Saint Francis University

Financial Aid Terms

Accrual: The date on which interest charges on an educational loan begin to accumulate (or accrue)

Assignment (of loans): Assignment occurs when a new lender assumes an educational loan from a previous lender. See also subrogation.

Bankruptcy: A legal proceeding in which an insolvent person (i.e., someone who cannot pay debts) may be relieved of financial obligations, but loses control over bank accounts and future financial options. Bankruptcy is a last resort for those with debt problems, and although some debts may be discharged, bankruptcy affects a person's credit rating and financial opportunities for many years. Student loans, including alternative student loans, cannot be discharged through bankruptcy.

Book Voucher: A book voucher can be granted to students that are expecting to receive a refund check but need refund money to cover book expenses before a check can be granted. The Office of Financial Aid will issue book vouchers at the beginning of the fall and spring semesters. Book vouchers can not be granted during the summer due to the different start dates that occur during the summer semester. The amount granted by the Office of Financial Aid will be deducted from the student’s account. For more information regarding Book Vouchers, please click on the Book Voucher hyperlink found on our homepage.

Borrower: A borrower is the person who has signed and agreed to the terms
in the promissory note, and must repay the loan.

Borrower-Based Academic Year (BBAY): A BBAY must begin with a term in which a student is enrolled at least half time. Also, any mini-sessions (summer or otherwise) that run consecutively within a term must be combined and treated as a single term. A Borrower-Based Academic Year must meet the minimum Title IV requirements for an academic year. However, a BBAY that includes a summer term may include fewer than 30 weeks of instructional time or fewer credit hours than the minimum number required for Standard Academic Year (SAY). This is because a summer term may be shorter than a standard term in an academic year, but is recognized as academically equivalent to a standard term when used as one of the terms in a Borrower-Based Academic Year.

Figure A demonstrates how a BBAY “rolls” through an academic year.

BBAY 1 BBAY 2 BBAY 3

In Figure B the student is not enrolled in the second term (fall) of BBAY #2.

BBAY 1 BBAY 2 BBAY 3

Figure C shows a student that does not attend a term that otherwise would have been the beginning of a BBAY (in this case spring), then the student’s next BBAY can not begin until the next term that the student attends.

BBAY 1 BBAY 2 BBAY 3

In all three of these examples, if these were the first three years of study for a dependent student and the student progressed a grade level each academic year, he/she would be eligible for up to the maximum Stafford amount of $3,500, $4,500, and $5,500 for the respective academic years.

When a student is enrolled in his or her final semester of college and will graduate at the end of the semester, the Federal Government requires the University to prorate the student’s loan eligibility for that semester. Please contact the Financial Aid Office regarding the amount for which you may be eligible, or with any other questions pertaining to the Borrower-Based Academic Year.

Budget: A budget is a plan for the coordination of resources (income, checking/savings accounts, etc.) and expenses, to prevent spending more than available resources.

Cancellation: Some loan programs provide for cancellation (i.e., waiver of your requirements to repay the loan) under certain circumstances, such as death or permanent disability of the borrower. Some federal student loan programs have additional cancellation provisions. For example, students who become teachers in certain national shortage areas may be eligible for cancellation of all or part of the balance of their educational loans. See also forgiveness.

Please check with your loan servicer to determine if you are eligible for partial or total cancellation. The following is a list of occupations, professions, and situations that may be eligible for cancellation: (Note: You may lose these privileges if you consolidate).

• Teacher--low income school, special education, or shortage in specified field (i.e., math or science)
• Head Start Administrator
• Law enforcement or corrections officer
• Military service in area of hostility
• Peace Corps volunteer
• Full-time nurse or medical technician
• Full-time employee of family services organization working with high-risk children
• Totally and permanently disabled
• Death

Capitalize: Capitalizing interest means that all interest accrued is added to the principal amount of your loan. Additional interest would then be based upon the higher principal amount. In other words, you would be paying interest on interest. If you are borrowing a Federal Stafford Loan that is unsubsidized, you will be able to indicate on your master promissory note (MPN) whether you choose to pay your interest quarterly or have the interest capitalize while you are in school. Choosing to pay your interest quarterly will minimize your loan debt.

