Glossary of Financial Aid Terms

The period during which school is in session. UM-Flint has four separate enrollment periods and for financial aid purposes, the academic year begins with Fall and runs through Summer.

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

The interest associated with a loan, which can change or remain the same during the year and term of the loan.

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.

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.

Expenses charged by UM-Flint that the student is expected to pay.

The person who is responsible for repaying a loan and who has signed and agreed to the terms in the promissory note.

The budget is an estimation of what it costs to go to school for a specific period of enrollment. It is calculated using an estimated cost of tuition & fees; food & housing; books & supplies; personal/miscellaneous expenses; and transportation. It is also based on: residency status for tuition purposes (in-state or out-of-state); class level (undergraduate or graduate); housing preference (off-campus or living-at-home); and enrollment status (terms/sessions and full time, part-time enrollment). The estimations are based upon averages for each category and are not reflective of actual or projected costs. Actual tuition & fees are published each year (generally after July 1) and are subject to the Board of Regents approval. Additional tuition, fee, dependent care, study abroad, or other educational expenses may be considered.

Some loan programs provide for the 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.

Adding unpaid accumulated interest to the loan principal.

Costs the lender or servicer incurs when collecting a delinquent or defaulted loan. These costs are charged to the borrower.

Form of refinancing and a way to simplify the repayment of federal loans. The process will move all individual federal loans with individual repayment amounts and create a new loan with one monthly payment.

A person who signs a credit agreement besides the borrower and is legally obligated to take responsibility for loan repayment if the borrower does not make payments.

The cost of attendance (COA), also known as the budget, is an estimation of what it costs to go to school for a specific period of enrollment. The COA is calculated using an estimated cost of tuition & fees; food & housing; books & supplies; personal/miscellaneous expenses; and transportation. The COA is also based on residency status for tuition purposes (in-state or out-of-state); class level (undergraduate or graduate); housing preference (off-campus or living-at-home); and enrollment status (terms/sessions and full time, part-time enrollment). The estimations are based upon averages for each category and are not reflective of actual or projected costs. Actual tuition & fees are published each year (generally after July 1) and are subject to the Board of Regents approval. Additional tuition, fee, dependent care, study abroad, or other educational expenses may be considered.

Failure to repay a loan according to the terms and agreements. Defaulting on a loan may result in legal action to recover the money, including garnishing wages and withholding income tax refunds. Defaulting on a government loan will make you ineligible for future federal financial aid unless a satisfactory repayment is arranged. Defaulting adversely affects your credit rating.

Deferment occurs when a borrower can 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 a forbearance. You can’t get a deferment if your loan is in default.

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 aid officer. 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.

When payments from a loan are late or missed, as specified in the terms of the promissory note and the selected repayment plan.

The U. S. Department of Education’s agent contracted to collect Direct Loan payments and handled deferments, repayment options, and consolidation.

Disbursement is the release of financial aid towards a school account for payment of tuition, fees, and other school charges.

Loans that have been canceled because of bankruptcy, total and permanent disability, death of a borrower, or school closure. (See cancellation)

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.

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. Students on an F1 or F2 student visa, a J1 or J2 exchange visitor visa, or a G services visa, are neither a citizen nor eligible non-citizen and are not eligible for aid.

Someone who is under the age of 18 and was determined, by a court in their state of legal residence, to be declared an adult.

Enrollment intensity is the percentage of full-time enrollment at which a student is enrolled, rounded to the nearest whole percent. For example, if full-time enrollment is 12 credit hours and the student is enrolled in 7 hours, the enrollment intensity would be 7 ÷ 12 × 100% = 58%.

Students are classified as either full-time, three-quarters-time, half-time, or less-than-half-time. This may determine the amount of aid a student receives. The table below indicates classification depending on status as a graduate/undergraduate and semester.

Enrollment Status Table referenced in original text.

A 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.

A 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.

The FAFSA Submission Summary summarizes the information included in the FAFSA. The summary will also indicate the amount of Pell Grant eligibility if any, and the Student Aid Index (SAI).

