Skip to main content

Financial Literacy & Budgeting

students sitting at a table on campus

Prepare and Pay for College

View publications, fact sheets, online tools, and other resources to help prepare and pay for college at:

Money Management Links

Learn how to create a budget and spend wisely.

Financial Aid Glossary

1040 Form- The Federal Income Tax Return.  Every person who has received income during the previous year must file a form 1040 with the IRS by April 15.

1098T (a tuition statement) - A form used by eligible educational institutions to report information about their students to the IRS.

1099 Form - If you receive a 1099-C form from a creditor, you must report the amount of the canceled debt as income to the IRS even though you have not actually received the money.  The amount shown in Box 2 of the 1099-C form is the amount that must be reported as income. 
401 (k) - A popular type of retirement fund.  It is legal to borrow money from your 401(k) to help pay for your children’s education.

1098-E - As provided in the Taxpayer Relief Act of 1997, borrowers may be eligible to claim a deduction for interest paid on qualified student loans for educational expenses.  Form1098-E (supplied to the student at the end of each calendar year) reflects the amount of qualifying interest paid to the Lender during the applicable tax period.  This same information will also be transmitted to the Internal Revenue Service.

Academic Year - A period of time usually consisting of two semesters or three quarters or trimesters, each with a certain amount of credit hours.

Accrued Interest - The interest on a student loan that begins to accrue (accumulate) after a student completes school.  This interest is charged on the principal (dollar) amount of the loan.

Amortization - A schedule of repayment which includes payments consisting of both principal and interest.

Assets - Cash on hand in checking and savings accounts; trusts, stocks, bonds, other securities; real estate (excluding primary home), income-producing property, business equipment, and business inventory. Considered in determining Expected Family Contribution (EFC).

Base Year - The tax year prior to the academic year (award year) for which financial aid is requested. The base year runs from January 1 through December 31.   Financial information from this year is used to determine eligibility for financial aid.

Borrower - Person responsible for repaying a loan that has signed and agreed to the terms in the promissory note.

Bursar's Office - The university office that is responsible for the billing and collection of university charges.  This may also be referred to the Business Office or Student Accounts Office.

Cancellation - Clause in which a portion or all of a student's loans can be canceled.  Promissory notes outline the circumstances under which loans can be canceled.

Capitalizing Interest ­- Adding accumulated interest to the loan principal rather than having the borrower make monthly interest payments.  Capitalizing interest increases the principal amount of the loan and, therefore, the total cost of the loan.

CBO - The Congressional Budget Office determines the costs of government programs and of changes being proposed by Congress.

Cohort - Borrowers who enter repayment in a given fiscal year.

Consolidation Loans - Consolidation occurs when a borrower with multiple loans requests that all of his or her loans be consolidated into one loan.  Repayment begins 60 days after discharge of prior loans; certain deferments are authorized.

Cosigner - A cosigner on a loan assumes responsibility for the loan if the borrower should fail to repay it.

Cost of Attendance (COA) - An estimate of the student's education expenses for a specified period of enrollment.  COA usually includes tuition and fees, room and board (or a housing and food allowance for off-campus students), and allowances for books, supplies, transportation, loan fees, and dependent care expenses if applicable.  It also covers miscellaneous and personal expenses, including an allowance for the rental or purchase of a personal computer.  Costs related to a disability may also be covered.

Constant Dollars - Dollars adjusted using a price index to eliminate inflationary factors. This adjustment facilitates direct comparison over time.

Default - Failure to repay a loan in accordance with the terms of the promissory note.

Deferment - The temporary postponement of loan payments.

Delinquency - Incidents of late or missed loan payments, as specified in the terms of the promissory note and the selected repayment plan.

Dependent Student - A student that is financially dependent upon a parent or legal guardian or a student who does not meet certain criteria for being classified as independent.

Disbursement - When loan proceeds are paid by the school to the student or parent borrower.

Discharge - The release of borrowers from their obligations to repay their loans. Borrowers must meet certain requirements to be eligible for discharges.

Disclosure Statement - A statement from a lender to a borrower that provides the borrower with information about the terms of the loan and the consequences of defaulting on that loan.

Electronic Funds Transfer (EFT) - The process of electronically transferring loan proceeds from the lender to a school's account or the school's financial institution.

Entrance Counseling - An educational session that first time Federal Loan borrowers must fulfill before the loan's proceeds can be disbursed. The entrance counseling session provides first time borrowers basic information about student loans and the terms and conditions of the Federal Direct, Perkins, or Graduate PLUS Loan programs.  

Exit Counseling - A group or individual session during which borrowers who are leaving school or dropping below half-time enrollment receive information about their repayment obligations and update information about themselves.

