Financial Aid Guide

Transcription

Financial Aid Guide

AAA.com/FinancialAid
Financial Aid Guide
AAA Student Lending Program
Your trusted resource for student lending
Important Deadline Dates
October 1 First available date to complete the CSS
PROFILE® (www.collegeboard.com)
January 1
FAFSA available to be filled out
at www.fafsa.ed.gov
February 15 Connecticut state FAFSA
completion deadline
RI state FAFSA completion deadline
March 1 May 1 Massachusetts, Maine, New Hampshire and
New York state FAFSA completion deadline
Federal FAFSA completion deadline
June 30 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
1
Financial Aid Basics
Types of Financial Aid
Get Ready to Apply
2
3
4
Key Deadlines
How to Apply
After You Apply for Financial Aid
Financial Aid Award Letters Arrive
Award Letter Breakdown
How Awards are Determined
Paying Tuition
Core Principles
The Perkins Loan
The Stafford Loan
5
8
12
Funding Options
Federal Student Loans
Federal Loan Types
2
14
The PLUS Loan
The GradPLUS Loan
Private Student Loans
Private Loan Types
20
Eligibility
Borrowing Limits
How to Save
Interest and Other Charges
6
Repayment24
Benefits of Consolidation
Combining Student Loan Debt
Interest Rate
Estimated Payments
7
Resources and Services 26
FAFSA Filing Assistance
Guidance Counselors
Scholarship Information
Webinar and Seminar Series
College Tours
Newsletter
8
Glossary28
In this
chapter:
1
• Types of Financial Aid
• Get Ready to Apply
This 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
• Key Deadlines
college funding options available, as well as ideas on how to reduce college costs. You will
• How to Apply
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
government, states, colleges, and private institutions.
Financial Aid Basics
Types of Financial Aid
Gift Aid
Grants 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.
2
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:
TIP:
Students with financial
need usually receive a
combination of both
types of financial aid.
(Detailed on page 2)
– 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
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
3
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.
TIP:
Remember financial aid is
awarded on a first-come,
first-served basis. The
sooner you submit your
documents the better.
1
2
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.
3
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.
4
* Note: If you opted to receive your PIN by e-mail, you should add [email protected]
to your e-mail address book or “safe list” to help avoid delivery problems.
TIP:
Key Deadlines
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.
For families using the paper
RI March 1
MA, ME, FL NH, NY, PA
May 1
CT February 15
VT No state deadline,
check with your
college for dates.
NJ June 1
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.
5
1
Gather the necessary documents.
A quick glance.
1. Gather Documents
• Social Security numbers
• Most recent bank statements
• Driver’s license (if any)
• Most recent business and
• Most recent W-2 Forms and
2. Print Worksheet
other records of income earned
3. File FAFSA
• Most recent Federal Income
4. Receive EFC
Tax Return – 1040, 1040A,
5. Receive SAR
investment information, business
and farm records, stock, bond,
and other investment records
• Alien registration number or
1040EZ, etc. including any
permanent resident card (see
foreign tax returns
eligible non-citizen in glossary
• Most recent untaxed income
on page 29 for details)
records – Social Security,
Temporary Assistance to Needy
Families, welfare, or veterans’
benefits records
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
It is highly
recommended
to submit your
FAFSA online
because it is a
more timely
submission…
6
2
3
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.
4
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.
5
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.
TIP:
The Higher Education Act (HEA) of 1992 allows a student
to receive financial aid for study abroad at qualified colleges.
7
2
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
TIP:
Financial Aid Award Letters
may come via:
1. Mail
2. E-mail
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
3. Online with College
for your student. All factors should be considered including: costs, academic challenge, college
These letters will be sent to
setting, social fit, etc. Think about attending the AAA Student Lending Webinar titled “Financial
the students.
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.
