Financial Aid Glossary
1040 Form, 1040A Form, 1040EZ 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.
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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
Interest on loans that accumulates and must be paid at a later date, usually when the principal becomes due.
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 home), income-producing property, business equipment, and business inventory. Considered in determining Expected Family Contribution (EFC).
Associate Degree
The degree granted by two-year colleges.
Award Letter
An official document issued by a school's financial aid office that lists all of the financial aid awarded to the student. This letter 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 award letter 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 award letter the "Financial Aid Notification (FAN)".
Bachelor's Degree
The undergraduate degree granted by four-year colleges and universities.
Bankruptcy
A legal action in which a person who is unable to meet the financial obligations is declared bankrupt by a decree of the court under Federal Bankruptcy Law. Federal student loans, however, cannot normally be discharged through bankruptcy.
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 agreed to the terms and signed a promissory note.
Borrower Benefits
A list of reasons and advantages why an individual would be interested in a student loan product from a particular lender. Read more about the borrower benefits offered by SC Student Loan.
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.
Capitalization
This occurs when unpaid interest is added to the principal of the loan, increasing the monthly payment and the total balance of the loan.
Consolidation
Process that allows a borrower to combine a number of existing loans into one loan. Borrowers usually consolidate their loans in order to lower monthly payments.
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.
Credit Rating
A numerical score based on credit limits, balances, and personal information assigned by credit bureaus and credit reporting agencies to determine an individual's ability to pay back loans and credit cards.
Default
Failure to repay a loan according to the terms agreed to when you signed a promissory note. Default may also result from failure to submit requests for deferment or cancellation on time.
Deferment
The temporary postponement of loan payments for a limited period of time. Deferments, allowed for specific borrower activities, extend the loan repayment period by the length of the deferment period. You must meet the conditions of eligibility set forth by the federal government. During deferment, interest will continue to accrue on any unsubsidized loans, but not on any subsidized loans. Any outstanding unsubsidized interest at the end of the deferment period will be added to the principal balance. Click here to review and download available deferment forms.
Delinquency
This occurs when loan payments are late or missed, as specified in the terms of the promissory note and the selected repayment plan.
Dependent Student
The federal government determines the criteria which define dependent status. To determine your dependency status, complete the online Dependency Status Worksheet.
Department of Education
The federal agency that establishes financial aid programs and processes financial aid applications.
Direct Costs
Costs that the college or university directly bills to the student. Tuition and fees are direct costs.
Disbursement
The release of loan funds. In most cases loans are disbursed in two equal installments.
Discharge
To release the borrower from his or her obligation to repay the loan.
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.
Electronic Student Aid Report
An electronic form of the Student Aid Report.
Enrollment Status
An indication of whether you are a full-time or half-time student. Generally you must be enrolled at least half-time (and in some cases full-time) to qualify for financial aid.
Entrance Counseling
An educational session that first time Stafford 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 Stafford, Perkins, or Graduate PLUS Loan programs. Read more about Entrance Counseling.
Exit Counseling Interview
An educational session that Stafford or Perkins Loan borrowers must fulfill around the time of graduation or separation from a college. The exit counseling session provides the borrower detailed information about the loans he/she borrowed, the company that will collect the payment and the available repayment alternatives. Read more about Exit Counseling.
Expected Family Contribution
The out-of-pocket expenses a family and/or student is expected to contribute toward the cost of college, graduate or professional school. The EFC is the basis for financial need.
Extended Repayment
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 10-07-98 with outstanding Stafford loans exceeding $30,000.
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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 Stafford and Perkins Loans.
FAFSA Pin Number
A FAFSA Pin Number is a 4-digit number provided by the U.S. Department of Education. You will receive a PIN once you complete the FAFSA. Your PIN 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.
Federal Consolidation Loan
Process that allows a borrower to combine a number of existing loans into one loan. Borrowers usually consolidate their loans in order to lower monthly payments. Read more about Federal Consolidation Loan
Federal Direct Student Loan Program (FDSLP)
The program name for loans that are both guaranteed and funded by the federal government. Funds for "direct loans" are provided by the U.S. government directly to students and their parents through their schools.
Federal Family Education Loan Program (FFELP)
Includes the Federal Stafford Loan (Subsidized and Unsubsidized), the Federal Perkins Loan, the Federal Parent PLUS Loan, and the Federal Graduate PLUS loan. The funds for these loans are provided by private lenders, such as banks, credit unions and savings & loan associations. These loans are guaranteed against default by the federal government. SC Student loan is a participant in the FFEL Program.