Expected Family Contribution (EFC) - The amount that a family is expected to contribute toward college costs according to federal financial aid formulas.

Extended Repayment Plan - An Extended Repayment Plan offers a fixed annual or graduated repayment amount paid over an extended period of time, not to exceed 25 years.  It is available for new borrower on or after October 7, 1998 with outstanding Stafford loans exceeding $30,000.

FAFSA - The Free Application for Federal Student Aid is the federal form that must be completed to be considered for all federal financial aid funds, including Federal Direct, Perkins, and Graduate PLUS loans.

Federal Direct Loan Program (FDLP) - The William D. Ford Federal Direct Loan Program, also referred to as the Direct Loan Program, is a federal program that was authorized under by the Student Loan Reform Act of 1993. FDLP provides low-interest loans to students. These loans are originated by participating institutions with capital provided directly through the U.S. Department of Education, which is the sole lender. Several loan programs exist under the umbrella of FDLP. These loans are the Stafford Subsidized loan program, the Stafford Unsubsidized loan program, the Parent Loan for Undergraduate Students (PLUS), and Consolidation loans.

Federal Family Education Loan (FFEL) program - The Federal Family Education Loan FFEL program is formerly known as Guaranteed Student Loans (GSL).  Loan funds are provided primarily by commercial lenders but principal and interest are guaranteed by the federal government through federally-funded guarantee agencies.  The same loan programs that exist under FDSL also exist under FFEL: the Stafford Subsidized program, the Stafford Unsubsidized program, the Parent Loans for Undergraduate Students (PLUS), the Supplemental Loan for Students (SLS), and Consolidation loans.

Federal Pell Grant - A federal grant program for needy postsecondary students who have not received a bachelor's degree or first professional degree.

Federal Perkins Loan - A loan program that provides low-interest student loans to undergraduate and graduate students who demonstrate exceptional financial need.  The Perkins Loan is made through the student's school's financial aid office.  The school is the lender, and therefore the loan is repaid to the school.  The loan is paid either directly to the student or the loan amount is applied towards school charges and expenses.  Repayment on the loan begins nine (9) months after the student graduates, leaves school or drops below half-time status.

Federal School Code - The Federal School Code List contains the unique codes assigned by the Department of Education for schools participating in the Title IV federal student aid programs. Students can enter these codes on the Free Application for Federal Student Aid (FAFSA) to indicate which postsecondary schools they want to receive their financial application results.

Fellowship - A form of aid given to graduate students to help support their education.  Some fellowships include a tuition waiver or a payment to the university in lieu of tuition.  Most fellowships include a stipend to cover reasonable living expenses (e.g., just above the poverty line).  Fellowships are a form of gift aid and do not have to be repaid.

Financial 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).

Financial Need - The difference between a student's Cost of Attendance and Expected Family Contribution.  It is the amount of financial aid the student needs to afford attendance at a particular college.

Financial Aid Notice - An official document issued by a school's financial aid office that lists all of the financial aid offered to the student. This notice provides details on their analysis of your financial need and the breakdown of your financial aid package according to amount, source and type of aid. The financial aid notice will include the terms and conditions for the financial aid and information about the cost of attendance. You may be required to sign a copy of the letter, indicating whether you accept or decline each source of aid, and return it to the financial aid office.  Some schools might refer to the financial aid notice as the "Financial Aid Notification (FAN)".

Fixed Interest Rate - Refers to loan interest rates that will not change throughout the entire life cycle of the loan.

Forbearance - An arrangement to postpone or reduce a borrower's monthly payment amount for a limited and specified period, or to extend the repayment period.  The borrower's interest is charged and accrues during forbearance.

FSA Username and Password: A FSA Username and Password is created by the student and a parent (if a dependent student) to complete the FAFSA, as well as other items related to federal student aid.  Your FSA Username and Password identifies you as someone who has the right to access your own personal information, such as to access your FAFSA or to sign a Master Promissory Note.

GAO - The Government Accountability Office (formerly the U.S. General Accounting Office) is the auditing arm of Congress, and is led by the Comptroller General of the United States.

Grace Period - A six-month period before the first payment must be made on a Stafford Subsidized or Stafford Unsubsidized Loan.  The grace period starts the day after a borrower ceases to be enrolled at least half time.  During the grace period on an Unsubsidized Loan, accumulating interest must be paid or it will be capitalized.

Graduated Repayment Plan - A plan that allows monthly payment amounts to start out at one level and then increase every two years during the repayment period.  Borrowers have up to 30 years to repay, depending on the amount they borrowed.  The minimum payment must cover interest that accumulates monthly and must be at least half of the payment that would be required under the Standard Repayment Plan.  The maximum amount may not be more than 1-1/2 times the payment that would be required under the Standard Repayment Plan.