8
XXX Univ
ersity
123 Scho
ol Street
Anywhere
, State 12
345
James Sm
ith Student ID
: 00625
Financial
Aid Award
Letter
Dear Jame
s,
Award Da
te: 03/01/1
After a ca
5
reful and th
orough re
following fin
vi
e
w of your
ancial aid
financial a
assistance
id applicati
.
on, XXX U
niversity is
Award
pleased to
offer you th
e
The XXX G
Fall
rant
Federal Pe
Spring
rkins Loan
$6,000
Federal Sta
Total
fford Loan
$
$750
6,000
Subsidize
d*
$
1
2
$
,000
750
Unsubsidiz
ed*
$1,750
$1,500
Federal W
ork-Study
$2,000
$1,750
$3,500
$2,000
$900
$4,000
$900
This award
$1,800
is based o
n estimate
Financial
s of you a
Aid reserv
$22,800
nd your pa
es the rig
of satisfac
rent(s)’ inc
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rt
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at any time
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gn, date, a
by May 1,
nd return o
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__ I accep
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ppreciate
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t the award
receiving it
Although yo
(s) indicate
as soon a
__ I declin
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d
s possible
above and
e some or
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all of the a
will enroll
__ I fully d
at XXX Un
ward(s) off
ecline the
iversity
ered but st
award(s) b
ill plan to a
ecause I w
ttend XXX
ill
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ttend XXX
University
My signatu
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re below c
ertifies tha
of this awa
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ave read th
rd letter, a
nd give XX
e Financia
and all exp
X Universit
l Aid Guid
enses cha
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rg
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so notifyin
on to apply
nd the term
udent acc
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any Federa
s and con
ount. I und
ersity Burs
ditions
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erstand I m
ar in writin
aid I may re
ay rescind
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TIP:
ceive to an
or withhold
y
such auth
orization b
y
Financial Aid
Student S
ignature
Award Letters are
not standardized.
Date
e
l
p
m
a
S
*See glossary for details.
9
The Gift Aid portion of the award letter will
Lending Program, refer to page 20 or log on
More on
itemize all grants and scholarships your student
to www.AAA.com/FinancialAid. You may also
Work-Study:
is being offered. Some may be taxable or
contact the AAA Student Lending Program for
conditional; contact your financial advisor,
help understanding loan terms and conditions at
Financial Aid Office or refer to IRS
1-888-422-2536.
When you fill out the
FAFSA you will be
asked if your student
is interested in workstudy. 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.
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
10
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.
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,
FAFSA Asset*
College Savings Plans
such as Coverdell savings
accounts, 529 college savings
this data will also be considered when determining aid.
plans and the refund value
of 529 prepaid tuition plans
Financial aid for most Federal programs is awarded based on need, except for the unsubsidized
should be reported as follows:
Federal Stafford Loan and Federal PLUS Loan. The EFC is a measure of your family’s financial
For a student who does not
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.
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,
Your EFC is calculated according to a formula established by law.
Below are the factors considered in the calculation:
accounts are reported as
parental investments, including
all accounts owned by the
student and all accounts
• Total Income, which includes
• Net Assets for parents and student
owned by the parents for any
member of the household.
earned income for parents and student.
which includes: cash on hand, savings,
Remember, if you are an independent
checking, stocks, bonds, investments,
student you will not include your
CDs, trust funds, and equity in real
parents’ income. Untaxed income and
estate outside of the family home and
percent of the business and
benefits received includes retirement
farm equity.
full-time or full-time equivalent
contributions made during prior year
(not total value of account), social
security, public assistance, etc.
Small Business does not
include the value of a small
business if your family owns
and controls more than 50
the business has 100 or fewer
employees. For small business
• Family Size.
value, your family includes (1)
persons directly related to
• Family Members in College,
not including parents.
• Age of Older Parent.
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
Financial aid for most Federal programs are
this subject go to
www.StudentAid.ed.gov.
awarded based on need…
*Source: U.S. Department of Education
11
3
In this
chapter:
• Core Principles
• Funding Options
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.
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.
1
2
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.
12
3
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
will use a
your Federal loan options first before considering other loans, as they generally offer
combination
lower interest rates, flexible repayment options, and more protection. Typically a family
of loan types,
will use a variety of loans to meet tuition and educational expenses.
4
Most families
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
but it is
important to
stay within
the Federal
Student Loan
Program
options when
possible.
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.
13
4
In this
chapter:
• Federal Loan Types
• The Perkins Loan
Federal Student Loans
• The Stafford Loan
Federal Student Loan Types
• The PLUS Loan
Federal interest rates are set by congress and are subject to change every academic year. You
• The GradPLUS Loan
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.
