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Louisiana Tech University

Office of
Financial Aid

Glossary of Financial Aid Terms

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Academic Year A period of time schools use to measure a quantity of study. For example, Louisiana Tech's academic year spans Fall, Winter, Spring, and Summer quarters in that order. Academic years vary from school to school and even from educational program to educational program at the same school.
Accrued Interest An amount of money, such as interest, that continues to accumulate over the life of the loan.
American College Test (ACT) A three-and-one-half hour examination which tests ability in English, mathematics, social studies, and natural sciences. Scores are reported in a range from 1 to 36 for each subject area.
Amortization Amortization is the gradual reduction of a loan debt through periodic installment (usually monthly) payments of principal and interest.
Annual Percentage Rate (APR) This is the yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans.
Average Daily Balance The outstanding balance in a given cycle divided by the number of days in the cycle.
Award Letter The official document, issued by a college's financial aid office, which lists all the financial aid awarded to a student.
Bankruptcy 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.
Books and Supplies Book charges are not included in the university charges but must be bought separately. When calculating total Cost of Attendance, we estimate $600 per quarter if attending full time.
Borrower A student or parent who signs a promissory note, thereby assuming obligation to repay the loan.
Cancellation Cancellation occurs when all or a portion of a loan is returned to the lender and the debt is discharged.
Capitalization If you choose to postpone paying interest on a student loan while you're in school, the interest may be capitalized, or added on to the principal amount. Capitalization increases the total amount you will repay on a student loan.
Comptroller's Office The university office that is responsible for the billing and collection of university charges. The Comptroller's Office can be contacted at 318-257-4325 or cashiers@latech.edu.
Consolidation Consolidation is the process of combining individual loans into one new loan to simplify and lower the monthly payment and/or extend the repayment period.
Consumer Information define
Cost of Attendance (COA) The total amount it will cost a student to attend a particular school. This includes tuition and fees, room and board, books and supplies, transportation costs, and personal expenses.
Credit Bureau An agency that compiles and distributes credit and personal information to creditors. Such information may include payment habits, number of credit accounts, balance of accounts, and length and place of employment.
Credit History Record of current and past credit transactions that potential lenders use to determine a borrower's ability to repay debt.
Credit Report A report that summarizes historical financial information collected to determine an individual's or an entity's creditworthiness, that is, the means and willingness to repay an indebtedness.
Debit Card Debit cards are issued by financial institutions and allow electronic access to your bank account with a preset amount of cash. When used, funds are withdrawn immediately from your account. There is no grace period and no interest to pay; transactions are rejected if the account lacks sufficient funds.
Default Failure to repay a loan according to the terms agreed to when you signed a promissory note. For the FFEL default is more specific, it occurs if you fail to make a payment for 270 days if you repay monthly (or 330 days if your payments are due less frequently).
Deferment A temporary period during which no loan payment is due. Interest payments can be made or, if postponed, the interest is capitalized and added on to the principal.
Delinquency Delinquency results when the borrower fails to make a payment when due, or to meet other terms of the promissory note.
Dependent Student According to the federal definition, a student who is 23-years-old or younger and dependent on his or her parents for financial support and does not meet any criteria established for independent student status.
Disbursement Payout of loan funds by the lender.
Disbursement Date The date(s) on which the loan proceeds are issued by the lender.
Disclosure Statement The form you receive which details the amount you borrowed and the terms of the loan and repayment.
Discretionary Income Total available funds minus total expenses.
Education Expenses Qualifying expenses to be covered by student aid, including tuition and school fees, books and supplies, room and board, and reasonable living expenses as determined by the school.
Electronic Funds Transfer (EFT) Electronic distribution of loan funds from the lender to the college.
Eligible Program

An eligible program is a course of study that leads to a degree or certificate and meets the U.S. Department of Education's requirements for an eligible program. To get federal financial aid, you must be enrolled in an eligible program, with two exceptions:

  • If a school has told you that you must take certain coursework 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 coursework. 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 an initial professional credential or certification required by a state for employment as an elementary or secondary school teacher, you can get a Federal Perkins Loan, Federal Work-Study, or Stafford loan while you're enrolled in that program.
Eligible School Accredited four- or five-year institution that awards bachelor's degrees, advanced degrees, nursing diplomas, or program certificates. Schools must qualify for Title IV aid under the Federal Higher Education Act.
Endorser An endorser or co-signer is someone who agrees to repay the loan if the borrower fails to do so.
Entrance/Exit Interviews Counseling sessions about loans that students must attend when receiving their first Stafford loan (Entrance Interview) and when leaving college (Exit Interview).
eSignature An eSignature, or electronic signature, is an online consent and agreement that has the same legal validity as a written signature.
Expected Family Contribution (EFC) The amount the federal government, via the FAFSA process, estimates that a student's family should be able to contribute to the cost of a college education. This figure includes parental contribution as well as the student's contributions from earnings and assets.
Family Educational Rights and Privacy Act of 1974 (FERPA) The Family Educational Rights and Privacy Act of 1974 protects the privacy of student records by requiring prior written consent before disclosing personally identifiable information to a third party. It applies to colleges and universities that receive funding from the federal government.
Federal Family Education Loan (FFEL) Program This is the largest source of federal aid. The advantage of federal aid is that the government pays the interest on selected loans while the student is in school. Students don't have to make payments until they leave school or drop below half-time status.
Finance Charge The amount of money a lender may charge you to borrow a loan. A finance charge is also assessed by credit card companies on any unpaid monthly balances.
Financial Aid Eligibility The difference between the total cost of attendance (COA) and the expected family contribution (EFC).
Financial Aid Package The total amount of financial assistance a student receives, including grants, scholarships, work-study, and loans, as listed in the college's financial aid award letter.
Forbearance A specified and temporary period during which no principal loan payment is due, or a period of time during which the lender agrees to accept smaller payments.
Free Application for Federal Student Aid (FAFSA) The form required to determine eligibility for all federal financial aid programs. The FAFSA needs to be completed annually.
General Education Development Certificate (GED) A certificate students receive if they’ve passed a specific, approved high school equivalency test. Students who have a GED may still qualify for federal student aid.
Gift Aid/Grants That portion of a student's financial aid award that is a grant or scholarship. It does not have to be repaid and does not require any employment.
Grace Period The span of time allowed before principal repayment of a student loan must begin after graduating, leaving school, or dropping below half-time status.
Graduated Repayment The monthly payments will gradually increase to ensure repayment in 10 years. This plan assumes borrower's income growth over time will cover the increasing loan payments. The total interest paid will be higher than the standard repayment plan.
Guarantee Fee A fee which is put in an insurance fund that protects the lender against any loan default and maintains the stability of the education loan program.
Guaranty Agency (Guarantor) An agency that insures student loans for lenders and helps administer the FFEL program for the U.S. Department of Education.
Half-Time You must be attending school at least half-time to be eligible for a Stafford Loan. Half-time enrollment is not a requirement to receive aid from the Federal Pell Grant, Federal Supplemental Educational Opportunity Grant, and Federal Perkins Loan programs. At Louisiana Tech University, half-time is at least four hours per quarter for an undergraduate program and three hours per quarter for a graduate program.
Holder The organization which owns the loan and which has the right to collect from the borrower.
Income-Sensitive Repayment Payments that increase or decrease each year as income rises or falls. A 10-year repayment period, which can be extended annually if payments are less than standard principal and interest (maximum 15 year repayment period). The total interest paid will be higher than the standard repayment plan.
Independent Student According to the federal definition, a student who is: 24-years-old by December 31 of the academic year; or married; or a graduate or professional student; or someone with legal dependents other than a spouse; or an orphan or ward of the court; or a veteran.
