Financial Aid

Academic Year – This is a measure of the academic work to be accomplished by the
student. The University defines its own academic year, but the federal regulations set
minimum standards for the purpose of determining Student Financial Aid awards. Unlike
the award year, an academic year does not have to begin and end at the same time for all
students.

Accrual Date – The day interest charges begin to be added to the loan balance.

Accruing Interest – The adding of interest to a loan amount.

Adjusted Gross Income (AGI) – Taxable income after all allowable adjustments are
made.

Assets – Cash on hand – savings, trusts, stocks, bonds, other securities such as real
estate, income-producing property, business equipment, and business inventory. Assets
are used to determine expected family contribution (EFC).

Athletic Scholarship –A scholarship based in any degree on athletic ability.

Award Authority – The university department or program responsible for selecting the
recipient of the scholarship, fellowships, or monetary award.

Award Notification – A letter notifying financial aid applicants of the assistance being
offered. The letter specifies the type of aid offered and the amount offered. A students
rights and responsibilities and the conditions that govern the award are included with the
award letter. The notification offers the student an opportunity to accept or reject the aid
offered.

Award Year – A financial aid term consisting of fall semester, spring semester, spring
semester, Summer I and Summer II. The year crosses two fiscal years and two calendar
years.

Borrower – The person who assumes legal obligations for the repayment of the loan
principal plus interest. In some cases the borrower is the student, for instance, when a
student is awarded a Federal Perkins of Federal Stafford Loan. In the case of Plus loans
the borrower is the parent.

Budget - The estimated cost of attendance (COA) for an institution usually includes
tuition, fees, books, supplies, room and board, personal expenses, and transportation.
Other expenses may be included depending on circumstances.

Citizen/Eligible Non-Citizen – A person is generally considered a legal citizen if they are
born in the U.S.A.. or the child of a U.S. Citizen, or pass the requirements of the laws and
regulations to establish citizenship. A person is generally considered a legally eligible
non-citizen he or she is 1) a U.S. permanent resident and has an Alien Registration
Receipt Card (I-551); 2) a conditional permanent resident (I-551C); or 3) an other non-
citizen with an Arrival-Departure Record (I-94) from the U.S. Immigration and
Naturalization Service (INS) showing any one of the following designations: "Refugee,"
"Asylum Granted," "Indefinite Parole," "Humanitarian Parole", or "Cuban-Haitian
Entrant."

Consolidation – Combining two or more Federal Stafford or Perkins loans into one new
loan that has a longer repayment term and a single monthly payment that is smaller than
the sum of previous monthly payments. By consolidating eligible federal student loans
and extending the repayment term ( up to 30 years, depending on the total loan amount),
repayment can be easier. Consolidation can over time add a significant amount to the
overall interest paid. Usually done in the student's last semester.

Cost of Attendance – The student’s cost of attendance includes not only tuition and fees,
but also living expenses while attending school. The school uses guidelines established
by federal regulation to determine the cost of attendance. A student’s cost of attendance
is compared to the expected family contribution to evaluate the student’s need for
financial aid.

Default – A borrower’s failure to repay according to the terms agreed upon when the
promissory note was signed. Consequences of default are wide spread. Assets, including
Internal Revenue Service (IRS) refunds may be seized and the borrower’s credit record or
history is negatively affected. Student loan borrowers cannot get out of default until they
pay back their loan in full, sign new loan agreements, or reschedule their debt. If an
individual is in default they are also ineligible for additional federal student aid, including
grants and loans.

Deferment - An authorized period of time during which a student loan borrower may
postpone making payments on the principal plus interest.

Dependency Status - A student’s dependency status is determined by guidelines
established by the federal government and indicates to what degree the student has access
to the parent’s Financial resources.

b.) Dependent Student Status – For an individual to be considered your dependent,
they must live with you, and you must provide them with more than half their financial
support. Spouses do not count as dependents in the Federal Methodology.

FFELP Subsidized Loans – A Direct Subsidized loan is awarded on the basis of
financial need. The borrower will not be charged any interest before repayment begins or
during authorized periods of deferment. The federal government subsidizes the interest
during these periods.

FFELP Unsubsidized Loans - A Direct Unsubsidized loan is not awarded on the basis of
need. The borrower will be charged interest from the time the loan is disbursed until it is
paid in full. If the borrower allows the interest to accumulate, it will be capitalized – that
is, that is the interest will be added to the principal amount of your loan and additional
interest will be based upon the higher amount.

Disbursement – The process by which financial aid funds are made available to students
for use in meeting educational and related living expenses. Funds may be disbursed
directly to the student or applied to the student’s account.