Career Maximum Stafford Loan Limit: A student's career maximum Stafford loan limit is the total amount of Stafford loan, both subsidized and unsubsidized, that a student can borrow in all years while pursuing a degree(s).

Certification (of a loan): When an educational institution certifies a loan, they notify and provide the lender with various pieces of information to complete the loan application including the student's enrollment status, expected graduation date, year in school, loan period, and cost of attendance.

Combined Total (Stafford Loan): In some scenarios, the subsidized and unsubsidized portions of a Federal Stafford Loan are added together to give you a combined total. This helps you to easily see your total (aggregate) loan borrowing without having to
add up the subsidized and unsubsidized components. You can find combined Stafford Loan amounts on the student portal of the National Student Loan Data System (NSLDS).

Consolidation: A consolidation loan combines several student loans into a larger loan from a single lender. The consolidation lender pays off the balances on the other loans giving the student the convenience of making one payment.

Cosigner: A term referring to a person, other than the principal borrower, who signs an agreement to repay a loan. The cosigner assumes equal liability for repayment of the loan.

Cost of Attendance: The cost of attendance is an estimate of a student's educational expenses for a specific period of enrollment. Your cost of attendance varies based on the number of credits you take, the courses you choose, and your living arrangements. In addition to tuition and fees, living expenses such as meals, rent, transportation, and books are built into each cost of attendance. Your total student aid can never exceed your cost of attendance.

Credit: You are taking an initial step toward establishing credit when you borrow money. Credit is a promise to pay later for goods, services, or money you receive now. Establishing good credit is important. By repaying your loans on time and making informed decisions regarding your student loan needs, you will prevent future credit difficulties.

Credit Bureau: Credit bureaus and credit reporting agencies provide banks and businesses with a credit rating, which assists banks and businesses in deciding whether to issue a loan or extend credit.

Credit Limit/Line of Credit:  An arrangement between a bank or credit card company and a customer which allows the customer to borrow up to a pre specified amount as determined by the lender.

Credit Rating (Credit Score): A credit rating or credit score is an evaluation of the likelihood of a borrower to default on a loan. Your credit rating 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 hurt your credit rating.

Default, Defaulter: A defaulter is a person who fails to meet his or her loan responsibilities. Being labeled a defaulter will stay on your credit history for up to seven years. Defaulters can be denied access to future credit or investments, and the federal government can deduct payments from wages or seize income-tax refunds. To avoid default, maintain contact with your lender. (To identify your lender, use NSLDS). It is possible for your lender to change during your college career or during repayment (your loans may be sold to a third-party servicing agency). Keep a detailed file of loan information, and notify your lenders as your situation changes. It is your responsibility to contact your lender if there is a change in your name, address, or enrollment status.

See also deferment and forbearance and loan forgiveness.

Deferment: Deferment is a period of time in which approved borrowers are not required to repay their loans (principal or interest). The following circumstances may enable you to pursue a deferment: (Note: You may lose these privileges if you consolidate).

• Full-time or half-time study
• Active military duty
• Peace Corps, Vista, ACTION, domestic service, or private/non-profit volunteer
• Engaged in service listed under cancellation privileges (see also forgiveness)
• National Oceanic & Atmospheric Administration Corps
• Graduate fellowship
• Professional internship
• Advanced professional training
• Economic Hardship
• Hardship (interest accrues)
• Unable to find full-time employment
• Pregnancy, adoption, or child care
• Mother of preschool child who is entering the workforce
• Temporary or total disability

If you do not qualify for a deferment but are still unable to make satisfactory repayment, you may qualify for forbearance. Also see grace period.

For more information on deferment, access AES/PHEAA's deferment information, or contact your lender. (To identify your lender, use NSLDS or the Loan Locator.)

Delinquency: Delinquency occurs when loan payments are late or missed, as specified in the terms of the promissory note and the selected repayment plan.

Dependent: A dependent student is required to include both student and parent income information on the Free Application for Federal Student Aid (FAFSA). Dependency status is determined using federal guidelines on the FAFSA. Also see independent.

Disbursement: Disbursement occurs when the lender releases the loan funds to the school for delivery to the borrower. At Saint Francis University, educational loans are disbursed directly into the student's Bursar account.

