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Glossary of Terms
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Academic Year
The period during which school is in session.Western has four separate enrollment periods and for financial aid purposes, the academic year begins with Summer II and runs through Summer I.
- Summer II: July through August
- Fall: August through December
- Spring: January through April
- Summer I: May through June
Alternative Loans
Loans that are established by private lenders to supplement the student and parent education loan programs available from federal and state governments.
Appeal
An appeal is a formal request to have a financial services specialist review your aid eligibility and possibly use professional judgment to adjust the figures. For example, if you believe the financial information on your financial aid application does not reflect your family's current ability to pay (e.g., because of death of a parent, unemployment, or other unusual circumstances), you should definitely make an appeal. The financial services specialist may require documentation of the special circumstances or of other information listed on your financial aid application.
Asset
An asset is defined as property owned by the student or the family and has an exchange value. There are four types of assets: cash, savings and checking accounts; investments; businesses; and investment farms.
Award Letter
An award letter is an official document issued by the Financial Aid Office that indicates the maximum awards for which you are currently eligible. The award letter identifies the amount, source and type of aid by enrollment period. The award letter provides details on factors used in determining your eligibility for aid including residency, dependency status, class level, planned enrollment, and estimated cost of attendance. Awards are subjected to change based on the availability of funds and changes in your eligibility. You will receive a "revised" award letter if your awards are adjusted.
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
Borrower
The person who is responsible for repaying a loan and who has signed and agreed to the terms in the promissory note.
Budget
See cost of attendance.
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 eligible students. Such programs include the Federal Perkins Loan, the Federal Supplemental Educational Opportunity Program (SEOG) and the Federal College Work Study (FCWS) Program.
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.
Cancellation
Some loan programs provide for release of borrowers from their obligations to repay their loans. Borrowers must meet certain requirements to be eligible for cancellations 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. Another common cancellation provision is available if you serve in the military. The military pays off a portion of your loans for every year of service.
Capitalization
Adding unpaid accumulated interest to the loan principal. Capitalizing interest increases the principal amount of the loan, and therefore, the total cost of the loan. 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.
Citizen/Eligible Non-Citizen
To receive financial aid, you must be a U.S. Citizen, U.S. National, or an eligible non-citizen. Generally, you are an eligible non-citizen if you are:
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A U.S. Permanent resident and you have an Alien Registration Receipt Card (I-551);
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A conditional permanent resident (I-551C) or
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An other eligible non-citizen with an arrival departure record (I-94) from the U.S. Immigration and Naturalization Service showing any one of the following designations: "Refugee", "Asylum Granted", "Indefinite Parole", "Humanitarian Parole" or "Cuban-Haitian Entrant".
If you are on only an F1 or F2 student visa, a J1 or J2 exchange visitor visa or a G services visa, you are neither a citizen nor eligible non-citizen.
Collection Costs
Costs the lender or servicer incurs when collecting a delinquent or defaulted loan. These costs are charged to the borrower.
Consolidation
Form of refinancing and a way to simplify the repayment of your federal loans. The process will move all your individual federal loans with individual repayment amounts and create a new loan with one monthly payment.
Cost of Attendance
The cost of attendance (COA), also known as the cost of education or "budget", is an estimation of what it could cost you to go to school for a specific period of enrollment. The COA is calculated using an estimated cost of tuition, fees, room, dining, books, supplies, personal, travel, and loan fees. It is based on your: residency status for tuition purposes (in-state or out-of state); class level (undergraduate or graduate); housing preference (on-campus, off-campus, or living-at-home); and enrollment status (terms/sessions and average full time, or less than half time enrollment). The estimations are based upon averages for each category and are not reflective of actual or projected costs. Actual tuition, fees, and university housing costs are published each year (generally after July 1) and are subject to Board of Trustees approval. Additional tuition, fee, dependent care, study abroad or other educational expenses may considered using professional judgment through by filing a cost of attendance appeal.
Default
Failure to repay a loan according to the terms agreed to when you signed a promissory note. 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.
Deferment
Deferment occurs when a borrower is allowed to temporarily 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 forbearance. You can't get a deferment if your loan is in 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 of the upcoming academic year, 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 you are unable to obtain parental information due to untenable or unusual circumstances, contact a financial services specialist. You do not qualify for independent status if 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.
Dependent
For your child to be considered your dependent, you must provide more than half of their support. If your child does not live with you, the other parent and you may not both claim the child as a dependent. For other persons to be considered your dependent, they must live with you and you must provide more than half of their support.
Delinquency
When payments from a loan are late or missed, as specified in the terms of the promissory note and the selected repayment plan.
Direct Loans
The William D. Ford Federal Direct Loan Program(Direct Loans), is a federal program that provides loans to students and parent borrowers directly from the U.S. Department of Education. The loans are Federal Direct Subsidized (FDS), Federal Direct Unsubsidized (FDU), Federal Direct Parent Loan (PLUS) and Federal Direct Consolidation Loans.