Entrance/Exit Interviews – Counseling sessions borrowers are required to complete
before receiving their first federal loan disbursement and prior to leaving school.
Estimated Financial Assistance (EFA) – The amount of student financial aid the student
can expect from federal, state, school, or other sources, including grants, loans, or need-
based work programs.

Expected Family Contribution (EFC) – The amount that a student and his or her parents
can reasonably be expected to contribute toward college costs, computed according to
federal guidelines and/or alternative guidelines. EFC is subtracted from the total cost of
attendance to arrive at an estimate of a student’s unmet need. EFC may be divided into
“parents’ contribution” (PC) and “student’s contribution (SC).

The Family Educational Rights and Privacy Act (FERPA) (20 U.S.C. § 1232g; 34 CFR
Part 99) – Is a Federal law that protects the privacy of a student's education record. The
law applies to all schools that receive funds under an applicable program of the U.S.
Department of Education

Federal Family Education Loan Program (FFELP) – Education loans provided by
private lenders and guaranteed by the federal government. Subsidized and Unsubsidized
Stafford Loans and Plus Loans are included.

Federal Methodology (FM) – The formulas according to which a student’s eligibility for
Federal Title IV Funds is determined. The formulas take into account income, some
assets, expenses, family size, and other factors.

Federal Pell Grant Program – A Federal Pell Grant, unlike a loan, does not have to be
repaid. Generally, Pell Grants are awarded only to undergraduate students who have not
earned a bachelor’s or professional degree. (A professional degree is usually earned after
earning a bachelor’s degree in a field such as medicine, law, or dentistry.) In some cases,
a student may receive a Pell Grant for attending a post-baccalaureate teacher certificate
program. For many students, Pell Grants provide a foundation of financial aid to which
other aid may be added.

Federal Perkins Loan Program – A Federal Perkins Loan is a low-interest (5 percent)
loan for both undergraduate and graduate students with exceptional financial need. The
school is the lender. The loan is made with government funds with a share contributed
by the school. The borrower must repay the loan to the school.

Federal Stafford Loans – Federal Stafford Loans are made to students through two loan
programs: Schools that participate in the Direct Loan Program allow their students to
borrow directly from the federal government. Schools that participate in the Federal
Family Education Loan Program allow private lenders to provide the funds.

Federal Supplemental Education Opportunity Grant (SEOG) –The SEOG is available
to undergraduate students who demonstrate exceptional need, according to the results of
the Free Application for Federal Student Aid.

Federal Work Study – Federal Work-Study is an award that allows a student to take a job
that works around their class schedule. The student will receive a paycheck monthly for
the hours they have worked. The student cannot earn more in the school year than their
Federal Work-Study award amount. Earnings are not applied to the Student's bill and are
generally used for incidentals, though the student may save their earnings for future
college bills. Students must demonstrate financial need to be considered for this award.
Fellowship – Generally for the benefit of a graduate student to aid in the pursuit of study
or research.

Financial Aid – Any amount paid or Benefit provided toward a student's educationally
related expenses. Educationally related expenses include: Tuition and fees, room and
board, books travel expenses, dependent care, study abroad, expenses related to student's
disability, personal expenses, and miscellaneous expenses. If payment is made as a result
of the individual's employment in a job,the payment is not considered financial aid.

Financial Aid Award – An offer of financial or in-kind assistance to a student attending a
postsecondary educational institution. The award may be in the form of one or more of
the following types of financial aid: repayable loans, an non-repayable grant and/or
scholarship, and/or student employment.

Financial Aid Package – A combination of aid from several sources and/or several
types. Typically a student receives a package that includes, both gift aid and self-help
aid, some public and some private.

Financial Need – The difference between what it costs to attend a particular college and
the amount that a student and his/her family can afford to pay towards those expenses.
Sometimes also called “demonstrated financial need”. The amount that an applicant can
be expected to contribute is measured according to standardized formulas. A student is
generally eligible for aid equal to the amount of his/her financial needs, although an
institution does not always have sufficient funds to meet full need. (See also Estimated
Family Contribution, Federal Methodology, and Institutional Methodology)

Free Application for Federal Student Aid (FAFSA) – A form distributed and processed
by the United States Department of Education, used in applying for all Federal Title VI
student aid programs, including Pell Grants, Stafford Loans, and the campus-based
programs( SEOG, Work-Study, and Perkins Loans). The FAFSA collects the
information required to determine need and eligibility according to the Federal
Methodology. It is widely available in high schools, postsecondary financial aid offices,
and can be completed on the web at www.FAFSA.ed.gov**. It may also be obtained by
writing to the Federal Student Aid Information center, P.O. Box 84, Washington, D.C.
20044