Discharge: When a bankrupt person is legally free and clear of any obligation to repay certain debts. Student educational loans can never be discharged under current bankruptcy laws.

Disclosure Statement: A disclosure statement is a statement of the actual cost of a loan, including the interest costs and the loan fee.

Expected Family Contribution (EFC) and Financial Need: Your EFC is a calculated figure that is used to estimate your family's ability to contribute towards your education. This figure is established by entering the information you submit on the FAFSA on the Web into a formula established by Congress and federal law. Please access additional information on EFC.

FAFSA (Free Application for Federal Student Aid): The FAFSA is the federal application that a student must complete to receive federal, state, or institutional aid. This application must be completed each year. Deadlines for submitting the Free Application for Federal Student Aid (FAFSA). Here at Saint Francis, the Office of Financial Aid processes applications for Federal Student Aid on a “rolling basis.” There is no set deadline for processing the FAFSA; applications will be processed when received. However, the preferred filing date is April 1^st prior to the fall semester. The deadline for students to be considered for the Pennsylvania State Grant is May 1^st.

Fixed Interest Rate:  A fixed interest rate is locked in at the origination of the loan and does not change during the term of the loan. See also Variable Interest Rate.

Forbearance: Forbearance is a period of time in which payments of principal are deferred while interest payments are not deferred. The interest will continue to accrue, and if not paid, may be added to your principal, increasing the total amount borrowed and the amount of interest you will pay. To determine whether or not you are eligible for a deferment or forbearance, contact your lender or loan servicer.

Forgiveness: Loan forgiveness occurs when the federal government cancels all or part of an educational loan because the borrower meets certain criteria (e.g., is performing military or volunteer service). See also cancellation. (Note: You may lose these privileges if you consolidate).

Full-time: Certain aid programs require full-time enrollment. For undergraduate students, full-time enrollment is at least 12 credits; for graduate students, full-time enrollment is at least 9 credits. Also see half-time.

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

Grace Period: In most cases, student loans offer a grace period, a period of time immediately following separation from school during which the borrower is not required to begin repayment. This period allows the borrower to find a job and establish a budget before repayment begins. The Federal Stafford Loan offer a 6-month grace period; Federal Perkins Loan offers a 9-month grace period.

Gross: The term gross refers to an overall total, excluding deductions. Your gross income, for example, is your total income without taxes or other items deducted from it. The gross amount of your Federal Stafford Loan or PLUS loan is the full amount you borrow, not including loan processing fees (1-3%). Once these fees are deducted, the net amount of your loan will be disbursed into your Bursar account to cover University charges, and any excess will be available as a refund. Also see net.

Guarantor/Guaranty Agency: The loan guarantor is the agency or institution that insures up-to-permissible limits against loss to lenders in the event of a default. The loan guarantor often reviews and approves the loan on a lender's behalf, where such arrangements have been made between the guarantor and the lender. See also loan servicer.

Guaranty: When federal loans are guaranteed by the guaranty agency, the agency is affixing federal protection to the loan. This protection ensures that the lender is repaid in the case of a default. The guaranty agency assumes responsibility for the defaulted loan and attempts to correct it.

Half-time: To be eligible for most federal student aid, a student must be enrolled at least half-time. For undergraduate students, half-time enrollment is at least 6 credits; for graduate students, half-time enrollment is at least 5 credits. Also see full-time.

Hold: In the event that a student does not complete specific University-related requirements, a hold may be placed on the student's University record(s), which prevents certain student actions or requests from occurring (e.g., future registration or release of transcripts).

Independent: An independent student uses only student income information on the Free Application for Federal Student Aid (FAFSA) and is not required to include parent information. The criteria for determining that a student is independent have been determined by the federal government and are as follows:

• The student is or will be 24 years old during the academic year
• The student is enrolled in a master's or doctoral program
• The student is married when he or she completes the FAFSA
• The student has a child or other dependent who receives more than half of his or her support from the student
• The student is an orphan or ward of the court
• The student is a veteran of the U.S. Armed Forces

If one or more of these criteria apply to a particular student, that student will be considered independent and will not be required to include parent information on the FAFSA. The student will also be able to borrow a larger Federal Stafford Loan.

Also see dependant.

