressed as a percentage of the loan amount, may stay the same for the term of the loan (fixed rate) or it may change periodically (variable rate).
Master Promissory Note (MPN)
A legally binding document between the borrower and the lender that obligates him or her to repay the loan according to its terms.
Principal
The amount borrowed. This is the amount to which interest is charged.
Satisfactory Academic Progress
The achievement of required Grade Point Average (GPA) within the defined timeframes, to ensure continued access to Financial Aid
Servicer
A company contracted by a lender to handle the administrative aspects of the loan such as collection of payments and correspondence with borrowers.
Student Aid Report (SAR)
The report sent directly to a student that summarises information submitted on the student’s FAFSA. It also provides financial-need calculations, including the student’s EFC based on submitted figures.
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