Glossary
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Academic Year – A period of time defined for credit hour schools as a minimum of 30 weeks instructional time in which a full time student is expected to complete at least 24 semester or trimester hours, or 36 quarter hours. For a clock hour school the period of time is a minimuim of 26 weeks in which a full time student is expected to complete at least 900 clock hours.
Administrative Wage Garnishment – Process by which a guarantor, under federal law, may intercept a portion of the wages of a borrower with a defaulted FFELP loan.
Adverse Credit – A derogatory credit status which, in turn, does not meet established status criteria needed in order to approve a PLUS Loan.
Aggregate Loan Limit – The total amount of loan proceeds for which a borrower is eligible by loan and borrower type throughout the student’s academic career.
Amortization – The process of gradually repaying a loan over an extended period of time through periodic installments of principal and interest.
Annual Loan Limit – The maximum loan amount that can be approved for a borrower during an academic year.
Anticipated Graduation Date – The date a student is expected to complete the academic program requirements.
Attend Code Change Report (ACCR) – A monthly report generated by ASA to inform lenders and servicers about students who have withdrawn, graduated or have ceased to be enrolled at least half-time. Lenders and servicers require this information as they need to know when to verify a student’s entrance into repayment of the interest and/or principal of the loan.
Automated Clearing House (ACH) – A pre-authorized, electronic method of transferring funds between accounts.
Bankruptcy – A person who declares bankruptcy, is found to be legally insolvent and his property is distributed among his creditors or otherwise administered to satisfy the interests of his creditors. Federal student loans, however, cannot normally be discharged through bankruptcy.
Billed – Refers to FASTFUND loans. Once a loan has been approved and scheduled for disbursement, a lender is “billed” on the weekly FASTFUND invoice for the guarantee fee and the net disbursement amount of the loan. See “FASTFUND Schedule.”
Borrower – A student or parent/legal guardian who, by signing the Application and Promissory Note, is legally responsible for repayment of the loan.
Bursar’s Office – Bursar’s Office or Student Accounts Office is the school office that is responsible for the billing and collection of student charges.
Campus-Based Aid – Federal financial aid programs that are administered by eligible schools. The federal government provides the school with a fixed annual allocation, which is awarded by the financial aid administrator to needy students. Such programs include the Perkins Loan, Supplemental Education Opportunity Grant (SEOG) and Federal Work-Study.
Cancellation – The annulment of a loan or portion of a loan.
Capitalization – The practice of adding unpaid interest to the principal balance of a loan, thereby increasing the amount of the loan.
Capitalized Interest – Accrued interest added to the borrower’s outstanding principal.
Claim – A lender request to the guarantor for reimbursement of a loan due to either the borrower’s consistent, consecutive delinquency or failure to begin payment. The lender can also request reimbursement of losses due to the borrower’s death, disability, default or bankruptcy; school closure; or false certification of the borrower’s eligibility.
Cohort Default Rate – The percentage of defaults to total borrowers calculated for schools, guarantors and lenders within a given fiscal year.
Collection Agency – A company that specializes in the collection of delinquent or defaulted loans. The lender often hires a collection agency to recover defaulted loans.
The College Board – A nonprofit educational association of colleges, universities, educational systems and other educational institutions that provides testing services, financial aid software and policy recommendations to the higher education community.
College Work-Study (CWS) – College Work-Study is simply a part time job on campus. This term is sometimes erroneously used to refer to the Federal Work-Study Program.
Comaker – 1 of 2 married individuals who jointly borrow a Federal Consolidation loan, each of whom is eligible and is held jointly and severally liable for the loan’s repayment. The term also refers to 1 of 2 parents who were joint borrowers of a PLUS loan made prior to April 16, 1999.
Consolidation Loan – A consolidation loan combines several student loans into one bigger loan from a single lender. The consolidation loan is used to pay off the balances on the other loans.
Consummated – A loan or disbursement is consummated if the proceeds (check and EFT) have been negotiated or credited the borrower or student’s account at his or her school.
Cost of Attendance (COA) – An estimate of the student’s educational expenses for a period of enrollment.
Credit Rating – A credit rating is a systematic evaluation of the ability of a borrower to handle loans and other types of credit.
Cumulative Loan Limit – See Aggregate Loan Limit.
Debit Roster – Refers to FASTFUND loans. A school with a debit roster (having more cancellations in one week than disbursements) has a negative balance and must return that balance to ASA so that ASA, in turn, can return the funds to the lenders.