Interest: Interest on loans is a fee the lender charges for borrowing money. Interest is charged on loans from the time you sign a promissory note until the time you completely repay the loan. See interest rate information for Stafford, PLUS, and Perkins.

Interest Rate: The interest rate is the annual percentage of the loan or credit card amount that is charged for its use. For Federal Stafford and Federal PLUS Loan interest rates, please see interest rates on loans for undergraduates or interest rates on loans for graduates.

Judgment: A court order to pay a party a certain amount of money.

Lender: A lender is the financial institution that provides the money to be borrowed through a student loan program. The lender approves the loan and applies for the loan guarantor. See also loan servicer. Credit card companies are also lenders in that they extend credit to borrowers who agree to repay the balance for items charged or cash advances on a credit card.

Lien: The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.

Loan: A loan is money borrowed that must be repaid.

Loan Fee: A loan fee is the expense of borrowing. This fee is deducted from each loan disbursement. Not all loans have fees.

Loan Origination: Loan origination is the process by which a lender brings a loan into existence and involves certification of the loan, guaranty, and completion of the master promissory note (MPN).

Loan Servicer: A loan servicer is a company hired by your lender to process loan repayments. See also loan guarantor .

Master Promissory Note (MPN): The Federal Stafford Loan MPN is the loan application for your Federal Stafford Loan. It is valid for 10 years while you are enrolled as a student. Once you complete the Federal Stafford Loan MPN, you will not need to sign another one to borrow in future years. Also see promissory note.

The PLUS Loan MPN is a parent's loan application for the Federal Parent (PLUS) Loan. Once a parent completes the PLUS Loan MPN, he/she will not need to sign another one to borrow in future years. If a parent has two students attending college, a separate MPN is required for each student. Likewise, if a mother and father both borrow a PLUS Loan for one student, a separate MPN is required for each borrower. Although the PLUS Loan MPN remains in effect for ten years, parents must complete the Edamerica on-line PLUS preapproval every year to activate a new PLUS Loan for each loan term and to ensure that credit standards continue to be met.

The Federal Perkins Loan MPN is the legally binding document that is evidence of a borrower's indebtedness to a school. If awarded a Perkins, you must sign the MPN before receiving funds.

Maturity: The maturity date is when the grace period on a loan has ended and the loan officially moves to repayment status.

National Student Clearinghouse: National Student Clearinghouse is a national database, which lenders, loan servicers, guaranty agencies, schools, and students can access to verify student degree and enrollment information.

National Student Loan Data System (NSLDS): NSLDS is the U.S. Department of Education's central database for student aid. It receives data from schools, agencies that guaranty loans, the Direct Loan program, the Pell Grant program, and other U.S. Department of Education programs. NSLDS provides a centralized, integrated view of Title IV loans and Pell grants that are tracked through their entire cycle; from aid approval through closure.

Net: The term net is used to refer to the amount remaining after all charges or fees have been deducted from the total. For example, your net income is your total income minus the amount of taxes you pay. The net amount of your Federal Stafford Loan is the amount that is disbursed into your Bursar account to cover University charges. It is the amount that you borrowed (i.e., the gross amount), with 1-3% loan processing fees deducted. Also see gross.

Origination Fee: Origination fees are loan fees 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 approximately 3% of the amount disbursed. A portion of this fee is paid to the federal government to offset the administrative costs of the loan.

Personal Identification Number (Federal Student Aid PIN): Your Federal Student Aid PIN (Personal Identification Number), or PIN is a unique number assigned to you by the Department of Education. You can use your PIN to securely access online accounts relating to student aid. If you are a dependent student, your parents can also apply for a PIN so they can complete portions of your financial aid application using their PIN online.

Prepayment: Prepayment loans indicate that the borrower is paying off all or part of a loan before it is due.

Principal: The term principal refers to a sum of money borrowed, due, or used as a fund. The principal amount of your Federal Stafford Loan is the total amount you have borrowed and must repay, with interest charge. If you have chosen to capitalize the interest on an unsubsidized Federal Stafford Loan (rather than paying it quarterly as it accrues), the principal will include the amount you originally borrowed plus interest that has capitalized. When you graduate and use your grace period, you will then begin payments of principal and interest. If you are using a subsidized Federal Stafford Loan, the government will pay the interest on the principal amount while you are in school. Once you graduate and use your grace period, you will then begin payments of principal and interest.