Direct Loan Servicing Center
The U. S. Department of Education's agent contracted to collect Direct Loan payments and handled deferments, repayment options and consolidation.
Disbursement
Disbursement is the release of financial aid towards your school account for payment of tuition, fees, room and board, and other school charges.
Discharge
Loans that have been canceled because of bankruptcy, total and permanent disability, death of borrower or school closure. (See cancellation)
Disclosure Statement
The disclosure statement is sent by the lender 30 calendar days before the first anticipated disbursement and provides the borrower with information about their loan types, anticipated loan disbursement amounts, loan fee rate, amount of loan fee, anticipated disbursement dates and anticipated net disbursements.
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.
Enrollment Status
An indication of whether you are as a full-time, ¾ time, ½ time, or less than half time student. Generally you must be enrolled at least half-time (and in some cases full-time, in other cases, less than half time) in courses that will count towards your degree or certificate to qualify for financial aid. Courses that are for noncredit (i.e, audit) do not count towards your degree.
Entrance Counseling
A group or individual session during which new borrowers who are borrowing federal loans for the first time receive important information about their rights and responsibilities as a loan borrower.
Exit Counseling
A group or individual session during which borrowers who are leaving school or dropping below half time enrollment receive important information about their repayment obligations and update information about themselves.
Expected Family Contribution
The Expected Family Contribution (EFC) is 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.
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, you may request professional judgment and appeal for an adjustment to your family contribution.
Federal College Work-Study
The Federal College Work-Study (FCWS) 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. Eligibility for FCWS is based on need. Money earned from a FCWS job is not counted as income for the subsequent year's FAFSA process.
Federal Direct Parent Loan (PLUS)
A federally financed parent loan made to parents of students who will be enrolled in college who meet specific eligibility requirements. Parents may borrow up to the cost of attendance minus any other financial aid received. A credit check will occur to determine if the parent is eligible to borrow funds. The federal government charges interest from the date of the first disbursement is made until the loan is paid in full. Payments of principal and interest begin 60 days after the second disbursement if made until the loan is paid in full.
Federal Direct Subsidized Loan (FDS)
A federally financed and subsidized student loan made on the basis of the student's financial need and other specific eligibility requirements. Students may borrow up to the cost of attendance less the expected family contribution and any other aid received. Students may not borrow more than the maximum annual or aggregate amount. The federal government does not charge interest on these loans while the borrower is in enrolled at least half time, during a six month grace period, or during authorized periods of deferment.
Federal Direct Unsubsidized Loan (FDU)
A federally financed student loan made to students meeting specific eligibility requirements. Students may borrow up to the cost of attendance minus any other financial aid received and may not borrow more than the maximum annual or aggregate amount. Interest is charged throughout the life of the loan. You may choose to pay the interest charged on the loan or allow the interest to be capitalized (added to the loan principal).
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.
Federal Pell Grant (Pell)
The Federal Pell Grant (Pell) is a federal grant program that does not have to be repaid. The Pell is awarded to undergraduate students with exceptional need and who have not earned a bachelor's or professional degree.
Federal Perkins Loan
The Federal Perkins Loan is a low-interest (5%) loan for both undergraduate and graduate students with financial need. The school is your lender and the loan is made with federal government funds. You must repay the loan to your school.
Federal Processor
The Federal Processor is the U.S. Department of Education's agent that processes the information submitted on the Free Application for Federal Student Aid to compute eligibility for federal student aid.
Federal Supplemental Educational Opportunity Grant (SEOG)
The Supplemental Educational Opportunity Grant (SEOG) is a federal grant program that does not have to be repaid. The SEOG is awarded to undergraduate students with exceptional need and priority is given to students who received Federal Pell Grant.
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 Services Specialist
A Financial Services Specialist (FSS) is a Western Michigan University professional employee who counsels and assists students and families in finding options to fund your college education. They are also called financial aid counselors, financial aid administrators and financial aid advisors.
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.
First-Time Borrower
A first-time borrower is a first-year student at Western who has not borrowed a federal loan while attending Western. First time borrowers are required to attend an entrance counseling session.
Forbearance
An arrangement to postpone or reduce a borrower's monthly payment amount for a limited and specified period or to extend the repayment period. You are charged interest during a forbearance and must continue paying the interest charges during the forbearance period. Forbearance is 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 all federal aid including the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (SEOG), Federal College Work Study (FCWS), Federal Direct Student Loans (FDS/FDU), Federal Direct Parent Loan (PLUS) and all other need-based aid.
Gift Aid
Gift aid is financial aid, such as grants and scholarships, which does not need to be repaid.
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 starts the day after a borrower ceases to be enrolled at least half time. Depending on the type of loan, you will have a grace period of six months (Direct 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. During the grace period for Federal Direct Unsubsidized loans, interest must be paid or it will be capitalized.
