AAA Student Lending Program
Financial Aid Guide
Your trusted resource for student lending
Important Deadline Dates
October 1 First available date to complete the CSSPROFILE® (www.collegeboard.com)
January 1 FAFSA available to be filled out at www.fafsa.ed.gov
February 15 Connecticut state FAFSA completion deadline
March 1 RI state FAFSA completion deadline
May 1 Massachusetts, Maine, New Hampshire and
New York state FAFSA completion deadline
June 30 Federal FAFSA completion deadline
Please remember each college has its own deadline to apply for financial aid. To be eligible for financial aid, remember to contact each college you are applying to and submit your FAFSA and other documents they require by their deadline.
Table of Contents
Financial Aid Basics 2
Types of Financial Aid Get Ready to Apply Key Deadlines How to Apply
After You Apply for Financial Aid 8
Financial Aid Award Letters Arrive Award Letter Breakdown How Awards are Determined
Paying Tuition 12
Core Principles Funding Options
Federal Student Loans 14
Federal Loan Types The Perkins Loan The Stafford Loan The PLUS Loan The GradPLUS Loan
Private Student Loans 20
Private Loan Types Eligibility
Borrowing Limits How to Save
Interest and Other Charges
Repayment 24
Benefits of Consolidation Combining Student Loan Debt Interest Rate
Estimated Payments
Resources and Services 26
FAFSA Filing Assistance Guidance Counselors Scholarship Information Webinar and Seminar Series College Tours Newsletter Glossary 28
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Financial Aid Basics
Types of Financial Aid
Gift AidGrants and scholarships: Money that does not need to be repaid. Keep in mind some scholarships could have a service component or may be taxable. You can find more information on scholarships at www.AAA.com/ScholarshipInfo.
Self-Help Aid
Loans: Borrowed money that is usually repaid with interest by students and/or parents. Loans can be from Federal or private lending sources. Learn more about your loan options in the Federal and Private Student Loan Sections of this guide or at www.AAA.com/FinancialAid.
Work-Study: Money a student can earn through on- or off-campus employment. This money usually helps students pay for indirect expenses and should not be
considered as a resource to pay tuition.
In this
chapter:
• Types of Financial Aid
• Get Ready to Apply
• Key Deadlines
• How to Apply
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T
his guide has been created to help families understand the types of aid available and how to properly apply for financial aid. Additionally, this guide takes a close look at all college funding options available, as well as ideas on how to reduce college costs. You will not receive financial aid if you do not apply.
Each year, billions of dollars are available to help families pay for college tuition. This aid comes in a variety of forms and from a variety of sources including the Federal
3 Financial Aid Eligibility
To be eligible, the student must:
• Be a U.S. citizen or eligible non-citizen* with valid Social Security number. • Be working toward a degree or certificate in an eligible program*.
• Be qualified to obtain post-secondary education. This can mean any of the following:
– Having a high school diploma or a GED certificate. – Meeting other standards established by your state.
– Completing a home school program approved by the state. • Register with Selective Service, if you’re a male between ages 18 – 25.**
• Maintain Satisfactory Academic Progress (SAP) as determined by your college.
*See glossary for additional details. **www.SSS.gov
TIP:
Students with financial need usually receive a combination of both types of financial aid. (Detailed on page 2)
FAFSA Defined
FAFSA stands for Free Application for Federal Student Aid. This is the gateway application to all financial aid and should be completed by each family every year. It can be filed online. In this guide you will learn how, when, and where to file. www.FAFSA.ed.gov
Get Ready to Apply
The senior year of high school is filled with a host of activities and deadlines, so it is best to prepare to apply for financial aid in the junior year or the summer before the senior year. These simple steps below can help.
Create a financial aid folder for all your documents. You will need to access these documents for the next four years or more. Keeping your documents in one place will make applying each year easier.
Apply for your Federal PIN (Personal Identification Number) ID at www.PIN.ed.gov.*
Each student and parent will need their own unique PIN. PIN IDs can be used to electronically “sign” your Free Application for Federal Student Aid (FAFSA) as well as any Federal student loan Master Promissory Notes for parents and students. Research deadlines for each college a student applies to. Make sure to inquire about additional financial aid paperwork required by each college. Some Private colleges may also require submission of the CSS PROFILE, or an institutional financial aid form. Most colleges will post this information on their financial aid web page. It is extremely important to submit ALL the financial aid documents required by each college. Use a calendar or spreadsheet to keep track of all deadlines.
The FAFSA is designed to instruct the student on how to complete the form, but since parents usually end up filling it out, this can make for some confusing reading
in the instructions. However, it is a good idea for parents to fill it out or at least review the information before it is submitted because it is a complex form. A small mistake could have a big impact on the amount of aid offered.
Note: The majority of students under the age of 24 will be considered a dependent by the Federal government and are required to report their parents’ financial information on the FAFSA and other financial aid documents. For independent/dependent guidelines, see the glossary on page 28.
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TIP:
Remember financial aid is awarded on a first-come, first-served basis. The sooner you submit your documents the better.
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Key Deadlines
FAFSA deadlines for each state can be found at www.FAFSA.ed.gov. To the right are a few deadlines for our region. Remember each college may have their own deadline which may be earlier than the state deadline. Adhere to the earliest deadline, not the student’s state of residency.
TIP:
For families using the paper FAFSA application; remember the form is color-coded. Purple is for parental information and orange is for student information. These colors may change from year to year.
How to Apply for Financial Aid
All colleges require the FAFSA in order to offer any Federal financial aid. Be sure to apply early, and adhere to both state and college deadlines, as most financial aid is limited. Remember, some financial aid is administered on a first-come, first-served basis.
If your student selects colleges that require the CSS PROFILE, you can fill out and submit this document at www.collegeboard.com. There is a fee associated with the PROFILE which is charged by The College Board. Some families may qualify for a fee waiver; ask your high school guidance counselor for details. If the institution has requested additional required financial aid documents of their own, be sure to submit them on time.
Submit the FAFSA document as soon as possible after January 1st. The data you submit on the FAFSA will be used by the government to calculate your family’s Expected Family Contribution (EFC). The EFC helps to measure your family’s financial situation. Each college you elect to receive your FAFSA will use the data to create a Financial Aid Award Letter, which you will receive in the spring. There are five simple steps to submit the FAFSA efficiently, detailed on the next page.
Key Deadlines
RI March 1
MA, ME, FL May 1 NH, NY, PA
CT February 15
VT No state deadline, check with your college for dates.
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Gather the necessary documents.2
3
It is highly
recommended
to
submit your
FAFSA online
because it is a
more timely
submission…
Dependent students will need the above listed documents for both parents and students. Independent students will only need their own documents and/or your spouse’s information. For students with divorced parents, use the information of the parent you lived with most in the last 12 months even if the student is not claimed as dependent on taxes. If the parent has remarried, you will need to include the stepparent’s information.