Perkins Loan Quick Glance
Borrower
Stafford Loan Quick Glance
Student
Borrower
Student
Complete FAFSA
Yes
Complete FAFSA
Yes
Interest Rate Type
Fixed
Interest Rate Type
Fixed
Standard Repayment Term
10 years
10 years
Extended Terms Available
Yes
Yes
Deferment and
Forbearance Options
Yes
Deferment and
Forbearance Options
Yes
Credit Check
No
Credit Check
No
Consolidation
Yes
Consolidation
Yes
For undergraduate and graduate students
Parent PLUS Loan Quick Glance
Borrower
Parent
Borrower
Student
Complete FAFSA
Typically
Complete FAFSA
Yes
Interest Rate Type
Fixed
Interest Rate Type
Fixed
10 years
10 years
Yes
Yes
Deferment and
Forbearance Options
Yes
Deferment and
Forbearance Options
Yes
Credit Check
Yes
Credit Check
Yes
Consolidation
Yes
Endorser Permitted
Yes
Endorser Permitted
Yes
Consolidation
Yes
For parents (or legal guardians) of undergraduate
dependent students
14
GradPLUS Loan Quick Glance
For graduate students that have maximized their
Stafford Loan
See www.StudentAid.ed.gov for any updated information.
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
TIP:
The availability of the
Federal Perkins Loan and
the Federal Perkins Loan application with the college the student attends. Most colleges will
the amount offered will vary
send information on how to secure a Federal Perkins Loan with the Financial Aid Award Letter.
from college to college.
Disbursement of Funds: Federal Perkins
interest while the student is in college. To
Loan funds are sent directly to the college
learn more about the Federal Perkins Loan visit
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.
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
Federal Perkins Loan Grace Period: This
intervention professionals, nurses,
loan does not need to be repaid until nine
medical technicians, law enforcement,
months after the student graduates, drops
certain employees of the Head Start
out, or ceases to be enrolled half-time.
program, Vista or Peace Corps
Half-time status is established by the
volunteers, and military personnel
college the student is attending.
may be eligible. To learn more
about discharge or
Federal Perkins Loan Interest Rate
cancellation options visit
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
For the latest information on Perkins Loans: 1-888-422-2536 | www.StudentAid.ed.gov
15
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
TIP:
Stafford Loan
Chart below for loan amount. Applicants for these loans are required to complete the FAFSA
and sign a Master Promissory Note.
If you are a freshman or
transfer student, be sure
Due to legislation change in 2010, all Federal Stafford Loans are required to be secured through
to complete your Financial
the Direct Lending Program. Master Promissory Notes can be signed and entrance counseling
Aid Entrance Counseling
online with your college
or Federal loan funds will
not disburse.
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.
Federal Stafford Loan Limit Chart*
Dependent
Undergraduate
Students
Independent
Undergraduate
Students
Year 1
$5,500
$9,500
Year 2
$6,500
$10,500
Year 3-5
$7,500
$12,500
$31,000
$57,500
Academic Year
Maximum Stafford
Loan Limits
Graduate
Students
$20,500
$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.
16
Federal Stafford Loan Grace Period: This
of up to $5,000 from the Federal government
loan does not need to be repaid until six
on any Federal Stafford Loan. Some teachers
months after the student graduates, drops
may also be eligible for loan forgiveness up
out, or ceases to be enrolled half-time.
to $16,000 (available for mathematics,
Half-time status is established by the college
science, and special education teachers
the student is attending.
under the TEACH GRANT). To qualify,
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
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
(determined by the financial data submitted
How to Save Even More on a
Federal Stafford Loan
on the FAFSA). For subsidized Federal
The government offers additional ways to
Stafford Loans the interest rate is generally
save on your Stafford Loan. Borrowers that
lower than the unsubsidized, but it is also
set up automatic debit payments once in
established every academic year (not to
repayment can receive .25% off their
exceed 8.5%). This should be itemized on
Stafford Loan interest rate.
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
Under certain circumstances you may
be eligible to receive a discharge or
cancellation of up to $5,000 from the
federal government…
For the latest information on Stafford Loans: 1-888-422-2536 | AAA.com/StaffordLoan
17
Federal PLUS Loans
(Parent Loans for Undergraduate Students)
Federal Parent PLUS Loan
TIP: Federal
PLUS Loan
If a parent is denied for a
Federal PLUS Loan, the
student may be eligible
for an additional $4,0005,000 to be added to the
student’s Federal Stafford
Loan. Typically, a school will
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
request a copy of the PLUS
Program. The limit is determined by the cost of attendance minus other financial assistance
Loan denial.
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).
Graduate and professional students are now eligible to
borrow under the GradPLUS Loan Program.