Many schools award institutional need-based scholarships and grants based upon a more comprehensive calculation of family financial circumstances using the information provided on the CSS PROFILE or the institution’s own financial aid form. This can result in a higher (or lower) figure than the Free Application for Federal Student Aid (FAFSA) might indicate with its Student Aid Index (SAI) estimate. UM-Flint does not use the CSS PROFILE.

The Federal Methodology is the need analysis formula used to determine the SAI. The Federal Methodology takes family size, taxable and nontaxable income, and assets into account.

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 (FAFSA) to compute eligibility for federal student 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-study).

A Financial Aid Officer is a University of Michigan – Flint professional employee who assists students and families in finding options to fund their college education.

An Financial Aid Offer Notification is an official email or letter sent to the student informing them of their financial aid package. Students will also receive an email notification whenever their package undergoes a revision.

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.

A first-time borrower is a student at UM-Flint who has not borrowed a federal loan. First-time borrowers are required to complete entrance counseling and sign a master promissory note.

A rate of interest accumulation that remains the same from the day of the loan to the last repayment.

An arrangement to postpone or reduce a borrower’s monthly payment amount for a limited and specified period or to extend the repayment period. Borrowers are charged interest during 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. Borrowers can’t receive forbearance if their loan is in default.

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 Work-Study (FWS), Federal Direct Student Loans, Federal Direct Parent Loan (PLUS) and all other need-based aid. Students need to reapply each year they want to be considered for aid.

Funds awarded to the student that does not have to be repaid, unless the student fails to meet certain terms. Gift aid includes grants and scholarships.

The grace period is a short time 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, students will have a grace period of six months (Direct Loans) before they must start making payments on their 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.

A federally financed loan made to graduate students who will be enrolled in college who meet specific eligibility requirements. Students may borrow up to the cost of attendance minus any other financial aid received. A credit check will occur to determine if the student 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.

Type of gift aid that does not need to be repaid.

This is income before taxes, deductions, and allowances have been subtracted.

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, Social Security, and pensions).

A student’s contract with their institution or a private entity to pay a percentage of their future earnings for a fixed period after graduation is exchanged for funds to pay for their education while enrolled.

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.

Students must provide more than half of their support and they must live with you for the upcoming or current academic year. (Does not include children or spouse)

A court-appointed relationship where a guardian is given the authority to make decisions for the student or ward, who is unable to make decisions for themselves and or is under the age of 18. Legal guardianship is granted through the court system in the student’s state of legal residence.

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.

An expense of borrowing deducted from each loan disbursement.

Some loan programs provide for the 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.

Financial aid that is merit-based depends on academic, artistic, or athletic merit, or some other criteria, and does not depend on the existence of financial need. Merit-based aid uses grades, test scores, hobbies, and special talents to determine eligibility for scholarships.

An in-state student has met the legal residency requirements for the state and is eligible for Michigan residency in-state student tuition at UM-Flint.

The difference between the COA 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.

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 (FWS), and Federal Direct Subsidized Student Loans.

Expenses incurred by attending UM-Flint that the student may pay to someone other than UM-Flint (bookstore, etc.).

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.

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 offered. Some forms of non-need-based federal aid are Federal Direct Unsubsidized Student Loan, and the Federal Direct Parent Loan (PLUS).

This is income after taxes, deductions, and allowances have been subtracted.

Amount of billable and non-billable remaining after all Gift Aid is applied. Net price can be covered through a variety of sources, including savings, income, and educational loans.

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. A portion of this fee is paid to the federal government to offset the administrative costs of the loan.

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.

When a student receives more financial aid than their eligibility based on their gross need, cost of attendance, or the individual program requirements.

An overpayment is created whenever a student receives federal aid that exceeds 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 funds until the debt is repaid in full or a satisfactory repayment arrangement is made.

Packaging is the process of assembling financial aid funds to assist in covering a student’s cost of attendance.