Print the FAFSA online worksheet at www.FAFSA.ed.gov. Printing and pre-filling the FAFSA worksheet can save a lot of time when you file your FAFSA online.
File the FAFSA online. It is highly recommended to submit your FAFSA online because it is a more timely submission, offers built-in edits, more detailed instruction, and provides for an easy renewal process each year. You can apply online at
www.FAFSA.ed.gov. If you have questions or need help filing the FAFSA, contact the AAA Student Lending Program at 1-888-422-2536.
• Social Security numbers • Driver’s license (if any) • Most recent W-2 Forms and
other records of income earned • Most recent Federal Income
Tax Return – 1040, 1040A, 1040EZ, etc. including any foreign tax returns
• Most recent untaxed income records – Social Security, Temporary Assistance to Needy Families, welfare, or veterans’ benefits records
• Most recent bank statements • Most recent business and
investment information, business and farm records, stock, bond, and other investment records • Alien registration number or
permanent resident card (see eligible non-citizen in glossary on page 29 for details)
A quick glance.
1. Gather Documents 2. Print Worksheet 3. File FAFSA 4. Receive EFC 5. Receive SAR7
Receive your Expected Family Contribution (EFC): The EFC is the amount that your family is expected to contribute to the student’s education for the academic year. This is NOT the amount you will pay. This EFC is calculated from the data reported on your FAFSA. The family contribution is determined by a formula (Federal Methodology Need Analysis Formula) approved by Congress. Colleges use this formula to determine what sources of aid the family qualifies for, including grants, scholarships, work-study, and loan programs.
Receive your Student Aid Report (SAR):
• 3-5 days after submitting an online FAFSA and signing with your PIN ID with valid e-mail address
The SAR allows you to correct any mistakes, update any changes in financial circumstances or add new colleges where you would like your information to be sent. An electronic copy of your SAR is also made available to the colleges you’ve listed on your FAFSA.
Study Abroad:Many U.S. students study abroad each year. The Higher Education Act (HEA) of 1992 allows a student to receive financial aid for study abroad at qualified colleges. Most foreign colleges require U.S. students to mail a copy of their SAR to the foreign college. Foreign colleges typically cannot receive your Student Aid Report (SAR) electronically. Check with the foreign colleges you listed on the FAFSA to see if they will need a paper copy of the SAR. This will start the financial aid process. Remember, financial aid for foreign colleges takes much longer to process; therefore it is a good idea to start early.
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TIP:
The Higher Education Act (HEA) of 1992 allows a student to receive financial aid for study abroad at qualified colleges.
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In this
chapter:
• Award Letters Arrive
• Award Letter Breakdown
• How Awards are Determined
After You Apply for Financial Aid
The data you submitted on the FAFSA is used to calculate your family’s EFC (Expected Family Contribution). This information is sent to all colleges listed on the FAFSA. Most colleges receive this information electronically. To determine your financial aid eligibility, each college will use the FAFSA data, and sometimes the CSS PROFILE data, and/or institutional data collected. Each college will then compile a Financial Aid Award Letter.Financial Aid Award Letters Arrive
After completing all the financial aid documents required by each college, you will receive a Financial Aid Award Letter from each college. Your letter may come via U.S. mail, e-mail, or for some colleges, you will need to access it online. To make an informed decision, you may want to wait for all your award letters before you accept one (but be careful not to miss an acceptance deadline from one college while waiting for another to reply). This will allow your family the opportunity to compare the aid offers side-by-side. Certainly the least expensive may not be the most appropriate college for your student. All factors should be considered including: costs, academic challenge, college setting, social fit, etc. Think about attending the AAA Student Lending Webinar titled “Financial Aid Award Letters.” Register at www.AAA.com/Register.
Award Letter Breakdown
Financial Aid Award Letters are not standardized. Some letters are very clear and contain all the information you need such as: scholarships, grants, loans, tuition costs, and instructions
on how to appeal, accept, or deny the awards. Others may not include tuition costs or may only offer generic tuition costs. All award letters should contain Gift Aid (grants and scholarships) and Self-Help Aid (work-study and loans) if they are being offered to your student.
TIP:
Financial Aid Award Letters may come via:
1. Mail 2. E-mail
3. Online with College These letters will be sent to the students.
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Sample
XXX University 123 School Street Financial A id Award Letter Anywhere, St ate 12345 James Smith Student ID: 00625 Award Date: 03/01/15 Dear James,After a careful and thorough review of your financial aid application, XXX University is pleased to offer you the following financial aid assist
ance. Award Fall Spring Total The XXX Grant $6,000 $6,000 $12,000 Federal Perkins Loan
$750
$750
$1,500 Federal Stafford Loan
Subsidized* $1,750 $1,750 $3,500 Unsubsidized* $2,000 $2,000 $4,000 Federal Work-Study $900 $900 $1,800 $22,800 This award is based on estimates of you and your parent(s)’ income reported on the
FAFSA. The Office of Financial Aid reserves the right to modify or cancel the financial aid
award(s) listed at any time
due to lack of satisfactory academic progress, c
hanges in enrollment, eligibility
, financial misrepresent
ation, or any other reason as specified by federal, st
ate, or institutional regulations or policies.
Kindly check the appropriate response below; then sign, date, and return one copy of this letter
. Although your response must be postmarked by May 1, we would appreciate receiving it as soon as possible.
__ I accept the award(s) indicated above and will enroll at XXX University
__ I decline some or all of the award(s) offered but still plan to attend XXX University __ I fully decline the award(s) because I will not attend XXX University
My signature below certifies that I have read the Financial Aid Guide, underst
and the terms and conditions of this award letter
, and give XXX University permission to apply any F
ederal financial aid I may receive to any and all expenses c
harged to my student account. I underst
and I may rescind or withhold suc
h authorization by so notifying the University Burs
ar in writing. Student Signature Date
TIP:
Financial Aid Award Letters are not standardized.The Gift Aid portion of the award letter will itemize all grants and scholarships your student is being offered. Some may be taxable or conditional; contact your financial advisor, Financial Aid Office or refer to IRS
publication 970 at www.IRS.gov for details. Private scholarships your student receives outside of the college will not be listed, but should be reported to the college. Grants, scholarships and awards are considered free monies.
Self-Help Aid is money you earn or borrow. The Federal Work-Study Program is one way your student may be able to earn money for college expenses. It is important NOT to include work-study as a source to pay tuition. It will be listed on your award letter; however these funds are typically used for personal expenses.