Disbursement of Funds: Federal PLUS
Federal PLUS Loan Grace Period: For
Loan funds are most often sent directly to the
parents of undergraduate students, repayment
college in a minimum of two equal payments.
begins 60 days after the last disbursement,
Funds are traditionally disbursed in the
which is typically March. Parents have the
beginning of the fall semester and then again
option to defer up to six months after a student
at the beginning of the spring semester.
graduates or leaves school. Repayment of
Colleges using trimesters will have three
Federal GradPLUS Loans does not begin until
equal disbursements. If you applied for extra
60 days after a student graduates, drops out,
funds for educational expenses the college will
or ceases to be enrolled half-time. Half-time
usually send you a check for the residual
status is established by the college the student
after paying tuition, fees, etc.
is attending. Federal GradPLUS borrowers will
be given an automatic in-school deferment.
18
Federal PLUS Loan Interest Rate
How to Apply
The Federal Parent PLUS and Federal
You can apply online for Federal PLUS/
GradPLUS Loan interest rates are
Federal GradPLUS at www.studentloans.gov.
established by the federal government. The
You will need your Federal PIN ID to sign your
Parent PLUS loan rate is capped at 10.5%
application. For Parent Plus Loans, be sure
and the GradPLUS loan rate is capped
to use the PIN ID assigned to the parent,
at 9.5%.
not the student or spouse.
How to save on Federal PLUS or
Federal GradPLUS Loans
TIP:
Parents have the option
to defer payments up to
six months after a student
graduates or leaves school.
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
You can apply online
for Federal PLUS/Federal
GradPLUS Loans in as
little as 15 minutes at
www.studentloans.gov.
For the latest information on PLUS Loans: 1-888-422-2536 | AAA.com/PLUSLoan
19
5
In this
chapter:
• Types of Private Loans
• Eligibility Requirements
Private Loans through the AAA Student Lending Program
Private Loans
• Borrowing Limits
Private Loan Overview
• How to Save
There are several funding sources available to pay for a college education. Private student
• Interest and
Other Charges
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:
1
2
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.
20
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.
TIP:
A solid co-signer, such as a
parent or other creditworthy
Borrowers and co-borrowers will also need to satisfy credit requirements set by the lender.
adult, makes you a stronger
Below is a list of typical borrower requirements:
loan candidate.
• 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.
For the latest information on Private Loans: 1-888-422-2536 | AAA.com/FinancialAid
21
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.
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…
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!
22
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
TIP:
Borrowers and co-borrowers
with higher credit scores
before you will know your individual interest rate. Additionally, you should always know what
may qualify for zero origination
the interest rate cap is on any Private student loan you decide to use.
fees with some Private
student lenders.
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 amount of your interest rate margin is based on
your loan program and your credit history.
*See glossary for details.
For the latest information on Private Loans: 1-888-422-2536 | AAA.com/FinancialAid
23
6
In this
chapter:
The AAA Student Lending Program
• Benefits of
Consolidation
Repayment
• Combining Student
Loan Debt
Repayment can be challenging for both students and parents. Typically, parents will begin
• Interest Rate
• Estimated Payments
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
TIP:
who has a Federal loan is eligible unless they are currently in default on a Federal student loan.
Some lenders offer
combined billing and
extended repayment options.
Benefits of a
Federal Consolidation Loan
• One bill
• Fixed rate
• One monthly payment
• Extend repayment up to 30 years
• Lower monthly payment
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.
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.
24
The AAA Student Lending Program
Combining Private
and Federal Student Loans
Federal
Consolidation
Interest Rate
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
The interest rate for a
consolidation loan programs. This will void your Federal loan benefits such as income based
Federal consolidation
repayment plans, teacher forgiveness programs, military benefits and others. You should carefully
loan is set according
consider what benefits you are giving up before you consolidate Federal loans into Private loans.
to a formula established
by Federal law. The
Estimated Consolidation Payments
fixed rate is based on
the weighted average
Loan Example
Amount
Old Payment
Based on 10 Year Term
New Payment
with Consolidation
of the interest rates on
the loans at the time
$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)
you consolidate,
rounded up to the
nearest one-eighth of
a percent. The interest
rate cannot exceed
8.25 percent. The
consolidation rate is
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%.
fixed for the life of the
loan, which protects
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.
For step-by-step instructions on how to
you from future
increases in variable
rate loans but prevents
you from benefiting
from future decreases
in variable rates.
consolidate your student loans, you can visit
AAA.com/Consolidate.