General Education Development (GED) Certificate – A certificate students receive if
they’ve passed specific approved high school equivalency test. Students who don’t have a
high school diploma but who have a GED may still qualify for federal student aid. A
school that admits students without a high school diploma must make a GED program in
the vicinity of the school available to these students and must inform them about the
program. Students who pass an approved-to-benefit (STB) test may also be qualified. An
applicant without a high school diploma or its recognized equivalent can be eligible for
funds if she or he…. 1.) Passes an independently administered ATB test approved by the
Department of Education and used for determining the student’s ability to benefit from
postsecondary education. Or 2.) Enrolls in a school that participates in a process that has
been both prescribed by the state in which the school is located and approved by the
Department.

Grace Period – A specified period of time after a student leaves school or drops below
half-time status during which he or she is not required to make payments on either
principle or interest. The grace period is typically six to nine months, depending on the
type of loan. The Federal Subsidized Stafford Loan, for example, has a six-month grace
period.

Gross Income – Income before taxes, deductions and allowances have been subtracted.
Guarantor – A state, regional, or national organization that acts as an agent for the
federal government in the administration and insurance of FFELP loans made by private
lenders. Also called “guarantee agency’ or “guaranty agency”
Half time – Enrollment in only half of the number of hours per semester required for
full-time enrollment status. At PAU full time is 12 hours per semester, so half-time is 6
hours per semester. Most financial aid awards are adjusted proportionately with
enrollment status, so that half-time means eligibility for only half of the award. Some
scholarships and grants require full time enrollment, where as most loans require only
half-time or higher enrollment for full awards.

~A student must be attending school at least halftime to be eligible to receive a
Federal Family Education Loan. Half time enrollment is not a requirement to receive aid
from the Federal Pell Grant, FSEOG, or Federal Work-Study,.

Income – The amount of money received from employment (salary, wages, tips), profit
from financial instruments (interest, dividends, capital, gains) or other sources (child
support, Social Security, pensions, disability)

Independent Students – For financial aid purposes, an independent student is one who is
at least 24 years old as of January 1st, or is married, or has a legal dependent other than a
spouse, or is a veteran of the U.S. armed Forces, or is a graduate or professional student,
or is an orphan or ward of the court (or was a ward of the court until age 18). All other
students are considered dependent. Parental refusal to provide support for a child’s
education is not sufficient for the child to be declared independent.

Institutional Methodology (IM) – Formulas used by many colleges, universities,
graduate and professional schools, and private scholarship programs to determine an
applicant’s need and eligibility for their own private, non federal student aid funds. While
similar in some respects to the Federal Methodology (see above), the Institutional
Methodology differs in others. For example, the IM takes home equity into account and
includes a minimum expected contribution from the student, but also permits more
generous treatment of medical/dental expenses, elementary, and secondary school tuition
paid, and child support paid.

Interest – The fee charged to a borrower for the use of someone else’s money, computed
as a percentage of what is borrowed. The interest rate may remain constant throughout
the life of the loan (i.e., variable).

ISIR – Institutional Student Information Report—This is an electronic record sent to the
school of choice as a result of completing the Free Application for Student Financial Aid
(FAFSA). See SAR for more information.

Legal Guardian – An individual appointed by the court to be a legal guardian of a person
and to whom the court specifically requires use his/her own financial resources to support
that person.

Loan Consolidation – A new loan that is created by combining the repayment of two or
more student loans to reduce the amount of monthly payments and extend the loan
repayment term.

Merit-Based Scholarship – A scholarship awarded primarily on the basis of the student's
academic achievement, special talent, and/or community service.

Methodologies – Need analysis formulas used to determine eligibility for student aid.
There are three financial aid methodologies; the Federal Methodologies, and the
Simplified Methodologies (or Simplified Need Test).

Minimum Monthly Payment – The minimum amount a borrower must pay each month
on each separate loan and credit-card account. Sometimes abbreviated as “MMP.” The
amount of the minimum monthly payment is based on the total amount and the
repayment term; on student’s loans, the MMP is usually $50 a month per loan.

Monetary Award/Prizes – Generally an amount less than $500 paid for the benefit of a
student. Awards generally have not been established through written donor agreements
with the university (Office of Univeristy Advancement). Awards are often funded by
departments through trust funds and include prizes (e.g., First Place Poetry Prize)
Need – The difference between cost of college attendance and a student’s (and the
student’s parents’) ability to pay the cost: Cost of attendance – Expected family
contribution = Financial need

Need Analysis – The process that determines a student’s financial need by analyzing
financial information provided by the student and his or her parents (or spouse, if
applicable) on a financial aid form. The need analysis is the first step in applying for
financial aid. All students must file a FAFSA (Free Application for Federal Aid) to apply
for need-based federal financial aid programs. Some schools, particularly private
colleges, also require students to fill out other forms ( see institutional methodologies) for
aid funded by that college. For state financial aid programs, the FAFSA may or may not
be the only form a student needs to submit. Applicants should always check with state
agencies for other forms they may need to complete, such as the CSS/Financial Aid
PROFILE at www.collegeboard.org**.