Graduate Student
A student who is enrolled to receive a masters, specialist or doctoral degree.
Gross Income
This is income before taxes, deductions, and allowances have been subtracted.
Home School
A home school is the school that will grant the student's degree. The school will process, award and disburse financial aid.
Host School
The host school will not be granting the student's degree. They will be certifying the student's enrollment status and providing information to the home school about the student such as costs for tuition and fees for courses taken there, grades received for those courses and/or withdrawal information.
Independent
An independent student is one who is at least 24 years old as of January 1st of the upcoming academic year, is married, is a graduate or professional student, has a legal dependent other than a spouse, is a veteran of the U.S. 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.
Instate Student
An instate student has met the legal residency requirements for the state, and is eligible for Michigan residency instate student tuition at Western.
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).
Interest
Interest is an amount charged to the borrower for the privilege of using the lender's money. Interest is 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.
Lender
A lender is a bank, credit union, savings & loan association, government or other financial institution that provides funds to the student or parent for an educational loan.
Loan Fee
An expense of borrowing deducted from each loan disbursement.
Loan Forgiveness
See cancellation.
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.
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.
Need Analysis
Need analysis is the process applying the Federal Methodology and 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 a financial aid form. The student must submit a need analysis form to apply for need-based aid. Need analysis forms include the Free Application for Federal Student Aid.
Need-Based
Financial aid that is need-based depends on your financial situation. Some forms of need based federal aid are: Federal Pell Grant, Federal Supplemental Educational Opportunity Grant (SEOG), Federal College Work Study (FCWS), and Federal Direct Subsidized Student Loans (FDS).
Non-Need-Based
Financial aid that is non need-based does not depend on your financial situation. Non-need-based aid eligibility is based on the difference between the cost of attendance and the resources awarded. Some forms of non-need-based federal aid are: Federal Direct Unsubsidized Student Loan (FDU), and the Federal Direct Parent Loan (PLUS).
Net Income
This is income after taxes, deductions, and allowances have been subtracted.
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
An outside resource is aid received that is not based on submitting a FAFSA such as private donor scholarships, prepaid tuition plans, graduate assistantships, and VA educational benefits.
Out-of-State Student
An out-of-state student has not met the legal residency requirements for the state, and is charged as a non-Michigan resident tuition rate.
Overawards
When a student receives more financial aid than eligibility based on their gross need, cost of attendance or the individual program award requirements.
Overpayment
An overpayment is created whenever a student received federal aid that exceeded his or her eligibility based on a student error, failure to report information, or an obligation to return funds. A student is not eligible for additional federal funds until the debt is repaid in full or satisfactory repayment arraignment is made.
Packaging
Packaging is the process of assembling a financial aid package.
Parent Contribution
The Parent Contribution (PC) 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.
Principal
The principal is the amount of money borrowed or remaining unpaid amount on a loan.
Prepayment
Any amount paid on a loan by the borrower before it is required to be paid under the terms of the promissory note. There is never a penalty for prepaying principal or interest on federal loans.
Private Loans
See Alternative Loans.
Promissory Note
The promissory note is a legal binding contract between the borrower and the lender. The promissory note states the terms and conditions of the loan, including repayment schedule, interest rate, deferment policy, and cancellations. The borrower should keep this document until the loan has been repaid.
Repayment Schedule
The statement provided by the lender indicating the amount borrowed, the amount of monthly payments and the date payments are due.
Satisfactory Academic Progress
You 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, you are unlikely to meet the school's graduation requirements.
Selective Service
Selective Service is registration for the military draft. Male students who are US citizens and have reached the age of 18 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.
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.
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).
Student Contribution
The Student Contribution (SC) is the amount of money the federal Government expects the student to contribute, the SC depends on the student's income and assets.
Unmet Need
In an ideal world, the financial aid office would be able to provide each student with the full difference between their ability to pay and the cost of education. Due to funding constraints the office may provide the student with less than the student's need. This gap is known as the unmet need.
Untaxed Income
Contributions to IRAs, Keoghs, tax-sheltered annuities, and 401k plans, as well as worker's compensation and welfare benefits.
Variable Interest
>Rate of interest on a federal direct loan that is tied to a stated index and changes annually, every July 1, as the index changes.
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, copies of Social Security benefit statements and W2 and 1099 forms, among other things.
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 the documentation is not submitted, the financial aid package will be canceled 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.
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. ROTC students, members of the National Guard, and most reservists are not considered veterans.
W2 Form
Employers are required by the IRS to issue a W2 (Wage and Tax statement) for each employee. The W2 form lists the employee's wages and tax withheld
Ward of the Court
A ward of the court is someone who is currently or was until age 18 under the protection of the courts. Often a minor becomes a ward of the court when the court determines the child was subject to abuse or neglect. If the court appoints a legal guardian, the parental legal rights have been severed and then they are considered to be a ward of the court. Neither emancipation or incarceration are considered as wards of the court.