Promissory Note: A promissory note is a legal contract requiring a borrower to repay a loan. When you sign a promissory note, you agree to repay the amount borrowed under the terms outlined in the promissory note. Repayment follows the grace period or deferment period that begins when you leave school or drop below half-time enrollment -- even if you do not finish your program of study or obtain a job in your major. See also Master Promissory Note (MPN).

Repayment: A loan in repayment status, after the expiration of the grace period, is being billed by the loan holder and payments are due.

Repayment Schedule: A repayment schedule is a statement provided by the lender or loan servicer that lists the amount borrowed, the amount of monthly payments, and the date payments are due.

Repayment Term: The repayment term of a loan is the period during which the borrower is required to make payments on the loan. When the payments are made monthly, the term is usually given as a number of payments or years.

Satisfactory Academic Progress: The Office of Financial Aid is required by federal regulation to monitor student progression toward completion of degree and certificate programs at both the undergraduate and graduate levels. This Satisfactory Academic Progress standard requires that a specific number of completed credits are necessary each academic year to remain eligible for student financial aid. For a complete description of SAP regulations, please click on the Satisfactory Academic Progress hyperlink found on the financial aid homepage.

Separation: The date when a student ceases being enrolled at least half-time. This is the time when a loan officially ends its initial "in-school" period, which can occur because of graduation, withdrawal, termination, or enrollment of less than half-time.

Special Consideration Form: The Office of Financial Aid is very much aware of uncontrollable circumstances that happen to families that cannot be reflected on income tax returns or the Free Application for Federal Student Aid (FAFSA). That is why we offer Special Consideration Forms to families that need such consideration. You and your family may report unusual circumstances that impact your ability to pay for education costs while attending Saint Francis University on this form. These circumstances can reduce your income for the year applying, or the extraordinary expenses that will negatively impact your disposable income available for education expenses. This form is to be completed only after you have already filed and received the results back from the current year’s Free Application for Federal Student Aid (FAFSA). Special Consideration Forms will be evaluated on a case-by-case basis. Please contact the Office of Financial Aid for applications and further information. Special Consideration Forms will not be processed after October 1^st of the current year without the given year’s income tax return.

Subrogation: Subrogation is the substitution of one lender for another. The current lender assumes the terms and conditions of the previous lender. See also assignment.

Subsidized: If you are borrowing a subsidized Federal Stafford Loan, the interest on the loan is paid by another party on your behalf while you are in school. Once you graduate or leave school and your grace period has expired, you will begin making monthly payments on both the interest and the principal (the amount borrowed).

Unsubsidized: If you are borrowing a Federal Stafford Loan that is unsubsidized, the federal government will not pay the interest on (i.e., will not subsidize) your loan while you are in school or during your six-month Grace Period.

You will be able to indicate on your Federal Stafford Loan Master Promissory Note (MPN) whether you choose to pay the interest on your loan quarterly or allow it to capitalize while you are in school. Choosing to pay the interest quarterly will minimize your loan debt. Payments of principal and interest begin once the six-month grace period expires. See also subsidized .

Variable Interest Rate: A variable interest rate is the rate of interest on a loan that is tied to a stated index and changes annually, every July 1, as the index changes. See also fixed interest rate.

Verification: Verification is a process that all universities receiving federal aid are required to complete. The purpose of verification is not to find fraudulent FAFSA applicants, but to find and correct common mistakes made during the filing of the Free Application for Federal Student Aid. All need-based aid packaging must be put on hold until a student provides the necessary information requested through the verification process. If the verification process is not completed, a student will not be considered for need-based financial aid. Thus, it is important to return the information and requested documentation as soon as possible. The federal government randomly selects FAFSA applicants for verification. Though a random process, students may also be flagged for verification if conflicting information is reported on the FAFSA. If randomly selected for verification, a student must complete the process within the semester selected. The Office of Financial Aid must receive all required documents two weeks prior to the end of the selected semester.

Yearly Maximum Stafford Loan Limit: The total amount of Stafford Loan, both subsidized and unsubsidized, that a student can borrow each year (fall/spring/summer).