Grant - Financial assistance that does not need to be repaid.

Guarantee Agency - A state or private nonprofit agency that has an agreement with the Secretary of Education to administer the FFEL program.  The agency insures lenders against losses due to a borrower's default.  Also called "guarantor" or "guaranty agency."

Half-time Student - A student who is carrying an academic workload that is considered at least one-half the workload of a full-time student (as determined by the school).

HEA - The Higher Education Act is the law that authorizes most of the federal programs that relate to financial aid for college.

Income-Based Repayment Plan - A federal student loan repayment option beginning July 1, 2009 that caps monthly payments based on income and family size, and forgives remaining debt and interest after 25 years.

Income Contingent Repayment Plan - Available only in the FDLP, this plan that allows the monthly payment amount to vary with the borrower's income, with any amounts remaining after 25 years forgiven.

Income Sensitive Repayment Plan - A plan that allows the monthly payment amount to vary with the borrower's income, except that all principal and interest must be fully repaid within 25 years.

Independent Student - A student who meets one of the following criteria: the student is 24 years or older, a graduate or professional student, married, orphaned or a ward of the court, veteran of the armed services, or has documents describing circumstances of independence.

In-School Period - Under the Stafford Subsidized loan program, the period during which a borrower pursues his or her studies as at least a half-time student at a participating school. This period begins with the date of disbursement and ends with the beginning of the grace period. During the in-school period, borrowers are not charged interest (in FFEL, the federal government pays lenders interest benefits and special allowance).

Interest - A loan expense charged by the lender and paid by the borrower for the use of borrowed money. The expense is calculated as a percentage of the principal amount (loan amount) borrowed.

Interest Rate - The actual amount of simple interest paid by the borrower.  Different types include fixed (the interest rate remains the same for the term of the loan) and variable (the rate adjusts according to economic and market conditions on a monthly, quarterly, or annual basis). 

IRS Offset - When other collection efforts fail, the Department of Education turns over a defaulted borrower's account to the Internal Revenue Service (IRS). This IRS offsets the debt against the defaulter's income tax refund.

Legal dependent  - A child or other person (other than a spouse) who lives with and gets more than half of his or her support  from the student and will continue to receive that support during the school year.

Legal guardian - A court-appointed individual whose guardianship responsibilities include using personal financial resources to support the person in his or her charge.

Lender - An entity offering loans to students; it can be a private company or bank, the government (Direct Loans), or an educational institution in the case of Perkins Loans.

Loan - Money borrowed that must be repaid.

Loan Forgiveness - This occurs when the federal government cancels all or part of an educational loan because the borrower meets certain criteria.

Loan Limits - Limits placed on student borrowers in terms of the maximum numbers of dollars they may obtain through federally funded student financial assistance programs. Loan limits vary by type of loan, academic level, program length, and whether a student is dependent or independent.

Loan Principal - The total sum of money borrowed.

Loans in Repayment - Loans that have entered the repayment period after expiration of the grace period.

Loan Term - The term of a loan is the period during which the borrower is required to make payments on his or her loans. When the payments are made monthly, the term is usually given as a number of payments or years.

Master Promissory Note (MPN)  - A promissory note that can be used to make one or more loans for one or more academic years; currently used to make Subsidized and Unsubsidized Stafford Loans as well as Parent and Graduate PLUS loans. 

Need-Based Financial Aid - Financial aid that relies upon financial need as the criterion for eligibility. Need is determined by subtracting the expected family contribution, via the FAFSA and/or Profile, from the institution's established cost of attendance.

OMB - The Office of Management and Budget is responsible for the overall budget of the United States government, and for the efficient operation of government agencies.

Origination Fee - A fee charged and deducted from the proceeds of a loan before the loan is disbursed. In the federal loan programs, the origination fee is paid to the government to offset its costs.

PLUS Loan (FDLP or FFEL) - Parent Loans for Undergraduate Students.  Loans taken out by parents for the purpose of helping to pay for their children's undergraduate education.  Parents are responsible for all interest charges.  The loan value may not exceed the full cost of the student's education, minus any other financial aid that the student receives.

Prepayment - 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 student loans.

Prime Rate - The rate at which banks borrow money from each other. A common benchmark for consumer and business loans set by banks, usually at a level 3 percentage points higher than the Fed Funds rate. The rate given to consumers on their loans is often determined as the prime rate plus a certain percentage, which represents the lender's assessment of the risk in lending.

Promissory Note - A legally binding contract between a lender and a borrower. The promissory note contains the terms and conditions of the loan, including how and when the loan must be repaid.