Self-Help Aid also includes loans which are usually repaid with interest. Colleges may list both Federal and Private loans on award letters. It is important to use all your Federal loan sources before considering any Private loan options. Federal student loans in general offer more protection and repayment options for
students and parents. To learn more about Federal loans, refer to page 14 or log on to www.AAA.com/FinancialAid. To learn
more about Private student loans offered through the AAA Student
Lending Program, refer to page 20 or log on to www.AAA.com/FinancialAid. You may also contact the AAA Student Lending Program for help understanding loan terms and conditions at 1-888-422-2536.
Ask about benefits for students and parents available through the AAA Student Lending Program.
There are certain Federal programs available to help students entering particular professions. Learn more about Federal loan reward programs at www.StudentAid.ed.gov.
Special Circumstances
Sometimes families have financial concerns that are not evident simply by analyzing their FAFSA data. In this case, a family should consider appealing their Financial Aid Award Letter. Most colleges have appeal policies and procedures in place. It is important to submit your appeal in writing. An appeal is serious and should only be considered under extenuating circumstances such as long-term unemployment, unusual medical bills, or other situations that have impacted or will impact your family’s finances. The AAA Student Lending Program Webinar titled “Financial Aid Award Letters” reviews types of appeals in detail. Go to www.AAA.com/Register to register. More on
Work-Study: When you fill out the FAFSA you will be asked if your student is interested in work- study. It is a good idea to say yes to be sure it is available if you are eligible, although you are not obligated to accept. A student will not be eligible for these programs if you do not select it on your FAFSA application.
11 FAFSA Asset*
College Savings Plans
such as Coverdell savings accounts, 529 college savings plans and the refund value of 529 prepaid tuition plans should be reported as follows: For a student who does not report parental information, the accounts owned by the student (and the student’s spouse) are reported as student investments. For a student who must report parental information, accounts are reported as parental investments, including all accounts owned by the student and all accounts owned by the parents for any member of the household.
Small Business does not
include the value of a small business if your family owns and controls more than 50 percent of the business and the business has 100 or fewer full-time or full-time equivalent employees. For small business value, your family includes (1) persons directly related to you, such as a parent, sister or cousin, or (2) persons who are or were related to you by marriage, such as a spouse, stepparent or sister-in-law.
To learn more on this subject go to www.StudentAid.ed.gov.
How Financial Aid Awards are Determined
The data you submit on the FAFSA is used to calculate your family’s EFC. For colleges that request additional financial aid documents such as the CSS PROFILE or institutional forms, this data will also be considered when determining aid.Financial aid for most Federal programs is awarded based on need, except for the unsubsidized Federal Stafford Loan and Federal PLUS Loan. The EFC is a measure of your family’s financial strength and indicates how much money your family is expected to contribute to your student’s education for one academic year. This information is sent to each college you listed on the FAFSA form. Remember, if you are an independent student (see glossary for dependency information) your parents’ income and assets will not be used to calculate your EFC.
Your EFC is calculated according to a formula established by law. Below are the factors considered in the calculation:
• Total Income, which includes earned income for parents and student. Remember, if you are an independent student you will not include your parents’ income. Untaxed income and benefits received includes retirement contributions made during prior year (not total value of account), social security, public assistance, etc. • Age of Older Parent.
• Net Assets for parents and student which includes: cash on hand, savings, checking, stocks, bonds, investments, CDs, trust funds, and equity in real estate outside of the family home and farm equity.
• Family Size.
• Family Members in College, not including parents.
Financial aid
for most Federal programs are
awarded
based on need…
Paying Tuition
The AAA Student Lending Program is committed to educating families about financial aid as well as how to use low-cost funding options when paying tuition. Student loan debt is an ever-increasing concern for parents and students. Making good choices today can make all the difference when it is time to repay your student loans. We offer seminars,
webinars, online tools and resources and access to Educational Loan Specialists to help families navigate financial aid and college funding options.
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In this
chapter:
• Core Principles
• Funding Options
Making good choices today
can make all the difference
when it is time
to repay your student loans.
College Funding Core Principles
Funding a college education can be challenging and costly. Below are some suggestions and guidelines to help families focus on using low-cost funding options first.
Past income – First, consider using savings, college funds, and other investments. Check with your financial advisors to ensure you are not using investments which carry penalties or tax implications for your family.
Present income – Next, consider using a tuition payment plan. Most colleges offer tuition payment plans which allow you to spread annual tuition payments over ten to twelve monthly installments. Most programs charge a small fee to participate. This option allows families to use their monthly cash flow to pay tuition and limit loan debt. As an additional incentive for first-year college students, the Parent PLUS Loan payment is usually not due until March of the following year. However, parents have the option to defer Parent PLUS Loan payments until six months after the student graduates, leaves college or drops below half-time status.
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Future income – Finally, consider using Federal, institutional, and Private loans offered to parents and students. You should only consider loans after you have maximized all grant and scholarship opportunities. It is important to exhaust all of your Federal loan options first before considering other loans, as they generally offer lower interest rates, flexible repayment options, and more protection. Typically a family will use a variety of loans to meet tuition and educational expenses.
Tax deductions and credits – Remember, Congress has created substantial tax deductions and credits to help families pay for college. Due to lack of awareness, these tax advantages may go unused. To learn more, print a copy of IRS publication 970 at www.IRS.gov.
College Funding Loan Options
Once the student chooses their college, you will need to decide how to fund expenses remaining after financial aid has been deducted. After applying the core principles of college funding (previous page), you should consider loan options. Most families will use a combination of loan types, but it is important to stay within the Federal Student Loan Program
options when possible. They generally provide better fixed interest rates and more protection such as deferment, forbearance, and cancellation options (see glossary for details). Students can and should use their full Federal Stafford Loan each year. Students that are offered a Federal Perkins Loan on their award letters should also take full advantage of this loan.
Next, parents should consider using the Federal PLUS Loan to fund the remaining cost. The following
sections will cover Federal and Private loan types.
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3
Most families
will
use a
combination
of loan types,
but it is
important to
stay within
the Federal
Student Loan
Program
options when
possible.