Default – The failure of a borrower to make regular payments when due for a period of at least 270 days, or to meet other terms of the promissory note, whereby the loan is no longer in a “repayment” state, but due in full to the lender.
Default Aversion Assistance – The assistance provided to a lender by the guarantor in order to prevent a delinquent loan from defaulting.
Deferment – A period of time during repayment in which the borrower, upon meeting certain conditions, is not required to make payments of loan principal.
Delinquency – Failure to make a full scheduled payment by the due date.
Department of Education – The branch of the Federal Government responsible for administering education programs throughout the country.
Dependent Student – A student who relies on their parent(s) or legal guardian(s) for support and who does not meet the federal criteria of a self-supporting student.
Direct Loans – The William D. Ford Federal Direct Loan Program (a.k.a. the Direct Loan Program), is a federal program where the school becomes the lending agency and manages the funds directly, with the federal government providing the loan funds. The terms for Direct Loans are generally the same as for the Federal Family Education Loan Program (FFELP).
Disbursement – The release of loan funds to the school for delivery to the borrower.
Disbursement Date – For FASTFUND lenders and servicers, the disbursement date is the date that the lender funds ASA for the disbursement. The lender can begin billing the U.S. Department of Education for interest and special allowance either on the date the funds are transferred to ASA or 3 days before ASA sends the funds to the school whichever is later. For non-FASTFUND lenders, the disbursement date is the date that the disbursement is issued to the school.
Due Diligence – The procedures required for attempting to a satisfactorily resolve a delinquency and prevent a default in accordance with federal regulations. The lender must document the performance of these attempts, and the attempts must be at least as forceful as those generally sued for consumer loans.
Electronic Data Exchange (EDE) – EDE and EDExpress are programs used by participating schools to electronically receive SARs from the federal processor. At some schools EDE allows students to electronically file their Free Application for Federal Student Aid (FAFSA).
Electronic Funds Transfer (EFT) – Refers to money transactions performed by any electronic means (i.e. Fedwire, ATM and ACH).
Eligible Non-Citizen – Someone who is not a U.S. citizen but is nevertheless eligible for Federal student aid. Eligible non-citizens include U.S. permanent residents who are holders of valid green cards, U.S. nationals, holders of form I-94 who have been granted refugee or asylum status, and certain other non-citizens. Non-citizens who only hold a student visa or an exchange visitor visa are not eligible for Federal student aid.
Eligible School – A post-secondary institution of higher education or a post-secondary vocational school declared eligible by the U.S. Department of Education to participate in the FFELP.
Endorser – A signer of a promissory note who is secondarily liable for a loan obligation. A lender may require a PLUS borrower with adverse credit to obtain a creditworthy endorser in order to receive the loan.
Enrolled – The status of a student who has completed the registration requirements (except for the payment of tuition and fees) at the school the student is attending or will attend.
Enterprise – ASA’s guaranty processing system.
Entrance Interview – A loan repayment and debt management session required by federal regulations, that is arranged by and conducted by the school for students receiving their first federally guaranteed student loans associated with attendance at that school. The entrance interview must be conducted before the student can receive loan proceeds.
Estimated Family Contribution (EFC) – The school’s estimate of the amount which the student, student’s spouse or family may be reasonably expected to contribute toward the post-secondary education during an academic year.
Estimated Financial Assistance (EFA) – The school’s estimate of the amount of federal, state or other scholarship, grant, work or loan program assistance that a student has been or will be awarded for a loan period.
Exit Interview – A loan repayment and debt management counseling session required by federal regulation that is arranged by and conducted by the school for all graduating students or students who are leaving school.
Fair Debt Collections Practices Act – Specific laws and guidelines which govern the methods and conduct an institution must follow when collecting funds from delinquent and default borrowers.
FASTAP Application – A pre-printed Application and Promissory Note sent to borrowers for signature. Schools send certification and eligibility information to ASA, and ASA creates an incomplete record on the guaranty system and issues a FASTAP to the borrower.
FASTFUND – A loan disbursement service whereby ASA disburses loan proceeds by check and EFT to schools on behalf of lenders.
FASTFUND Results – Once a lender funds ASA, a variety of results files are created and sent to servicers. If the disbursement is made, a variety of results files are created and sent to schools. These results files contain all disbursement related information for a given disbursement.
Federal Default Fee –A fee charged by a guarantor for each loan it guarantees. In most cases, the lender reduces the amount of the loan proceeds by this amount, and the fee is remitted to the guarantor. The Higher Education Act limits this fee to one percent of the loan principal. Previously called the guarantee fee.
