Glossary of Financial Aid Terms
Financial Aid

Academic Year - The period during which school is in session. At TJC a 9-month academic year is from September through May (Fall and Spring semesters); 12 months is September to August (Fall, Spring, and Summer).

Alternative Loans - See Private Loans.

Appeal - A formal request submitted after your financial aid is suspended to have your aid eligibility reviewed and possibly become eligible for aid. For example, if you are placed on Financial Aid Suspension because you failed to meet Satisfactory Academic Progress, or because you have exceeded the 150% rule (see our Satisfactory Academic Progress Policy). The financial aid office will require documentation of the reasons why you did not meet Satisfactory Academic Progress.

Award Letter - A Financial Aid Notification that lists all of the financial aid awarded to the student. It will show the amount, source and type of aid awarded.

Award Year - The academic year for which financial aid is requested and/or received. Typically this is a 9-month award/academic year (from September through May) unless aid is specifically requested for the summer.

Bridge Loan - A deferment of tuition and fees awarded to students with a complete financial aid packet or who are waiting on student loan funds that have already been awarded.

Budget - An amount based on the average cost of education for a 9-month school year. This amount is used to determine eligibility for financial aid. Also known as the Cost of Attendance, the budget includes tuition and fees, books and supplies, room and board, transportation, and various other items.

Cancellation - Cancellation of a loan means that the student is no longer responsible for paying the balance on the loan. Cancellation can occur in several ways. Sometimes loans can be cancelled or discharged under certain circumstances, such as death or permanent disability of the borrower. Sometimes a loan must be cancelled before it is released to the student account. This can happen because of a recent eligibility change or because of an over-award (student receives additional grant or scholarship aid).

Capitalization - The practice of adding interest to the principal or loan amount, instead of paying the interest while in school. Through capitalization, a student can put off payments on an unsubsidized loan until after their class hours drop below half time status, but the amount owed after college will as the interest is accrued on the capitalized interest each month. Capitalization costs you money in the long run.

Cost of Attendance - (Also known as the cost of education or "budget") The total amount it should cost the student to go to school, including tuition and fees, room and board, allowances for books and supplies, transportation, and personal and incidental expenses. Loan fees, if applicable, may also be included in the COA. Child care and expenses for disabilities may also be included at the discretion of the financial aid administrator. Schools establish different standard budget amounts for students living on-campus and off-campus, married and unmarried students, and in-state and out-of-state students.

Default - Failure to repay or otherwise meet the terms and conditions of a loan. For most student loans, it takes nine months (270 days) of delinquent payments for a loan to go into default. The penalties for defaulting include loss of financial aid eligibility, garnishing wages, a bad credit rating, seized tax refunds, and loss of monthly payment options (the whole loan may become due and payable at once).

Deferment - When a borrower is allowed to postpone repayment of the loan for a variety of reasons. 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, and loans in default are not eligible for a deferment.

Delinquency - When a borrower fails to make a scheduled payment for a student loan on time the student is considered delinquent in payment. There may be late fees charged, and if the borrower misses payments for nine months, they will be considered in default.

Dependent - A student’s status indicating that parental information is needed to determine a student's eligibility for financial aid. A student may be living away from home and not receiving any money from their parents and still be dependent for financial aid purposes. Generally, any student under age 24 is considered dependent.

Disbursement - The release of loan funds to the school for delivery to the borrower. Payments are made sometimes by paper check or by Electronic Funds Transfer (EFT). When disbursed as paper checks, the checks are left for the student and it is the student’s responsibility to pay any balance on their student account. Through EFT, loan funds are first credited to the student's account for payment of tuition, fees, room and board and other school charges and any excess is paid to the student by check.

Disclosure Statement - A statement issued to the borrower by the lender that provides information about the actual cost of the loan, including the interest rate, origination, insurance, loan fees and any finance charges.

EFC - Expected Family Contribution - This code is generated from your FAFSA and is used to determine all financial aid eligibility.

EFT - Electronic Funds Transfer is used by lenders to send student loan funds electronically to schools, in lieu of paper checks. Funds received by EFT will be credited to the student account to pay charges before being released to the student.

Eligible Non-Citizen - Someone who is not a US citizen but is nevertheless eligible for Federal student aid is considered an eligible non-citizen. 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. The financial aid office may require additional documentation. Non-citizens who hold a student visa or an exchange visitor visa are not eligible for Federal student aid.

Entrance Loan Counseling - Required counseling for all student borrowers during which the terms and conditions of the loan are explained. The counseling includes watching a video in the library and a test. The test covers both the video and the TJC Financial Aid Handbook. Student borrowers must attend the counseling and pass the test before turning in a loan application.

Exit Interview and survey form - A required session for student borrowers who are graduating or otherwise leaving school, or dropping below half time enrollment, during which the terms and repayment of the loan(s) are explained.