Federal Student Loans
Federal Student Loan Types
4
In this
chapter:
• Federal Loan Types
• The Perkins Loan
• The Stafford Loan
• The PLUS Loan
• The GradPLUS Loan
Perkins Loan Quick Glance
Borrower Student
Complete FAFSA Yes
Interest Rate Type Fixed
Standard Repayment Term 10 years Extended Terms Available Yes Deferment and
Forbearance Options Yes
Credit Check No
Consolidation Yes
Stafford Loan Quick Glance
Borrower Student
Complete FAFSA Yes
Interest Rate Type Fixed
Standard Repayment Term 10 years Extended Terms Available Yes Deferment and
Forbearance Options Yes
Credit Check No
Consolidation Yes
Parent PLUS Loan Quick Glance
Borrower Parent
Complete FAFSA Typically
Interest Rate Type Fixed
Standard Repayment Term 10 years Extended Terms Available Yes Deferment and
Forbearance Options Yes
Credit Check Yes
Consolidation Yes
Endorser Permitted Yes
GradPLUS Loan Quick Glance
Borrower Student
Complete FAFSA Yes
Interest Rate Type Fixed
Standard Repayment Term 10 years Extended Terms Available Yes Deferment and
Forbearance Options Yes
Credit Check Yes
Endorser Permitted Yes
Consolidation Yes
For graduate students that have maximized their Stafford Loan
For undergraduate and graduate students
For parents (or legal guardians) of undergraduate dependent students
Federal interest rates are set by congress and are subject to change every academic year. You can visit www.studentaid.gov or the financial aid section on your college’s website to see the exact federal loan rates for the current academic year.
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The Federal Perkins Loan
A Federal Perkins Loan is a need-based student loan offered by the Department of Education to assist students in funding their undergraduate and graduate education. If your student is eligible for the Federal Perkins Loan, it will be listed on the Financial Aid Award Letter. Availability and the amount offered will vary from college to college. Unlike the Federal Stafford Loan, a student can only sign the Federal Perkins Loan application with the college the student attends. Most colleges will send information on how to secure a Federal Perkins Loan with the Financial Aid Award Letter.
Disbursement of Funds: Federal Perkins Loan funds are sent directly to the college in a minimum of two equal payments. Funds are traditionally disbursed in the beginning of the fall semester and then again at the beginning of the spring semester. The Federal Perkins Loan is a Federal program which is administered by the college the student attends.
Federal Perkins Loan Grace Period:This loan does not need to be repaid until nine months after the student graduates, drops out, or ceases to be enrolled half-time. Half-time status is established by the college the student is attending.
Federal Perkins Loan Interest Rate
The Federal Perkins Loan interest rate is established by the Federal government. It is currently a fixed rate of 5 percent. The Federal Perkins Loan is fully subsidized, which means the government will pay the
interest while the student is in college. To learn more about the Federal Perkins Loan visit www.StudentAid.ed.gov.
How to Save on the Federal Perkins Loan
Under certain circumstances you may be eligible to receive a partial or full discharge or cancellation from the Federal
government. Teachers in low-income areas, special education teachers, early intervention professionals, nurses, medical technicians, law enforcement, certain employees of the Head Start program, Vista or Peace Corps volunteers, and military personnel may be eligible. To learn more about discharge or
cancellation options visit www.StudentAid.ed.gov.
TIP:
The availability of the Federal Perkins Loan and the amount offered will vary from college to college.
Federal Loan Options
The Federal Stafford Loan
Access to the Federal Stafford Loan is not dependent upon your family’s income. This is a common misconception. All qualified undergraduate and graduate students are eligible to borrow under the Federal Stafford Loan Program. The amount you can borrow is determined by the student’s part-time or full-time status and their year in college. Refer to the Federal Stafford Loan Limit Chart below for loan amount. Applicants for these loans are required to complete the FAFSA and sign a Master Promissory Note.
Due to legislation change in 2010, all Federal Stafford Loans are required to be secured through the Direct Lending Program. Master Promissory Notes can be signed and entrance counseling can be completed via the website (www.studentloans.gov).
Disbursement of Funds: Stafford Loan funds are sent directly to the college in a minimum of two equal payments. Funds are traditionally disbursed in the beginning of the fall semester and then again at the beginning of the spring semester. Colleges using trimesters will have three
disbursements. If you applied for extra funds for educational expenses, the college will usually send you a check for the residual after paying tuition, fees, etc.
TIP:
Stafford Loan
If you are a freshman or transfer student, be sure to complete your Financial Aid Entrance Counseling online with your college or Federal loan funds will not disburse.Federal Stafford Loan Limit Chart*
Academic Year Undergraduate Dependent Students Independent Undergraduate Students Graduate Students Year 1 $5,500 $9,500 $20,500 Year 2 $6,500 $10,500 Year 3-5 $7,500 $12,500 Maximum Stafford Loan Limits $31,000 $57,500 $138,500**
*Loan limits are set by congress and are subject to change. **This includes undergraduate Federal Stafford Loan Debt. For updates see www.StudentAid.ed.gov.
17 Federal Stafford Loan Grace Period: This
loan does not need to be repaid until six months after the student graduates, drops out, or ceases to be enrolled half-time. Half-time status is established by the college the student is attending.
Federal Stafford Loan Interest Rate
The Federal Stafford Loan interest rate is established by the Federal government. It is established every academic year (not to exceed 8.5%). However, a portion of your Federal Stafford Loan may be subsidized (determined by the financial data submitted on the FAFSA). For subsidized Federal Stafford Loans the interest rate is generally lower than the unsubsidized, but it is also established every academic year (not to exceed 8.5%). This should be itemized on your Financial Aid Award Letter.
How to Save on a Federal Stafford Loan
Under certain circumstances you may be eligible to receive a discharge or cancellation
of up to $5,000 from the Federal government on any Federal Stafford Loan. Some teachers may also be eligible for loan forgiveness up to $16,000 (available for mathematics, science, and special education teachers under the TEACH GRANT). To qualify, you must not have had an outstanding balance on a Federal Stafford Loan as of October 1, 1998. To learn more about discharge or cancellation options visit www.StudentAid.ed.gov.
How to Save Even More on a Federal Stafford Loan
The government offers additional ways to save on your Stafford Loan. Borrowers that set up automatic debit payments once in repayment can receive .25% off their Stafford Loan interest rate.
For the latest information on Stafford Loans: 1-888-422-2536 | AAA.com/StaffordLoan
Under certain circumstances you may
be eligible to
receive a discharge or
cancellation of up to $5,000
from the
Federal Loan Options
Federal PLUS Loans
(Parent Loans for Undergraduate Students)
TIP: Federal
PLUS Loan
If a parent is denied for a Federal PLUS Loan, the student may be eligible for an additional $4,000-5,000 to be added to the student’s Federal Stafford Loan. Typically, a school will request a copy of the PLUS Loan denial.Federal Parent PLUS Loan
Parents of undergraduate dependent students are eligible to borrow under the Federal PLUS Loan Program. The borrowing limit is determined by the Cost of Attendance (COA) minus other financial aid received. Although it is not a Federal requirement to submit a FAFSA in order to apply for a Federal PLUS Loan, many times it is a school policy. It is always a good idea to submit a FAFSA each year as this will give your student access to the Federal Stafford Loan as well.