Federal Family Education Loan Program (FFELP) – Loan program authorized by the Higher Education Act of 1965, including the Stafford, PLUS, SLS and Consolidation Loans. These loans are guaranteed against default by the federal government.
Federal Methodology (FM) – The need analysis formula used to determine the Estimated Family Contribution (EFC). The Federal Methodology takes family size, the number of family members in college, taxable and nontaxable income, and assets into account. Unlike most Institutional Methodologies, however, the Federal Methodology does not consider the net value of the family residence.
Federal Processor – Is the third-party contractor organization that processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and uses it to compute eligibility for federal student aid.
Federal Work-Study (FWS) – A program that provides undergraduate and graduate students with part-time employment during the school year. The federal government pays a portion of the student’s salary, making it cheaper for departments and businesses to hire the student. For this reason, work-study students often find it easier to get a part-time job. Eligibility for FWS is based on need. Money earned from a FWS job is not counted as income for the subsequent year’s need analysis process.
Fellowship – A form of financial 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 – Funds that are 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 Aid Administrator (FAA) – A college or university employee who is charged with the administration of financial aid. Some schools call FAAs “Financial Aid Advisors” or “Financial Aid Counselors.”
Financial Aid Package – The financial aid package is the complete collection of grants, scholarships, loans and work-study employment from all sources (federal, state, institutional and private) offered to a student to enable them to attend the college or university. Note that unsubsidized Stafford loans and PLUS loans are not considered need based aid, since these financing options are available to the family to help them meet the Estimated Family Contribution (EFC).
Forbearance (FORB) – A period of time during which the borrower is permitted to temporarily cease making payments or reduce the amount of the payments. The borrower is liable for the interest that accrues on the loan during the forbearance period. Some forbearances are entitlements for eligible borrowers; others are granted at the discretion of the lender.
Free Application for Federal Student Aid (FAFSA) – The form the student must complete to apply for Federal Title IV financial assistance, including Stafford Loans.
Grace Period – The period of time after the student ceases to be enrolled at least half-time and before full repayment begins.
Graduated Repayment – Under a graduated repayment schedule, the monthly payments are smaller at the start of the repayment period, and gradually become larger. The graduated repayment schedule cannot exceed 10 years (or 25 years for borrower eligible for extended repayment schedule), excluding in-school, grace, deferment or forbearance.
Graduate Student – A student who is enrolled in a post-baccalaureate program of study at a qualified institution of higher education.
Grant – A grant is a type of financial aid that the student does not have to repay.
Guaranteed – A loan is considered guaranteed (approved for disbursement) once all information on the Application and Promissory Note has met ED and guarantor requirements.
Guaranteed Student Loan (GSL) – The Guaranteed Student Loan is the old name for the subsidized Stafford Loan.
Guaranty Agency (Guarantor) – A state or private non-profit organization which has an agreement with the Secretary of Education to administer a loan guarantee program under Title IV, Part B of the Higher Education Act of 1965, as amended.
Holder – Refers to an eligible lender that owns a particular FFELP loan.
Income – Sensitive Repayment Schedule – A repayment schedule for some FFELP loans under which the borrower’s monthly payment amount is adjusted annually, based solely on the borrower’s expected total monthly gross income received from employment and other sources during the course of the repayment period.
Independent Student – A student who is either at least 24 years old, an orphan or ward of the court, veteran or active duty member of the U.S. Armed Forces, a graduate or professional student, a married person or a person that is economically responsible for legal dependents other than a spouse.
Institutional Methodology – If a college or university uses its own formula to determine financial need for allocation of the school’s own financial aid funds, the formula is referred to as the Institutional Methodology (IM).
Institutional Student Information Report – The Institutional Student Information Report (ISIR) is the name for the electronic version of Student Aid Reports (SARs) delivered to schools by EDExpress.
Interest – The charge made to the borrower for the use of a lender’s money.
Invoice – Refers to FASTFUND loans. The invoice is the vehicle used to bill lenders for funds for new disbursements with specific preferred disbursement dates. Lenders wire the net disbursement amount, the federal default fee, and the processing fees to ASA. The invoice is also used to return funds to lenders for cancellations. Invoice may also refer to the monthly guarantee billing issued to non-FASTFUND lenders.
IRS Offset – An interception by the U.S. Internal Revenue Service (IRS) of the income tax refund of a borrower with a defaulted FFELP loan. The same interception of funds can occur to Social Security and retirement benefits. The amount offset, less a processing fee, is forwarded to the Department by the guarantor and ultimately applied to the defaulted loan.