To learn more about Consolidation Loans: 1-888-422-2536 | AAA.com/Consolidate
25
7
In this
chapter:
• FAFSA Filing
Assistance
Resources and Services
• Guidance Counselors
The AAA Student Lending Program offers a variety of tools, resources, products, and
• Scholarship Information
services to help families properly plan and pay for college. We understand the many
• Seminar and
Webinar Series
challenges families face when trying to navigate the financial aid process, as well as the
•College Tours
resources and services are designed to educate and help families understand the
• Newsletter
• Tax Benefits
sometimes confusing funding options available to them for educational costs. Our
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
TIP:
prepare for college. Students and their parents often approach Guidance Counselors with
The AAA Student Lending
questions about financial aid. Each year we provide Professional Training Days to help
Program offers podcasts
Guidance Counselors stay current with Financial Aid topics, legislation, and scholarship
that can be downloaded
opportunities. To register for a Professional Training Day, log on to www.AAA.com/Register
from AAA.com/FinancialAid,
or call 1-888-422-2536.
also available in Spanish.
We also offer comprehensive webinar services for your parents to help educate them
on a variety of Financial Aid topics.
26
• Financial Aid 101
• Scholarships 101
• FAFSA Line by Line
• Financial Aid Award Letters
• CSS Profile
• College Funding Options
Scholarship Information
We offer online information when it comes to applying and searching for scholarships.
Tax Benefits
Each month we highlight a scholarship in our online Student Lending Newsletter.
Tax deductions and tax
Additionally, we offer webinars dedicated to the subject of scholarships. For more
credits are another way
information visit www.AAA.com/ScholarshipInfo.
educated consumers
can help pay for college.
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:
• Financial Aid 101
• College Funding Options
• Scholarship Workshop 101
• Consolidation 101
• Financial Aid Award Letters
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.
• FAFSA Line by Line
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
TIP:
Each month we highlight a
scholarship in our Student
Lending 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].
For additional resources and services: 1-888-422-2536 | AAA.com/FinancialAid
27
8
In this
chapter:
• Glossary
Financial Aid Glossary
-AAbility-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 participate in the administration of Federal student aid
programs. Accreditation means that the college
meets certain minimum academic standards, as
defined by the accrediting body.
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.
AGI (Adjusted Gross Income): All taxable
income less IRS allowable adjustments to income.
This figure is from U.S. IRS tax forms.
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.
Annual Percentage Rate (APR): The interest
maintained on a loan for a one-year period.
-D-
Accrued Interest: Interest that accumulates on
the unpaid principal balance of a loan.
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.
-BBorrower: The person who receives the loan.
-CCampus-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),
28
and Federal Work-Study are examples of campusbased aid.
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.
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?
the Federal Pell Grant, the Federal Work-Study
Program, the Federal Perkins Loan, the FFELP, and
the FDSLP.
As of today, are you an emancipated minor as
determined by a court in your state of legal
residence?
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.
As of today, are you in legal guardianship as
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?
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 considered 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.
-EED, DOE, USED, or DE (U.S. Department of
Education): Government agency that administers
several student financial aid programs, including
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.)
•Indefinite Parolee
29
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 WorkStudy, 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.
-FFAFSA (Free Application for Federal Student
Aid): The form that must be completed by students
30
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.
-GGift 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
borrowers’ loans enter repayment.
graduates, drops below half-time, or leaves college.
Grants: Financial aid awards that do not have to be
repaid. Grants are available through the government,
state agencies and colleges.
Interest: An amount calculated as a percent of the
principal loan amount, which is charged for
borrowed money.
Guarantor (Guaranty Agency): The agency or
institution that repays lenders in the event of a
default on a student loan.
-L-
-IIndependent 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
residence?
As of today, are you in legal guardianship as
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?
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?
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?
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
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.
-NNational 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.
-OOrigination 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.
-PPell 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.
31
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.
SEOG: Supplemental Educational Opportunity
Grant Program; grant funds made available
through some schools to a limited number of
undergraduate students with financial need.
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.
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.
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.
-SSAR (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.
32
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.
-UUnsubsidized 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.
-VVariable 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.
-WWork 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.
©Copyright 2015 AAA Southern New England Bank
Loans and the AAA Student Lending Program offered through
AAA Southern New England Bank. This Guide is intended for
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,
Washington, D.C., 2007
1-888-422-2536
AAA Southern New England Bank
110 Royal Little Drive
Providence, RI 02904
FIN.14109.15 2/15 Eighth Edition

Financial Aid Guide

Transcription

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