Need-based Aid – Financial aid that is awarded based on a student’s financial situation.
Most government’s student financial aid is need based. Need-based aid can be awarded in
the form of grants, loans, or work-study pay.

Need-Based Scholarship – A scholarship awarded primarily on the basis of the student's
financial need.

Non-Taxable Income – All income received that is not reported to the Internal Revenue
Service (IRS) or is reported but excluded from taxation. Such income would include but
is not be limited to any untaxed portion of Social Security benefits, welfare payments,
untaxed capital gains, interest on tax-free bonds, IRA’s, Keogh, dividend exclusion,
military and other subsistence and quarters allowances, retirement contributions and child
support.
Origination fee – A processing fee charged by the lender of the loan that is deducted
from the proceeds of the loan before the loan disburses; partially offsets the
administrative cost of the Federal Loan Programs.

Outside Scholarship – A scholarship awarded by an outside agency that selects the
recipient and the agency does not specifically set aside funding for PAU students.

Overaward – Generally, any amount of campus-based aid or Federal Family Education
Loan that exceeds the student’s financial need or Cost of Attendance ( PELL Grant is
always the first award when adding up sources of funds in determining an over-awarded,
and is awarded based upon cost of attendance and need, and hence is never the reason for
an overaward).

Prepayment – Paying off some or all of a loan in order to reduce the amount of interest
that must otherwise be paid.

Promissory Note – The binding legal document a borrower signs when borrowing a
student loan. It lists the conditions under which the borrower is borrowing and the terms
under which the borrower agrees to pay back the loan. It will include information on how
interest is calculated and about deferment and cancellation provisions. It’s very important
to read and save this document because the borrower will need to refer to it later when
beginning repayment of the loan.

Refund – The amount due a student who withdraws or fails to pursue his/her course of
study when funds have been paid to the institution. When an institution determines that a
student is due a refund, if that student has received financial aid funds, a portion of the
refund must be allocated to the program(s) from which the student received aid.
Repayment schedule – Description of the borrower’s monthly payments, interest rate,
total repayment obligation, due dates, and length of time before repaying the loan.
Satisfactory Academic Progress – To be eligible to receive federal student aid, a student
must maintain satisfactory academic progress toward a degree or certificate. The student
must meet the school’s written standard of satisfactory progress. The student should
check with the school to find out about its standard.
Scholarships Awarded by Off-Campus Agencies – Scholarships awarded by off-campus
agencies that have designated funding for PAU students. Generally, these agencies
select the recipient's and the funds are not university controlled.

Selective Service Registration – If required by law, a student must arrange to register
with the Selective Service to receive federal student aid. The requirement to register
applies to males who were born on or after January 1, 1960, are at least 18 years old, and
are not currently on active duty in the U.S. Armed Forces. (Citizens of the Federal States
of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau are exempt
from registering.)

Students contribution (SC) – The amount that a student can reasonable be expected to
contribute toward his or her own educational expenses, based on federal and/or
alternative guidelines. (See also “Dependency status” and Estimated Family
Contribution.

Subsidized Loan – The government pays the interest on the loan while the student is in
school, during the six-month grace period, and during any deferment period. Subsidized
loans are awarded based on financial needs and may not be used to finance the family
contribution.

Tuition – The amount of money colleges charge for instruction and use of facilities.
Room, Board, and fees are charged in addition to tuition, so the terms “tuition” and
“college cost” are not synonymous.

Untaxed Income and Benefits – From Worksheet A/B (page 8 of the paper FAFSA).
Worksheet A/B collects information about certain untaxed income and benefits. Any
income or benefits already reported elsewhere on the application are not include on
Worksheet A/B. Includes: deductible IRA and/or Keogh payments, untaxed Social
Security payments, benefits received on behalf of dependents, underpayments and
overpayments of benefits, housing allowances, other untaxed income and benefits, and
cash payments. For descriptions of these items click here.

Verification – A procedure whereby the school checks the information the student
reported on the financial aid application, usually by requesting a copy of the tax returns
filed by the student, and if applicable, the student’s spouse and/or parents(s). Many
school conduct their own form of verification. In addition, the school must verify
students selected through the federal central processing system.