Federal GradPLUS Loan
Graduate and professional students are now eligible to borrow under the Federal GradPLUS Loan Program. The limit is determined by the cost of attendance minus other financial assistance received. Applicants for these loans are required to complete the FAFSA. In addition, they must have applied for their maximum annual Federal Stafford Loan (see Federal Stafford Loan Limit Chart on page 16).
Disbursement of Funds: Federal PLUS Loan funds are most often sent directly to the college in a minimum of two equal payments. Funds are traditionally disbursed in the beginning of the fall semester and then again at the beginning of the spring semester. Colleges using trimesters will have three equal disbursements. If you applied for extra funds for educational expenses the college will usually send you a check for the residual after paying tuition, fees, etc.
Federal PLUS Loan Grace Period: For parents of undergraduate students, repayment begins 60 days after the last disbursement, which is typically March. Parents have the option to defer up to six months after a student graduates or leaves school.Repayment of Federal GradPLUS Loans does not begin until 60 days after a student graduates, drops out, or ceases to be enrolled half-time. Half-time status is established by the college the student is attending. Federal GradPLUS borrowers will be given an automatic in-school deferment.
Graduate and professional students
are now eligible
to
borrow under the GradPLUS Loan Program.
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Federal PLUS Loan Interest Rate
The Federal Parent PLUS and Federal GradPLUS Loan interest rates are established by the federal government. The Parent PLUS loan rate is capped at 10.5% and the GradPLUS loan rate is capped at 9.5%.
How to save on Federal PLUS or Federal GradPLUS Loans
Borrowers can further reduce their interest rate by making automatic debit payments by .25%. These borrower benefits are available to both Federal PLUS and Federal GradPLUS borrowers.
Why use Federal Loans
• Flexible repayment options • Fixed percentage rates • Loan Cancelation Programs
• Deferments and Forbearance Options
How to Apply
You can apply online for Federal PLUS/ Federal GradPLUS at www.studentloans.gov. You will need your Federal PIN ID to sign your application. For Parent Plus Loans, be sure to use the PIN ID assigned to the parent, not the student or spouse.
TIP:
Parents have the option to defer payments up to six months after a student graduates or leaves school.
You can
apply online
for Federal PLUS/Federal
GradPLUS Loans in as
little as 15 minutes at
www.studentloans.gov.
Private Loans through the AAA Student Lending Program
Private Loans
Private Loan Overview
There are several funding sources available to pay for a college education. Private student loans fill the gap that remains after scholarships, grants, and Federal loans are exhausted. The terms and conditions of private loans, as well as the amounts one may borrow, vary among lending institutions. Since Private loans are not Federally administered, but rather are a private agreement made between the borrower and lender, filing the FAFSA is not required.
Types of Private Loans
There are a variety of Private student loans and Private student loan lenders in the marketplace. When considering private student loans you should consider:
The type of loan you will need such as, undergraduate, graduate, certificate, or continuing education.
What the loan funds are to pay for, such as, tuition, books, uniforms, traveling expenses, bar exam expenses, living expenses on or off campus living, etc.
General Eligibility Requirements
Applying with a qualified co-signer is strongly recommended for students under 24 or without a credit history. A solid co-signer, such as a parent or other creditworthy adult, makes you a stronger loan candidate. It increases your chances of fast approval and could even lower your costs with a better interest rate.
5
In this
chapter:
• Types of Private Loans
• Eligibility Requirements • Borrowing Limits • How to Save • Interest and Other Charges
2
1
21 Most lenders will require undergraduate and graduate student borrowers to be enrolled at least
half-time in a degree program at an eligible school/college and meeting (SAP) Satisfactory Academic Progress as defined by your college. An eligible college is typically a college that meets the credit and default requirements set by the lender.
Borrowers and co-borrowers will also need to satisfy credit requirements set by the lender. Below is a list of typical borrower requirements:
• Be a U.S. citizen or a permanent resident who has resided in the U.S. for the previous two years.
• Be at least 18 years of age, some lenders will allow borrowers to be age 17 with a qualified co-signer.
• Have a minimum of two years of continuous employment for borrower, or if applicable, co-borrower.
• Have a minimum of 24 months of credit experience and a satisfactory credit history for borrower, or if applicable, co-borrower.
• Acceptable Debt to Income Ratio and must pass a Credit Check.
Most lenders will require undergraduate
and graduate student borrowers to
be enrolled at least half-time
in
a degree program at an
eligible school.
TIP:
A solid co-signer, such as a parent or other creditworthy adult, makes you a stronger loan candidate.
Borrowing Limits
Most lenders will allow you to use the money you borrow to cover the cost of tuition as well as a wide range of education-related expenses like books, lab fees, room and board, and travel home. Lenders will typically have a minimum and maximum amount you can borrow per academic year, as well as a maximum debt amount.
• Minimum amounts vary from lender to lender, $500 – $2,500 per academic year. • Maximum amounts vary from lender to lender and may be based on your cost
of attendance.
• Most lenders will set an overall maximum collective debt amount. This is typically between $100,000 – $250,000.
How to Save on Your Private Loan
Some lenders will offer “borrower benefits.” This is just another way to save money. These borrower benefits may include an interest rate reduction for making automatic debit payments. Other borrower benefits may include an interest rate reduction after a number of on-time payments or upon graduation. Be sure to ask for these benefits in writing and save your original promissory note in a Financial Aid file for future reference. These interest rate reductions can certainly add up over time. When you are funding a college education, every penny counts!
Most lenders will allow you to use the
money you borrow to cover the cost of
tuition as well as a
wide range of
education-related
expenses…
23
The amount of your
interest rate margin is based on
your loan program and your credit history.
TIP:
Borrowers and co-borrowers with higher credit scores may qualify for zero origination fees with some Private student lenders.
For the latest information on Private Loans: 1-888-422-2536 | AAA.com/FinancialAid
Interest and Other Charges
Most Private student loans have variable and fixed interest rates based on a Prime Rate or LIBOR Rate plus a margin of interest which varies depending on the credit-worthiness of the borrower and any co-signer. The amount of your interest rate margin is based on your loan program and your credit history. This means you will need to apply for a Private student loan before you will know your individual interest rate. Additionally, you should always know what the interest rate cap is on any Private student loan you decide to use.
In general, some Private and most Federal student loans have additional fees. As fees can vary from lender to lender, you should always ask if there are repayment fees, origination fees or any other fees associated with your loan.
Other things to know
All Private student loans will require the student fill out and return a Self-Certification Document in order to disburse any funds. This document will be provided by your lender or college.
You will need to list:
• Your Expected Family Contribution* • Your Expected Financial Aid* • Your Cost of Attendance*
Note: Return the document to lender
upon completion.