Private Loans - Also called alternative loans, or supplemental loans, private loans are non-government loans offered by non-profit lenders, banks, credit unions and other lenders. They are not based on financial need, but rather on your creditworthiness and ability to repay. 

Public Service Loan Forgiveness - A program for federal student loan borrowers that forgives remaining debt for people who work in nonprofit, government, and public service jobs after ten (10) years of qualifying payments.

Rehabilitation Loans - When twelve (12) consecutive payments have been made on a formerly defaulted loan, it can become a rehabilitation loan. Once a loan becomes rehabilitated, it becomes a new loan. A borrower again becomes eligible for participation in federal financial aid programs.

Reinsurance Payments (Reinsurance Default Claims) - Monies the federal government gives a guarantee agency as reimbursement for payments made to lenders for losses due to borrower default.

Repayment Period - The period, which a borrower is responsible for repaying his or her loan. In the case of Direct loans, this period begins on the day after the last day of the grace period. In the case of PLUS and SLS loans, this period begins on the day the loan is disbursed. The maximum repayment period is ten years, not including any authorized deferment or forbearance periods.

Repayment Schedule - A statement provided to the borrower that lists the amount borrowed, the amount of monthly payments, and the date payments are due.

Satisfactory Academic Progress (SAP) - The level of academic standing (defined by the school) that a student must maintain to continue receiving federal or state financial aid, including educational loans. 

Scholarship - Financial aid that does not have to be repaid. Scholarships are generally made based on an applicant meeting certain eligibility criteria.

Secondary Market - An institution or organization that purchases eligible student loans and provides lenders with a source of liquidity to make new loans.

Special Allowance - A quarterly supplemental interest payment to lenders based on the outstanding principal balance of Stafford, PLUS, SLS and Consolidation loans. This payment assures that, as a complement to the borrower's interest rate, the lenders receive a guaranteed yield on their loans even when interest rates change.

Stafford Subsidized Loan (FDLP and FFEL) - A federally subsidized student loan made on the basis of the student's financial need and other specific eligibility requirements.  Stafford Subsidized loans have subsidized interest, which means that the federal government covers the interest on these loans while borrowers are enrolled at least halftime, during the six-month grace period following graduation, or during authorized periods of deferment.  Stafford Subsidized loans are available to undergraduate and graduate students while the student is in school.  The borrower begins to repay the principal and interest after leaving school.

Stafford Unsubsidized Loan (FDLP and FFEL) - These loans are made to borrowers meeting specific eligibility requirements. Interest is charged throughout the life of the loan. The borrower may choose to pay the interest charged on the loan or allow the interest to be capitalized (added to the loan principal).

Standard Repayment Plan - A repayment schedule that allows up to ten (10) years to repay student loans, with a minimum monthly payment of $50 a month. This is the default repayment plan for unconsolidated federal student loans, although borrowers can choose other plans.

Student Aid Report (SAR) - A form sent to the student after submitting the FAFSA to the federal processor.

Title IV - The portion of the Higher Education Act (see HEA) that includes most of the federal financial aid programs.

US Department of Education - Government agency that administers several federal student financial aid programs, including the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loans, the Federal Stafford Loans and the Federal PLUS Loans.

Variable Interest - Rate of interest on a loan that is tied to a stated index and changes annually every July 1 as the index changes.

Verification - The process to confirm an individual student's application data. Students and parents must submit tax returns and other supporting documentation to their financial aid office if asked.  


The following tools will help you calculate your monthly loan payments. Note that they are only recommended as resources and should not be used to yield true repayment figures.  A breakdown of each repayment option can be found on the website

Repayment Calculator – for Standard, Extended, and Graduated Repayment as well as Income-Based, Income Contingent, Pay As You Earn, and Revised Pay As You Earn Repayment

Net Price Calculator

Additional Links


Servicers for Federal Loans:

CornerStone - Phone: 800-663-1662 - Website:

Department of Education Student Loan Servicing Center (ACS) - Phone: 800-835-4611

HSEC/Edfinancial - Phone: 855/337-6884 - Website:

FedLoan Servicing (PHEAA) - Phone: 800/699-2908 - Website:

Granite State – GSMR - Phone: 888/556-0022 - Website:

Great Lakes Educational Loan Services, Inc. - Phone: 800-236-4300 - Website:

KSA Servicing - Phone: 877-292-4825 - Website:

MOHELA - Phone: 888-866-4352 - Website:

Navient - Phone: 800-722-1300 - Website:

Nelnet - Phone: 888-486-4722 - Website:

OSLA Servicing -  Phone: 866-264-9762 - Website:

VSAC Federal Loans - Phone: 888-932-5626 - Website:

One-to-two weeks after the first disbursement, parents/students will receive a mailing notifying them of their selected loan servicer.