Insurance Premium Fee deducted from the loan proceeds and paid to the guaranty agency to cover the loan if the borrower defaults.
Interest The fee charged to borrow money which accrues and is paid over the life of the loan.
Interest Rate Cap Upper limit set on a variable interest rate.
Lender The organization, bank, or lending institution from which a student loan is borrowed.
LIBOR The acronym for London Interbank Offered Rate, LIBOR is the base interest rate paid on deposits between banks in the Eurodollar market. The interest rate is based on the quarterly average of the one-month LIBOR rate, plus an additional percentage. This percentage ranges from 1.0% to 3.0% depending on the type of loan, whether or not there is a co-borrower, and the school default rate.
Manual Check A paper check issued by the lender jointly to the University and student.
Master Promissory Note (MPN) The legal document that a borrower signs to receive Federal Stafford Loan funds. The MPN can be used for a single enrollment period, or for multiple periods (up to ten years).
Merit-based Aid Financial aid that is based on an applicant's scholastic achievements or particular talent.
Minimum Payment The minimum dollar amount that you must pay per month on your credit card bill.
Monthly Payment This is the amount you must pay each month on your student loan during repayment. For every $10,000 you borrow, you will pay approximately $125 per month with the standard ten-year repayment option.
Need The difference between a school's cost of attendance and the student's expected family contribution.
Need Analysis The process used by schools that determines a student's eligibility to receive financial aid.
Need-based Aid Financial assistance based on the financial aid eligibility of the student and family.
Origination Fee The fee charged by the government to offset interest payments on a federal student loan. The amount of the fee is deducted from the dollar amount of the loan.
Principal The amount of a loan that must be repaid upon maturity and the amount upon which interest will be charged.
Private Sources of Aid Financial aid from non-government sources such as corporations, foundations, civic associations, etc.
Promissory Note The legal document or "promise to pay" that a borrower signs before receiving loan proceeds. The promissory note includes information about the terms and conditions of the loan.
Regular Student A regular student is one who is enrolled or accepted for enrollment at an institution for the purpose of obtaining a degree, certificate, or other recognized educational credential offered by the institution. Generally, to receive financial aid from federal programs you must be a regular student. For some programs, there are exceptions to this requirement. See the definition of an eligible program.
Room and Board Costs of living off campus vary widely and are not charged by the university, therefore the off-campus charges are not included. It is the student's responsibility to factor that cost into his or her budget.
Satisfactory Academic Progress (SAP) To be eligible to receive federal student aid, you must meet and maintain your school’s standards of satisfactory academic progress toward a degree or certificate offered by that institution.
Secondary Markets Your lender may sell your loan to a secondary market. Upon sale, the originating lender transfers all responsibility and ownership of loans to the secondary market. The terms and conditions of the loan will not change.
Servicing Agency (Servicer) Companies that administer loans for lenders and secondary markets. They issue monthly statements, handle billing and collect payments. If your lender transfers administrative tasks to a servicing agency, you'll receive your payment schedule from, and make your payments to, that agency.
Standard Repayment Fixed, equal monthly payments (minimum payment of $50) and a 10-year maximum repayment period.
Student Aid Report (SAR) The report the student receives from the federal government, after filing the FAFSA. The SAR details the student's eligibility for federal financial aid.
Study Abroad A student may use federal student financial aid to help defray the expenses of study abroad programs, even if the study abroad program is not required for the student’s degree or certificate. Some of these programs are administered directly by Louisiana Tech University and others are administered by a "host" institution and credits earned in the programs appear on a student's transcript as transfer hours. These later programs require a Consortium Agreement between Louisiana Tech University and the "host" institution.
Subsidized Interest Interest paid by the federal government while the student is in college or during grace and deferment period.
Unsubsidized Interest Interest paid by the borrower rather than the government.
Variable Interest Rate of interest that is determined by an index, which periodically changes based on adjustments to the index.
Work-Study Federally funded student employment program, unusually in the form of an on-campus job.