The AAA Student Lending Program
Repayment
Repayment can be challenging for both students and parents. Typically, parents will begin repayment well before their students. Repayment can be further complicated when it involves Private and Federal loans. As the use of Private student loans has increased significantly over the past decade, many families will need to balance repayment of both types of loans. This section will give you a head start on your choices and what to expect during repayment. A Federal consolidation loan is a practical way to refinance education debt by bundling all Federal loans into a single loan. Parent borrowers have the opportunity to consolidate at any time, regardless of the student’s enrollment status. There is no credit check during the loan process; anyone who has a Federal loan is eligible unless they are currently in default on a Federal student loan.
Benefits of a
Federal Consolidation Loan
6
In this
chapter:
• Benefits of Consolidation • Combining Student Loan Debt • Interest Rate • Estimated Payments • One bill• One monthly payment • Lower monthly payment
• Fixed rate
• Extend repayment up to 30 years
TIP:
A Federal Consolidation Loan takes 6-10 weeks to process. It is important to continue making student loan payments until you are notified that your consolidation loan is in place.
TIP:
Some lenders offer combined billing and extended repayment options.
Students can consolidate all of their Federal student loans once they graduate, drop below half-time status or drop out. There is a 6–9 month grace period with most Federal student loans.
25
Combining Private
and Federal Student Loans
Consolidation of Private and Federal student loans is not allowed under the Federal consolidation program. However, combining Private and Federal loans is allowed under some Private
consolidation loan programs. This will void your Federal loan benefits such as income based repayment plans, teacher forgiveness programs, military benefits and others. You should carefully consider what benefits you are giving up before you consolidate Federal loans into Private loans.
Federal Consolidation Interest Rate
The interest rate for a Federal consolidation loan is set according to a formula established by Federal law. The fixed rate is based on the weighted average of the interest rates on the loans at the time you consolidate, rounded up to the nearest one-eighth of a percent. The interest rate cannot exceed 8.25 percent. The consolidation rate is fixed for the life of the loan, which protects you from future increases in variable rate loans but prevents you from benefiting from future decreases in variable rates.
Estimated Consolidation Payments
Loan Example
Amount Based on 10 Year TermOld Payment with ConsolidationNew Payment
$10,000 $115.08 $89.19 (15 years)
$20,000 $230.16 $153.56 (20 years)
$30,000 $354.24 $230.34 (25 years)
$60,000 $690.48 $394.16 (30 years)
These are estimates. Your actual payment amounts may be different. Current Payment amount based on interest rate of 6.80%. New Payment amount based on interest rate of 6.875%.
To learn more about Consolidation Loans: 1-888-422-2536 | AAA.com/Consolidate
For step-by-step instructions on how to
consolidate your student loans, you can visit
AAA.com/Consolidate.
Private Consolidation Loans
If you have more than one private student loan, your loans can be consolidated by private lenders. You should ask the same questions you did when you were looking for a private student loan. To learn more, visit AAA.com/FinancialAid.
7
In this
chapter:
• FAFSA Filing Assistance • Guidance Counselors • Scholarship Information • Seminar and Webinar Series • College Tours • Newsletter • Tax BenefitsResources and Services
The AAA Student Lending Program offers a variety of tools, resources, products, and services to help families properly plan and pay for college. We understand the many challenges families face when trying to navigate the financial aid process, as well as the sometimes confusing funding options available to them for educational costs. Our resources and services are designed to educate and help families understand the importance of using low-cost funding options. We continually look for opportunities to expand our resources. To learn more about our latest offerings go to www.AAA.com/ FinancialAid or call our Educational Loan Specialists to help guide you at 1-888-422-2536.
FAFSA Filing Assistance
The AAA Student Lending Program assists members with applying for Federal Financial Aid in a variety of ways such as one-on-one appointments, Financial Aid seminars, webinars and online resources to guide families through the process.
A Word to Guidance Counselors
High school Guidance Counselors play a vital role in helping students and their families prepare for college. Students and their parents often approach Guidance Counselors with questions about financial aid. Each year we provide Professional Training Days to help Guidance Counselors stay current with Financial Aid topics, legislation, and scholarship opportunities. To register for a Professional Training Day, log on to www.AAA.com/Register or call 1-888-422-2536.
We also offer comprehensive webinar services for your parents to help educate them on a variety of Financial Aid topics.
TIP:
The AAA Student Lending Program offers podcasts that can be downloaded from AAA.com/FinancialAid, also available in Spanish.
• Financial Aid 101 • FAFSA Line by Line • CSS Profile
• Scholarships 101
• Financial Aid Award Letters • College Funding Options
27
Scholarship Information
We offer online information when it comes to applying and searching for scholarships. Each month we highlight a scholarship in our online Student Lending Newsletter. Additionally, we offer webinars dedicated to the subject of scholarships. For more information visit www.AAA.com/ScholarshipInfo.
Webinar and Seminar Educational Series
The AAA Student Lending Program Seminar Series is designed to educate families on the various topics and challenges during the college planning years. These seminars are also designed to assist families with students already attending college. To register for a seminar or webinar, contact us at 1-877-888-8609 or log on to www.AAA.com/Register.Topics include:
TIP:
Each month we highlight a scholarship in our Student Lending Newsletter. • Financial Aid 101
• Scholarship Workshop 101 • Financial Aid Award Letters • FAFSA Line by Line
• College Funding Options • Consolidation 101
College Tours
A successful college tour is key to helping your student make more informed choices. Members can plan their own customized college tour using AAA TripTik Travel Planner online or have one of our travel specialists do the work for them by calling 1-877-874-7845. Our staff can provide directions from home to one or more campuses, locate hotels along the way, identify AAA rates, and make all reservations.
Newsletter
We offer a brief, one-page monthly online Student Lending Newsletter to help families keep current on important information: financial aid topics, deadlines, timelines, and more. Every month we highlight a scholarship and ways to save. To subscribe to the Student Lending Newsletter, e-mail a request to [email protected].
Tax Benefits
Tax deductions and tax credits are another way educated consumers can help pay for college. These tax benefits have been created by Congress to help address college affordability. You can find this updated information online at www.IRS.gov under publication 970.
8
In this
chapter:
• Glossary
Financial Aid Glossary
-A-Ability-to-Benefit: One of the criteria used to
establish student eligibility in order to receive Title IV program assistance is that a student must have earned a high school diploma or its equivalent. Students who are not high school graduates (or have not earned a GED) can demonstrate that they have the “ability to benefit” from the education or training being offered by passing an approved ability-to-benefit (ATB) test.