Federal Graduate/Professional PLUS Loan (Grad PLUS)
A federally guaranteed loan program designed to help graduate or professional students pay the cost of their education expenses. This loan fills the gap between the cost of education and the funding received through Stafford Loans and other financial aid. Payments are not required while the student is enrolled on a half time or greater basis. On Federal PLUS loans, Federal law requires us to charge a 3% loan origination fee; however, we will credit this amount back to your account. Read more about our Federal Grad PLUS loan.
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
Low interest loans for undergraduate or graduate students.
Federal Parent PLUS Loan (PLUS)
A federally guaranteed loan program that allows parents to borrow funds to help pay educational expenses. The program does require the borrower to pass a simple credit check. The loan's interest rate is fixed at 8.5%. Read more about our Federal Parent PLUS loan.
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.
Federal Stafford Loan A Federal Stafford Loan is a long-term, low interest loan available to students to help pay expenses related to attending a college or university. Read more about our Federal Stafford loan.
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.
Fixed Interest
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 is charged interest during forbearance. Forbearance is usually granted at the discretion of the lender to borrowers ineligible for a deferment.
Full-time student
Full-time status is determined by your school. It usually refers to when a student is taking at least 12 credit hours of class for undergraduate students and nine credit hours for graduate students.
Grace Period
The period of time that begins when a borrower graduates (or ceases to be enrolled at least half-time) and ends when repayment must begin. The grace period for most student loans is six months.
Graduate Student
A student who is enrolled in a Masters or Doctoral program.
Graduated Repayment
A schedule where the monthly payments are smaller at the start of the repayment period and gradually become larger. Payments are increased once every 24 months. This plan provides for the greatest relief from the 'cash crunch' of starting your career.
Grants
Educational funds that do not require repayment from present or future earnings.
Gross Income
Income before taxes, deductions and allowances have been subtracted.
Guarantee Agency or Guarantor
State agencies responsible for approving student loans and insuring them against default. Guarantee agencies also oversee the student loan process and enforce federal and state rules regarding student loans.
Guarantee Fee
A small percentage of the loan that is paid to the guarantee agency to insure the loan against default. The insurance fee is usually 1% of the loan amount. Also known as a Federal Default Fee. SC Student loan pays this fee on behalf of our borrowers.
Guarantor Code
A unique code used to identify guarantors who participate in the Federal Family Education Loan Program (FFELP). Our guarantor code is 745.
Half-time student
Half-time status is determined by your school. It usually refers to when a student is taking at least six credit hours of class. In most cases, enrollment must be at least half-time to qualify for financial aid.
Income
The amount of money received from employment (salary, wages, tips), profit from financial instruments (interest, dividends, capital gains), or other sources (welfare, disability, child support, Social Security and pensions).
Income Sensitive Repayment
This repayment alternative is available to some federal loan borrowers. Income sensitive repayments base the monthly payment on the borrower's income in relation to total federal loan indebtedness. Under this option, monthly payments can drop to as low as the amount of interest that accrues on the loan's principal balance. Borrowers must apply for this option annually and must provide documentation of income - usually in the form of a federal tax return.
Independent student
The federal government determines the criteria which define independent status. To determine your dependency status, complete the online Dependency Status Worksheet.
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). For loan-specific interest rate information, please visit our Loan Programs page.
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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.
Lender Code
A unique code used to identify lenders who participate in the Federal Family Education Loan Program (FFELP). Our lender code is 833128.
Less than half-time student
An undergraduate taking less than 6 credits per term or graduate student taking less than 5 credits per term. Students enrolled less than half-time are ineligible for financial aid under most circumstances.
Loan
A type of financial aid which must be repaid, with interest.
Loan Consolidation
See Federal Consolidation Loan.
Loan Forgiveness
This occurs when the federal government cancels all or part of an educational loan because the borrower meets certain criteria.
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, from the institution's established cost of attendance.
Net Income
This is income after taxes, deductions and allowances have been subtracted.
Origination Fee
A fee the borrower pays to the lender for originating a student loan. Origination fees are most often associated with Stafford, PLUS and Federal Direct Student loans. The maximum origination fee for these federal loans is 3% of the loan's principal balance. SC Student Loan pays the Stafford origination fee on behalf of our borrowers. While government regulations do not allow us to pay the 3% origination fee upfront on behalf of Parent and Graduate PLUS borrowers, we do credit that amount back to the borrower’s account once the loan has disbursed.