Late Disbursement – Loan proceeds that are disbursed within 120 days after the end date of the loan period or date that the student ceased to be enrolled at least half-time. The school, in order to request late disbursement funds, must meet specific rules and regulations.
Leave of Absence – Approved leaves of absences are breaks in enrollment, not including a semester or spring break that are requested by the student and approved by the school based upon the school’s published leave of absence policy. Approved leaves of absences may total no longer than 180 days within an academic year.
Lender – A lender is a bank, credit union, savings and loan association, or other financial institution that provides funds to the student or parent for an educational loan.
Lender’s Interest and Special Allowance Request and Report (LARS Report) – The federal form lenders must submit on a quarterly basis to the U.S. Department of Education to report loans eligible for interest and special allowance benefits. Also ED Form 799
Loan Period – An attendance period or periods within an academic year for which an applicant intends to use student loan proceeds.
Loan Processing Fee – An allowance, paid by the U.S. Department of Education to guarantors to offset the costs of administering the guarantee process, based on a certain percentage of the total dollar amount of loans guaranteed within a specific time period.
Magic – ASA’s self service help desk that utilizes “trouble tickets” to report and track technical support needs.
Master Promissory Note (MPN) – A promissory note under which the borrower may receive loans for either a single period of enrollment or multiple periods of enrollment.
National Association of Student Loan Administrators (NASLA) –Composed of guarantors American Student Assistance (ASA), Kentucky Higher Education Assistance Authority, Texas Guaranteed Student Loan Corporation (TG), and Great Lakes Higher Education Guaranty Corporation, NASLA’s purpose is to reinvent the guaranty agency function by moving agencies away from the role of “insurer” to a fee-for-service model.
National Council of Higher Education Loan Programs (NCHELP) – A national committee of lenders, guarantors, and other financial aid administrators that advises and helps develop rules and regulations under FFELP and FDSLP.
Needs Analysis – A standardized assessment of the ability of a student and/or a student’s family to contribute toward education expenses.
Network Engineering and Telephony Systems (NETS) – A group within Information Systems responsible for infrastructure at ASA (phone, voicemail, e-mail, and print servers, Internet, network, VPN, etc).
No Interest Loan (NIL) – A Massachusetts state sponsored loan program administered by the State Scholarship Office.
Origination Fee – A percentage of the gross disbursement amount charged by the U.S. Department of Education to offset the government’s cost of administering the FFELP.
OSFA (Office of Student Financial Assistance) – The Massachusetts state agency that administers the NIL and state scholarship programs.
Overaward – An amount of aid awarded in excess of demonstrated financial need.
Paid in Full – The full payoff of a loan’s principal and interest obligations.
.pdf (Portable Document Format) – A document format that uses Adobe Acrobat as the decoder/encoder. A freeware version of Adobe Acrobat may be downloaded from www.adobe.com.
Pell Grant – The Pell grant is a federal grant that provides funds of up to $4,050 based on the student’s financial need.
Perkins Loan – Formerly the National Direct Student Loan Program, the Perkins Loan allows students to borrow up to $4,000/year (up to $20,000 total) for undergraduate school and $6,000/year for graduate school (up to $40,000 total). The Perkins Loan has a fixed interest rate of 5% and is awarded by a financial aid administrator to students with exceptional financial need. The student must have completed the Free Application for Federal Student Aid. The interest on the Perkins Loan is subsidized while the student is in school.
PLUS Loans – This loan type is for natural or adoptive parents or stepparents (in some cases) of eligible dependent undergraduate students and eligible graduate or professional students themselves enrolled at least half-time to finance their own education.
Pre-Approval Services – An application completion service whereby ASA obtains any missing information or corrects information from the borrower or school and assumes the lender’s signature on each application processed.
Principal Balance – The outstanding amount of the loan, on which the lender charges interest.
Private Loans – Private loans are education loan programs established by private lenders to supplement the student and parent education loan programs available from federal and state governments.
Production Script – Special software program that adds, modifies or deletes data from the Enterprise system database(s).
Professional Judgment – The flexibility given to a financial aid administrator to make adjustments to student eligibility on a case-by-case basis.
Promissory Note – A legally binding agreement the borrower signs to obtain a loan under the FFELP, in which the borrower promises to repay the loan, with interest, in periodic installments.
Refund – The difference between the amount the student paid toward institutional charges and the amount the school can retain under the appropriate (e.g., institutional, state, or accrediting agency) refund policy.