The Parent Contribution is an estimate of the portion of educational expenses that the federal methodology calculation determines your parents can contribute. It is based on their income, the number of parents earning income, assets, family size, and other relevant factors. Students who qualify as independent are not expected to have a parent contribution.

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 initial disbursement.

Federal grant program for undergraduate students who demonstrate financial need and have not yet completed a baccalaureate degree.

The principal is the amount of money borrowed or the remaining unpaid amount on a loan.

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. Contact your personal loan servicer for information on making payments.

Loans that are established by private lenders to supplement the student and parent education loan programs available from federal and state governments.

Level of degree-granting program in which a student is enrolled. Program levels may include: undergraduate (students seeking an associate degree, an undergraduate certificate, or a baccalaureate degree); post-baccalaureate degree (such as teacher certification); or graduate (students working on a master’s degree, graduate certificate, doctorate, or professional degree.) The amount and types of financial aid which a student is eligible for is determined, in part by their program level.

The promissory note is a legally 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.

Re-evaluation is a formal request to have a financial aid officer 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 the death of a parent, unemployment, or other unusual circumstances), you should submit a re-evaluation. The financial aid officer may require documentation of the special circumstances or other information listed on your financial aid application.

The statement provided by the lender indicates the amount borrowed, the number of monthly payments, and the date payments are due.

You must be making Satisfactory Academic Progress to continue receiving federal aid. If a student fails to maintain standing consistent with the school’s SAP policy, it will result in the loss of aid eligibility. For SAP to be satisfied, the overall ratio of attempted and completed coursework must be at least 67%. A student must also be under 150% of the maximum time required to complete a degree.

Financial aid in the form of loans or student employment. Loans can be used to pay the remaining net costs after gift aid is deducted. Student employment earnings (including Work-Study funds) are generally not deducted from billed costs but can be used to help you cover indirect costs and are paid in the form of wages to students.

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 loan 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.

A type of gift aid awarded to the student that does not need to be repaid. Scholarship offers are typically based on merit or a combination of merit and need, such as academic excellence, talent, affiliation with various groups, or career aspirations. To be eligible for the renewal of certain scholarships, the student may be required to maintain a specific Grade Point Average (GPA) or enrollment status. Please reference the student financial aid website to see the guidelines for the specific scholarship offered.

The Student Aid Index (SAI) is an analysis of your family’s financial situation as determined by the Federal Methodology need analysis formula approved by Congress. This number is used to determine a student’s financial need and aid offer.

The Student Contribution (SC) is the amount of money the Federal Methodology calculation determines the student can contribute; the SC depends on the student’s income, assets, and other factors.

A loan for which the federal government pays the interest while the student is in school, and during grace and deferment periods.

The Supplemental Educational Opportunity Grant (SEOG) is a federal grant program that does not have to be repaid. The SEOG is offered to undergraduate students with exceptional need and priority is given to students who received Federal Pell Grant.

Federal grants for undergraduate and graduate students, offered in exchange for specific future teaching services in designated high-need fields and low-income elementary and secondary schools. If a student does not complete the required teaching service, the grant becomes a Federal Direct Unsubsidized Loan that must be repaid.

The difference between a student’s SAI 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.

A loan for which the student is responsible for paying all interest at all times. Interest accrues on the loan from the date of the first disbursement until the loan is paid in full. To avoid capitalization of the interest, the interest can be paid before the loan repayment is scheduled to begin.

Contributions to IRAs, Keoghs, tax-sheltered annuities, and 401k plans, as well as worker’s compensation and welfare benefits.

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 is a randomly triggered review process in which the financial aid office determines the accuracy of the information provided on the student’s FAFSA and the cost of education. 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 Federal income tax transcripts 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 change. If the documentation is not submitted, the financial aid package will be canceled and no aid offered.

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.

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 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 nor incarceration is considered as wards of the court.

A program that provides undergraduate and graduate students with part-time employment during the school year. The federal or state government pays a portion of the student’s salary. Eligibility for work-study is based on need. Money earned from a work-study job is not counted as income for the subsequent year’s FAFSA and the cost of the education process.