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Palmetto Assistance Loan (PAL)
A private loan offered exclusively by SC Student Loan for students and the parents of undergraduate students to supplement their federal loans and other financial aid. Read more about our Palmetto Assistance Loan (PAL).
Palmetto Assistance Loan Consolidation
A private loan offered exclusively by SC Student Loan that allows borrowers to consolidate all of their private education loans into a single, variable rate loan with one payment each month. Read more about our PAL Consolidation.
Palmetto Assistance Loan Law PREP (Practice Review and Exam Preparation)
A private loan offered exclusively by SC Student Loan for law students preparing for and taking the Bar Exam. Read more about our Palmetto Law PREP.
Palmetto Assistance Loan Residency and Relocation (R & R)
A private loan offered exclusively by SC Student Loan for 4th year medical students seeking their residency. Read more about our PAL R & R loan.
Past due
Status that occurs if a monthly bill is still unpaid after its due date.
Pell Grant
A need-based financial aid program funded by the federal government. The amount of the award is based on the student's enrollment level (full time, three-quarter time, etc.) and the cost of attendance.
Prepayment
Paying off all or part of a loan before it is due.
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, plus its profit margin.
Principal
The amount of the loan funds borrowed.
Private Loans
Also called alternative loans, or supplemental loans, private loans are non-government loans offered by banks, credit unions and other lenders. They are not based on financial need, but rather on your creditworthiness and ability to repay. SC Student Loan offers the following private loans: Palmetto Assistance Loan (PAL), Palmetto Assistance Loan Consolidation, Palmetto Assistance Loan Law Practice Review and Exam Preparation, Palmetto Assistance Loan Residency and Relocation, and SC Teachers Loan.
Professional Degree
A degree in a field like law, education, medicine, pharmacy or dentistry.
Promissory Note
The binding legal document that must be signed by the student borrower before loan funds are disbursed by the lender. The promissory note states the terms and conditions of the loan, including repayment schedule, interest rate, deferment policy and cancellations. The student should keep this document until the loan has been repaid.
Repayment schedule
A statement provided by the lender or servicer of a loan 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. Many private educational loans, including the Palmetto Assistance Loan, are also subject to a school's SAP policies.
SC Teachers Loan
A 100% forgivable loan, offered exclusively by SC Student Loan (SCSL), designed to entice talented and qualified students to the teaching profession. Read more about our SC Teachers Loan.
Scholarship
A financial aid award that does not have to be repaid. Scholarships are generally made based on an applicant meeting certain eligibility criteria.
Simple Interest
Interest that is paid only on the principal balance of the loan and not on any accrued interest. Most federal student loan programs offer simple interest. Note, however, that capitalizing the interest on an unsubsidized Stafford loan is a form of compounded interest.
Student Aid Report (SAR)
A form sent to the student after submitting the FAFSA to the federal processor.
Standard Repayment Plan
A repayment plan that allows for substantially equal payments over the life of the loan. These monthly payments can be lowered through consolidation.
Subsidized Federal Stafford Loan
This is a need-based student loan. Interest that accrues on subsidized Stafford Loans while the student is in school (at least half-time) is paid by the federal government on the student's behalf. Read more about subsidized stafford loans.
Tax ID EIN
Our tax ID EIN number is 57-0602805.
Treasury Bill Rate (T-bill rate)
The rate paid by the government on its short-term borrowing. It is adjusted quarterly. Treasury bill rates are indexes used by variable-rate loan programs.
Title IV Loans
Title IV of the Higher Education Act of 1965 created several education loan programs which are collectively referred to as the Federal Family Education Loan Program (FFELP). These loans, also called Title IV Loans, are the Federal Stafford Loans (Subsidized and Unsubsidized), Federal PLUS Loans and Federal Consolidation Loans.
Unsubsidized Federal Stafford Loan
A non-need based loan program, so students with no financial need can even qualify for this aid program. Interest on an unsubsidized loan accrues from the date of disbursement and continues throughout the life of the loan. Interest that accrues on unsubsidized loans must be paid by the borrower, however, it is strictly voluntary to make interest payments while a student is enrolled in school. The borrower may make periodic payments (monthly or quarterly, depending on the lender's policy) or allow the interest to accrue throughout enrollment and have the interest "capitalized" (added to the loan's principle balance). While capitalization eliminates having to make payments while in school it will increase the total cost of a loan. Read more about unsubsidized Federal Stafford loan.
Undergraduate Student
A student who is enrolled in a Bachelors program.
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
Interest rates that can fluctuate. Most variable-interest loans have an annual or maximum cap, which prevents them from exceeding a set amount within a certain period of time.
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.