Rehabilitation – A process by which a borrower may bring a FFELP loan out of default by adhering to specified repayment requirements. In most cases, borrowers who regain eligibility (through successful rehabilitation and re-entering repayment) would be eligible for additional Title IV assistance.
Release – Enterprise software update that contains systems enhancements, upgrades, and “bug” fixes.
Repayment Terms – The number and monthly dollar amount of payments disclosed by the borrower to the lender.
Roster – Refers to FASTFUND loans. The roster is the vehicle used to notify schools of their new disbursements with specified preferred disbursement dates. Schools can receive an EFT roster and/or a check roster. The EFT roster is also used to notify schools of loan cancellations.
Satisfactory Academic Progress (SAP) – The academic progress required of a student in order to receive financial aid. Each school must establish a standard for evaluating a student’s efforts to achieve an educational goal within a given period of time.
Secondary Markets – Agencies with the authorization to buy student loans from lending institutions.
Selective Service – Selective Service is registration for the military draft. Male students who are U.S. citizens and have reached the age of 18 and were born after December 31, 1959 must be registered with Selective Service to be eligible for federal financial aid.
Server – A computer that provides client PCs with access to files, printers or other services as shared resources to a computer network.
Servicer (or Third-Party Servicer) – An entity that enters into a contract with a program participant to administer any aspect of its participation in a Title IV program.
Simple Interest – Simple interest is interest that is paid only on the principal balance of the loan and not on any accrued interest. Simple interest is calculated by multiplying the amount of principal by the interest rate by the amount of time it is accruing. Most federal student loan programs offer simple interest. Note, however, that capitalizing the interest on a loan is a form of compounded interest.
Skip Trace – Diligent efforts to locate a borrower’s telephone number or address when such information is unknown or invalid.
Special Allowance – A percentage of the daily average unpaid principal balance, paid to a lender by the Department on an eligible Stafford, PLUS, SLS or Federal Consolidation loan. Special allowance payments act as an incentive for lenders to make education loans by, in effect, making up the difference between the interest rate charged to a FFELP borrower and market interest rates. The special allowance rate is set by statutory formula.
Student Status Confirmation Report (SSCR) – A report which verifies the enrollment and address statuses of students provided to guarantors by schools and transferred to lenders and servicers.
Subrogation – A transfer in the ownership of a defaulted loan from a guarantor to the U.S. Department of Education. Loans to be subrogated must meet criteria established and revised annually by the U.S. Department of Education.
Subsidized Loan – With a subsidized loan, such as the Perkins Loan or the Subsidized Stafford Loan, the government pays the interest on the loan while the student is in school, during the grace period and during any deferment periods. Subsidized loans are awarded based on financial need and may not be used to finance the family contribution. See also Unsubsidized Loan.
Supplemental Loan for Students – Supplemental Loan for Students (SLS) are federal loans for financially independent students. This program was eliminated in 1994 with the creation of the unsubsidized Stafford Loan program.
Temporarily Disabled – A borrower who, by reason of injury or Illness, cannot be expected to be able to attend an eligible education school or work and earn money during a period of at least 60 days needed to recover from the injury or illness.
Title IV – A section of the Higher Education Act that authorizes federal loan, work and grant education financial assistance programs.
Totally and Permanently Disabled – the condition of an individual who is unable to work and earn money or attend school due to an injury or illness that is expected to continue indefinitely or result in death.
Unconsummated Loan – The loan proceeds that the school returned to the lender prior to the borrower’s having cashed the check, or the school having applied the proceeds to the student’s account.
Unsubsidized Loan – A non-need based loan such as an unsubsidized Federal Stafford loan or a Federal PLUS loan. The borrower is responsible for paying the interest on an unsubsidized loan during the in-school, grace and deferment periods, in addition to repayment periods.
U.S. Department of Education (ED) – The U.S. Department of Education 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. For more information about these programs, please see U.S. Department of Education’s home page at www.ed.gov.
Voluntary Flexible Agreement (VFA) – A Voluntary Flexible Agreement is an agreement between a guarantor and the U.S. Department of Education to test new and innovative methods for carrying out the types of activities currently required of guaranty agencies to identify and demonstrate more efficient and effective means to manage the FFEL program.
Withdrawal Date – The date the student withdraws, as determined by the school. The requirements that the school must follow for determining the student’s withdrawal date depend upon whether the school is required to take attendance.
Write-Off – A loan amount for which there has been a total cessation of collection activity.
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