Accreditation: The school must have accreditation
from an accrediting body recognized by the U.S. Department of Education to be eligible to partici-pate in the administration of Federal student aid programs. Accreditation means that the college meets certain minimum academic standards, as defined by the accrediting body.
Accrued Interest: Interest that accumulates on
the unpaid principal balance of a loan.
AGI (Adjusted Gross Income): All taxable
income less IRS allowable adjustments to income. This figure is from U.S. IRS tax forms.
Annual Percentage Rate (APR): The interest
maintained on a loan for a one-year period.
Award Letter or Financial Aid Award Letter:
An official document issued by a financial aid office listing all the financial aid awarded to the student. The award letter will include information about the cost of attendance and terms and conditions for the financial aid.
-B-
Borrower: The person who receives the loan.
-C-Campus-Based Aid: Financial aid programs
administered by the university. The government provides the university with a fixed annual allocation, which is awarded by the financial aid administrator to deserving students. The Perkins Loan Program, Supplemental Education Opportunity Grant (SEOG),
and Federal Work-Study are examples of campus-based aid.
Cancellation (Discharge): A discharge or
cancellation releases you from all obligation to repay the loan. Two examples are death or permanent disability. Other cancellations are loan-specific. For a complete list of cancellation provisions visit www.dl.ed.gov.
Capitalization of Interest: Addition of unpaid
interest to the principal balance of a loan, which increases the total outstanding balance due.
Consolidation: Combining several education
loans into a new loan with a new payment schedule and interest rate.
COA (Cost of Attendance): The total cost of
attending a post-secondary institution for one academic year. The cost of attendance usually includes tuition, fees, room, board, supplies, transportation, and personal expenses. Most colleges have a COA for on-campus students, off-campus students, commuter students, and part-time students.
-D-Default: The failure to repay a loan in accordance
with the terms of the promissory note. Default occurs after 270 days of non-payment of Federal student loans. The consequences of default are severe.
Deferment: A period during which a borrower,
who meets certain criteria, may suspend loan payments. For some loans, the Federal government pays the interest during a deferment. On others, the interest accrues and is capitalized, and the borrower is responsible for paying it.
Dependent Student: A student who does not
meet any of the criteria for an independent student. An independent student is one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents other than a spouse.
29 When you were age 13 or older, were both your
parents deceased, were you in foster care or were you a dependent/ward of the court? As of today, are you an emancipated minor as determined by a court in your state of legal residence?
As of today, are you in legal guardianship as determined by a court in your state of legal residence?
At any time on or after July 1, 2008, did your high school or school district homeless liaison determine that you were an unaccompanied youth who was homeless?
At any time on or after July 1, 2008 did the director of an emergency shelter program funded by the U.S. Department of Housing and Urban Development determine that you were an unaccompanied youth who was homeless? At any time on or after July 1, 2008 did the director of a runaway or homeless youth basic center or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless? Parents of a dependent student must submit parental information on the FAFSA in order for their student to be consid-ered for financial aid. Parents of dependent students are eligible to borrow under the Federal PLUS Loan Program.(See also independent student.)
Direct Lending (DL) Program: A student loan
program administered by the U.S. Department of Education. Students borrow directly from the Federal government instead of from a private lender. Learn more at www.DLenote.ed.gov. (See FDSLP in glossary.)
Disclosure Statement: Statement of the total
cost and amount of a loan, including the interest rate and any additional finance charges issued by the Guarantor or Lender.
-E-ED, DOE, US-E-ED, or DE (U.S. Department of Education): Government agency that administers
several student financial aid programs, including
the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loan, the FFELP, and the FDSLP.
EFA (Expected Financial Aid Award): Your
EFA is the total amount of Financial Aid (grants, scholarships, Federal loans, etc.) listed on your Financial Aid Award Letter. When you apply for a Private student loan, the EFA is required on the self-certification document you must submit to the lender. Do not include Federal PLUS loans or work-study money in this calculation.
EFC (Expected Family Contribution): Your
Expected Family Contribution (EFC) is the number that’s used to determine your eligibility for Federal student financial aid. This number results from the financial information you provided in your FAFSA application. Your EFC is reported to you on your Student Aid Report (SAR).
Early Decision: An admission program with
earlier deadlines and earlier notification dates than the regular admissions process. Students who apply through an early decision program commit to attending the school if admitted. Thus, a student can apply for early decision to only one school.
Eligible Non-Citizen: You must be one of the
following to receive Federal student aid: • U.S. citizen
• U.S. national (includes natives of American Samoa or Swain’s Island)
• U.S. permanent resident who has an I-151, I-551, or I-551C (Permanent Resident Card) If you’re not in one of these categories, you must be an eligible non-citizen, and you must have an Arrival-Departure Record (I-94) from the U.S. Department of Homeland Security (DHS) showing one of the following designations:
• Refugee • Asylum Granted
• Cuban-Haitian Entrant, status pending • Conditional Entrant (valid only if issued
before April 1, 1980)
• Victims of human trafficking, T-visa (T-2, T-3, or T-4 etc.)
If you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), you aren’t eligible for Federal student aid. If you’re in the United States on certain visas, including an F1 or F2 student visa, or a J1 or J2 exchange visitor visa, you’re not eligible for Federal student aid. Also, persons with G series visas (pertaining to international organizations) are not eligible.
Eligible Program: A program of organized
instruction or study that leads to an academic, professional, or vocational degree or certificate, or other recognized educational credential. To receive Federal student aid, you must be enrolled in an eligible program with two exceptions:
• If a college has told you that you must take certain course work to qualify for admission into one of its eligible programs, you can get a Stafford Loan for up to 12 consecutive months while you’re completing that preparatory course work. You must be enrolled at least half-time, and you must meet the usual student aid eligibility requirements. • If you’re enrolled at least half-time in a
program to obtain a professional credential or certification required by a state for employment as an elementary or secondary school teacher, you can get a Federal Work- Study, Federal Perkins Loan, a Federal Stafford Loan, or your parents can get a PLUS Loan while you’re enrolled in that program.
Enrollment Status: An indication of whether you
are a full-time or part-time student. Generally you must be enrolled at least half-time in a degree or certificate program to qualify for financial aid.
Entrance Counseling: Students receiving Federal
Stafford or Perkins Loans are required to complete a loan counseling session before they receive their first disbursement. This counseling session reviews terms, conditions, interest rates, and repayment options. Most schools will have a link to their online entrance counseling tool on their Financial Aid website. Many schools will offer the counseling session during Student Orientation Day.
-F-FAFSA (Free Application for Federal Student Aid): The form that must be completed by students
and parents applying for Federal financial student aid.
FDSLP: The Federal Direct Student Loan Program.