Expected Family Contribution - The amount a student (and parents, if dependent) is expected to pay towards the cost of attending college. This figure accurately determines eligibility for financial aid. The EFC depends on the student's dependency status, family size, number of family members in school, taxable and nontaxable income and assets. The difference between the COA and the EFC is the student's financial need, and is used in determining the student's eligibility for need-based financial aid such as grant aid and subsidized Stafford loans.

FAFSA - This is the Free Application for Federal Student Aid used to apply for federal and state financial aid. A new FAFSA is released each year and can be completed beginning January 2nd before the Fall semester you plan to start college.

Federal Family Education Loan Program (FFEL) - Includes the Federal Stafford Loan (Subsidized and Unsubsidized) and the Parent Loan for Undergraduate Students (PLUS). Private lenders, such as banks, credit unions and savings & loan associations provide the funds for these loans. These loans are guaranteed against default by the federal government.

Financial Aid Package - Grants, scholarships, loans and work-study employment offered to a student to help them afford their education. Typically the financial aid package is presented to the student in the form of an award letter or financial aid notification.

Financial Need - Financial need represents the amount of money the student needs to afford their education. This is also known as unmet need. It is determined by the following calculation:

First-Time Borrower - A first-year student who has no unpaid loan balances when he applies for a loan. First-time borrowers receive the first disbursement of their loan approximately 30 days after the first day of the classes. If the student withdraws during the first 30 days of classes, the loan is canceled and does not need to be repaid. Non-First-Time Borrowers receive their loan funds within a few weeks of the start of classes.

Forbearance - During a forbearance the lender allows the borrower to temporarily postpone repaying the principal, but the interest charges continue to accrue, even on subsidized loans. The borrower must continue paying the interest charges during the forbearance period. Forbearances are granted usually in cases of extreme financial hardship or other unusual circumstances when the borrower does not qualify for a deferment. You can not receive a forbearance if your loan is in default. Forbearance differs from a deferment in that it is not a legal requirement; it is given at the lender's discretion.

Garnish - Withholding part of a borrower's wages to repay a loan, generally when that loan is in default.

Grace Period - Period of time during which a borrower is not required to make payments on a student loan. Grace periods can last as long as 6 months, and normally begin after the student is no longer enrolled at least half time.

Graduated Repayment - A type of repayment on a student loan where payments begin at a lower amount and graduate to a slightly higher amount as the repayment period continues.

Guarantee Agency - This is an agency that guarantees the loan and repays a lender, should the borrower default on a student loan. In Texas, Texas Guaranteed Student Loan Corporation is our guarantee agency.

Guarantee Fee -This is a fee deducted from student loans to help pay the cost of defaults. It is also known as the insurance premium. The guarantee fee for Federal Subsidized Stafford, Unsubsidized Stafford and PLUS loans is 1% of the amount.

Half-Time - A student must be enrolled at least half-time to be eligible for aid and some programs may require full-time enrollment for eligibility. Half-time is generally counted as a minimum of six (6) credit hours.

Independent - Means that parental information is not needed in determining a student's eligibility for financial aid. This student must meet one of the following requirements:

• Born before January 1, 1981
• You have a bachelor’s degree.
• You are married.
• You are or were an orphan or ward of the court.
• You are a veteran of the Armed Forces.
• You have legal dependents that receive at least half of their support from you.

Need - Eligibility for financial aid. Need is the difference between the student's budget (cost of attendance) and expected family contribution.

Origination Fee - This is a fee deducted from student loans to pay the administrative costs. The origination fee for Federal Subsidized Stafford, Unsubsidized Stafford and PLUS loans is 3% of the amount.

Principal - The amount borrowed on a loan.

Private Loans - Education loan programs established by private lenders to supplement the student and parent education loan programs available from federal and state governments. These are generally not as good as the federal loan programs, and the student must "shop around" and apply through the bank for loans with terms that best suit them.

Promissory Note - A written, legally binding promise to repay a loan. The promissory note outlines the terms and conditions of the loan, including repayment schedule, interest rate, deferment policy, and cancellation requirements.

SAR - The Student Aid Report sent by the Department of Education to the student after applying for financial aid, which determines eligibility for a Pell Grant. Also known as ISIR (Institutional Student Aid Report).

Satisfactory Academic Progress - Refers to the schools policy concerning the minimum number of hours that must be completed each semester, the maximum time frame, and the minimum Grade Point Average (GPA) required while receiving financial aid.

Subsidized Loan - This is a loan that student borrowers do not have to pay interest on until after their grace period expires.

Unmet Need - The difference between a student's eligibility for financial aid and the amount of financial aid actually received.

Unsubsidized Loan - This is a loan that student borrowers must pay all the interest on. Interest is charged both during and after enrollment, however, students can elect to capitalize the interest, and make their payments after they are out of school. See Capitalization. (These loans are only offered under "special" circumstances)

Verification - A review process through which a Financial Aid Office must request documentation from a financial aid applicant to verify the accuracy of the information provided on the application.