Student Financial Services


Accrued Interest

The interest that accumulates on the unpaid principal balance of a loan.

Annual Percentage Rate (APR)

The interest maintained on a loan for a one year period.


Some loan programs provide 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 some or all of their educational loans.


The addition of unpaid accrued interest applied to the principal balance of a loan which increase the total debt outstanding. 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.


Consolidation combines several student loans into one loan. The consolidation loan is used to pay off the balances on the other loans. While the monthly payments may be less, there is usually a higher interest rate on a consolidated loan, and a longer life of the loan.

Cost of Attendance

The cost of attendance (COA) 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 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.


A loan is in default when the borrower fails to pay several regular installments on time (i.e., payments overdue by 180 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. Defaulting on a student loan can affect your credit rating, making it difficult to obtain credit cards, car loans and home mortgages.


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.


The failure to make scheduled monthly loan payments when they are due.


Disbursement is the release of loan funds to the school for delivery to the borrower. The payment will be made co-payable to the student and the school. 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 refunded to the student.

Enrollment Status

An indication of whether you are a full-time (at least 12 credits) or part-time (at least 6 credits) student. Generally you must be enrolled at least half-time (and in some cases full-time) to qualify for financial aid.

Entrance Interviews

Students with educational loans are required to complete an online interview before funds can be released.  This process reviews the repayment terms and schedule of the loan, as well as the rights and responsibilities of the student borrower.

Expected Family Contribution (EFC)

The dollar amount that a family is expected to pay toward a student's educational costs. This calculation is based on family earnings, assets, number of students in college and size of family.


The Free Application for Federal Student Aid must be completed by students in order to apply for virtually all forms of financial aid.

Financial Need

The difference between the student's educational costs and the Expected Family Contribution (EFC).


Forbearance 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 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.


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. The grace period for a Direct Student Loan is for six months.


Financial aid that does not have to be repaid is awarded to students based on financial need.


Interest is the amount charged to the borrower for the privilege of using the Department of Education'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.


Prepayment means paying off all or part of a loan before it is due.


The principal is the amount of money borrowed or remaining unpaid on a loan. Interest is charged as a percentage of the principal amount. Insurance and origination fees will be deducted from this amount before disbursement.

Promissory Note

The legal and binding contract signed between the Department of Education and the borrower, which states that the borrower will repay the loan as agreed upon in the terms of the contract.


A scholarship is an award that does not usually have to be paid back, and is usually awarded to students who demonstrate or show promise of high achievement in an area such as academics, athletics, music, art or other disciplines.


An organization that acts on behalf of the Department of Education to administer their student loan portfolio and is paid a fee to do so.

Student Aid Report (SAR)

The form a student receives after filing a FAFSA application. The SAR notifies the student of his eligibility for federal student aid.

Subsidized Loan

With a subsidized 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 and may not be used to finance the family contribution.

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 elect not to pay the interest while they are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need and may be used to finance the family contribution.