Stafford and PLUS Loans are available directly from the government rather than through commercial lenders. Selected colleges and universities participate in this program. (See Direct Lending (DL) Program in glossary)
Federal Methodology: The need analysis
formula mandated by law to determine a student’s eligibility for student aid programs.
Federal Processor: The organization that
processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and submits the results to students and colleges.
Financial Aid: Financial assistance in the form
of scholarships, grants, work-study, and loans for education offered through state, Federal, and state agencies.
Financial Need: The difference between the
cost of attendance at a college and the Expected Family Contribution.
Fixed Interest: On a fixed interest loan, the interest
rate remains the same for the life of the loan.
Forbearance: If you temporarily can’t meet
your repayment schedule but are not eligible for a deferment, your lender might grant you a forbearance for a limited time. Forbearance occurs when your lender or servicer agrees (in writing) to either postpone or reduce your payments temporarily. Generally, a forbearance is granted up to 12 months at a time, for a maximum of 3 years.
-G-Gift Aid: Financial aid, such as grants and
scholarships, which does not need to be repaid.
Grace Period: After borrowers graduate, leave
college, or drop below half-time enrollment, loans that were made for that period of study have several months before payments are due. This period is called the “grace period.” During the grace period, no interest accrues on subsidized loans. Interest accrues on unsubsidized loans during grace periods, and this interest is capitalized when
31 borrowers’ loans enter repayment.
Grants: Financial aid awards that do not have to be
repaid. Grants are available through the government, state agencies and colleges.
Guarantor (Guaranty Agency): The agency or
institution that repays lenders in the event of a default on a student loan.
-I-Independent Student: A student who is either
married, 24 years of age or older, enrolled in a graduate or professional education program, has legal dependents other than a spouse, is an orphan or ward of the court, or a veteran of the U.S. Armed Forces.
When you were age 13 or older, were both your parents deceased, were you in foster care or were you a dependent/ward of the court?
As of today, are you an emancipated minor as determined by a court in your state of legal residence?
As of today, are you in legal guardianship as determined by a court in your state of legal residence?
At any time on or after July 1, 2008, did your high school or school district homeless liaison deter-mine that you were an unaccompanied youth who was homeless?
At any time on or after July 1, 2008 did the director of an emergency shelter program funded by the U.S. Department of Housing and Urban Development determine that you were an unac-companied youth who was homeless?
At any time on or after July 1, 2008 did the director of a runaway or homeless youth basic cen-ter or transitional living program decen-termine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless?
In-School Deferment: If the student is attending
college at least half-time at a postsecondary school or approved Graduate Fellowship program the student may qualify for a deferment until the student
graduates, drops below half-time, or leaves college.
Interest: An amount calculated as a percent of the
principal loan amount, which is charged for borrowed money.
-L-LIBOR (London Interbank Offered Rate): A
daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale interbank market.
-N-National Student Loan Data System (NSLDS): NSLDS is a database for federal
student financial aid where you can find out about the Federal loans and grants you’ve received. If you’ve only just applied for aid, you won’t find any information on NSLDS yet. NSLDS receives data from schools, guarantors and U.S. Department of Education programs. The NSLDS website is generally available 24 hours a day, seven days a week. By using your Federal PIN ID, you can access your information. You can access the NSLDS database at www.NSLDS.ed.gov.
Need: The difference between the cost of
education and the Expected Family Contribution (EFC) is the student’s financial need.
-O-Origination Fee: Fee, payable by the borrower
and deducted from the principal of a loan prior to disbursement to the borrower. For federally-backed loans, the origination fee is paid to the government to offset the cost of the interest subsidy to borrowers. For Private loan programs, the origination fee is generally paid to the originator to cover the cost of administering and insuring the program.
-P-Pell Grant Program: The largest grant program.
Eligibility and award amounts are determined by the college based on established guidelines. Pell Grant eligibility will be posted on the student’s Financial Aid Award Letter.
Perkins Loans: Federally insured loans funded by
the government and awarded by the college. The loans feature a low interest rate and are repayable over an extended period.
PIN: Personal Identification Number. Your PIN
serves as your electronic signature and gives you access to your personal records with the Department of Education. A PIN allows applicants to complete the FAFSA online. The PIN ID can be used to sign Stafford and PLUS Loans online.
PLUS (Parent Loans for Undergraduate Students): Federally insured loans for parents
of dependent students. The PLUS Loan is now available to graduate and professional students.
Post-Secondary: This term means ‘after high
school’ and refers to all programs for high school graduates, including programs at two- and four-year colleges, and vocational & technical schools.
PROFILE: (CSS/Financial Aid PROFILE):
A customized financial aid application form required by certain private colleges and scholarship programs, which collects additional financial information to determine eligibility for institutional aid. You can file the PROFILE at www.CollegeBoard.com.
Promissory Note: Contract between a borrower
and a lender that includes all the terms and conditions under which the borrower promises to repay the loan.
-S-SAR (Student Aid Report): Your Student Aid
Report (SAR) summarizes the information you submit on your Free Application for Federal Student Aid (FAFSA) and provides you with your Expected Family Contribution (EFC).
Scholarships: Funds used to pay for higher
education that do not have to be repaid. Scholarships may be awarded based on any number of criteria, such as academics, achievements, talents, and affiliations with various groups, or career aspirations.
Self-Help Aid: Financial aid in the form of loans or
student employment.
SEOG: Supplemental Educational Opportunity
Grant Program; grant funds made available through some schools to a limited number of undergraduate students with financial need.
Servicer: An organization that acts on behalf of
the lender to administer a student loan account. Often the borrower deals with the loan servicer when there are questions about repayment.
Stafford Loans: Loans made available to students
through the Direct Lending Program.
Subsidized Loans: A loan for which a borrower
is not responsible for the interest while in an in-school, grace, or deferment status. Subsidized loans include: Direct Subsidized and Direct Subsidized Consolidation Loans.
-U-Unsubsidized Loans: A loan for which the
borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan. Unsubsidized loans include: Direct Unsubsidized Loans, Direct PLUS Loans and Direct Unsubsidized Consolidation Loans.
-V-Variable Interest: With a variable interest loan,
the interest rate changes periodically. For example, the interest rate might be linked to prime rate or LIBOR plus additional percentage rate and be updated monthly, quarterly, semi-annually, or annually.
-W-Work Study: A program, awarded by the college,
through which students work part-time to help fund their education. These funds are typically used for indirect college costs such as living expenses.
informational purposes and should not be construed as legal or financial advice.
References in this guide to “Source: U.S. Department of Education” are to U.S. Department of Education, Federal Student Aid, Students Channel, Funding Education Beyond High School: The Guide to Federal Student Aid 2010 – 11,
1-888-422-2536
AAA.com/FinancialAid
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