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Financial Aid Glossary
Alternative Loan
See Supplemental Loans.
Award Letter
This official document issued by a college's Financial Aid Office lists all of the financial assistance offered to a student.
Capitalization
A process of adding unpaid interest to the principal balance of your loan. This will increase the balance due and may increase monthly payments.
Consolidation
The option of combining all outstanding student loans into one, often with extended repayment terms.
Cost of Education
The total amount a student must pay to attend school for one academic year, including tuition, room and board, books, supplies, transportation and personal expenses. A college's Financial Aid Office determines this figure.
Deferment
A period of time during repayment in which the borrower, after meeting certain criteria, is not required to make their regular monthly payments. Refer any questions to Great Lakes Higher Education (800) 236-4300.
Default
Failure to make payments on a timely basis or to comply with the terms disclosed on the promissory note. The borrower will be in default on a FFELP Loan if their payments are more than 270 days past due or if they fail to comply with other terms of the loan. Legal action may be taken to collect on a defaulted loan.
Dependent Student
A student is classified a "dependent" if they do not meet one of the criteria of an independent student. Parent's income and assets will be used in determining the amount of financial aid the student will be awarded.
Direct Lending Schools
Institutions of higher education which have chosen to place all of their students' federally insured student loans through the Federal Direct Lending Program. Such schools may either participate exclusively in the Direct Lending Program or allow students to choose the lending program from which to borrow.
FAFSA
The Free Application for Federal Student Aid (FAFSA) is a standard federal application which is used to determine eligibility for most forms of financial aid including federal government backed loans. The FAFSA is typically completed early in the year, as it requires tax information from the students and/or parents.
Federal Family Education Loan Program (FFELP)
A loan program authorized by the federal government in the Higher Education Act. This program includes federal Stafford, PLUS and Consolidation Loans. These loans are funded by banks, guaranteed by guaranty agencies and insured by the federal government.
Financial Aid Package
A report from an applicant's college documenting the monetary aid available to the student. This includes all grants, scholarships, work-study and loans available from school, state and federal programs.
Fixed Rate Loan
The interest rates for federal education loans borrowed after July 1st 2006 are fixed at 6.8% for the Federal Stafford loan and 8.5% for the PLUS loan.
Forbearance
A temporary postponement of principal and interest payments. Qualification is determined by Great Lakes Higher Education (800) 236-4300. The borrower may choose to continue to pay interest payments on the loan, or if not, interest will be capitalized at the end of the period.
Free Money
The best form of financial aid because the student never has to pay it back. Grants and scholarships are both free money.
Grace Period
A period of time after the student leaves school during which no payments for student loans are required. Typically, the grace period on Stafford Loans is 6 months and a PLUS Loan is 60 days.
Graduate/Professional PLUS Loan
These are loans for students who are enrolled at least half-time in a graduate or professional program. They require a credit check. Student can borrower up to the total cost of education, minus any other aid offered. This loan may be eligible for in-school deferment. The interest rate is fixed at 8.5% and interest begins to accrue immediately.
Grants
A form of financial aid, similar to scholarships, that do not have to be repaid.
Guaranty Agency
A state or non-profit organization which has an agreement with the U.S. Secretary of Education to guarantee loans under the Federal Family Education Loan Program. Associated Bank uses Great Lakes Higher Education Corporation as our guaranty agency.
Independent Student
A student may be classified as an "independent" student if they meet one of the following criteria:
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Lender Code (Lender Number)
An assigned number used to indicate which lender would fund a student loan. A student will indicate this code either on the Award Letter or the Master Promissory Note. Associated Bank's lender code is 830492.
LIBOR (London Interbank Offered Rate)
The interest rate offered by a specific group of London banks for U.S. dollar deposits of a stated maturity.
Master Promissory Note
A legally binding contract that includes the terms and conditions under which the borrower promises to repay the loan.
Origination Fee
A fee charged by the government on Federal Family Education Loans. The origination fee is deducted from the proceeds of the loan by the lender and paid to the Department of Education.
PIN
The PIN serves as your identifier and your electronic signature for the online FAFSA and Master Promissory Note. You can receive your personal PIN at
www.pin.ed.gov.
Pell Grants
One of the largest sources of grants, these grants are given by the Federal Government and are designed to help students with financial need pay for college.
Perkins Loans
A campus-based, low interest loan for graduate and undergraduate students. The college acts as the lender using a limited pool of funds provided by the federal government. These loans are awarded based on exceptional financial need.
Parent PLUS Loan
These are loans under the Federal Family Education Loan Program for parents or step-parents of undergraduate students. They require a credit check. The interest rate is fixed at 8.5% and interest begins to accrue immediately. Repayment starts within 60 days of the loan's last disbursement for the school year.
Private Loan
See Supplemental Loans
Rebate Program
A program designed to reward borrowers for a good repayment history. At Associated Bank you have opportunities to save on your Stafford (subsidized and unsubsidized), PLUS, and Consolidation Loans.
Scholarships
Scholarships, like grants, are a form of financial aid that does not have to be repaid. These are available from many sources including community groups, schools and private corporations. Scholarships can be awarded based on a variety of criteria including scholastic achievement, hobbies and college majors.
School-Sponsored Funding
Financial aid awarded by the school in the form of work-study or the Federal Perkins Loan. These are usually awarded to students with the greatest financial need.
Stafford Loan
Loans under FFELP awarded on the basis of financial need. They may be subsidized or unsubsidized. These loans can be made from a bank, credit union or other eligible lender or obtained directly from the government under the Federal Direct Lending Program. The interest rate is fixed at 6.8%.
Student Aid Report (SAR)
Commonly called a SAR, the Student Aid Report is generated from family financial information provided on the FAFSA. It is a summary of the financial aid that the student is eligible for based on their individual circumstances.
Subsidized Loan
A loan on which the government pays (subsidizes) the interest while the student is in school at least half-time and during periods of grace and deferment.
Supplemental Loans
These are loans for students seeking additional money to cover the cost of education. They require a credit check and have higher fees and interest rates compared to the federal loans. This type of loan should be considered when all other options have been exhausted.
Unsubsidized Loan
A loan that is not based upon need. The borrower is responsible for paying the interest on the loan including in-school, deferment, forbearance and grace periods.
Variable Rate Loan
Interest rates that change with an index (ie. treasury notes). The interest rates for the Federal Stafford and PLUS loans borrowed prior to July 1st 2006 are set by the government each year and change annually on the first of July.
Work-Study
Part of the Federal Student Financial Assistance Program that provides part-time employment for post-secondary students who need income to help meet education costs.
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