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Applicant Information Request (AIR)
An official form used by HESAA to request required information from a Tuition Aid Grant (TAG) applicant. HESAA uses this information to complete your state grant record and determine state grant eligibility.
Award Letter
Official document issued by a college’s Financial Aid Office. Lists all of the financial aid awarded to a student.
A person is declared bankrupt, when found to be legally insolvent and the person's property is distributed among creditors or otherwise administered to satisfy the interests of creditors. Generally, federal student loans cannot be discharged through bankruptcy.
The person who applies for a loan and receives the proceeds (or money) of the loan.
Borrower Benefits
Those favorable terms which lending institutions offer to borrowers. Borrower benefits may include reduced interest rates, discounted interest rates for automated payment, discounted origination fees, discounts for repeated on time payments, etc. Lenders that offer borrower benefits do so at their exclusive election and publish those benefits for review by borrowers.

Addition of unpaid interest to the principal balance of a loan which increases the total outstanding balance due.

See also interest capitalization.

An application made to a guarantor for payment of an insured student loan for loss of payment due to borrower death, total and permanent disability, bankruptcy, default, or school closure.
The activities and/or actions associated with getting payment on unpaid loan principal and interest from a borrower after that borrower defaults on the loan. The players in the loan process that could be taking these actions include lenders, guarantors, servicers, and collection agencies.
Combined Billing
Lenders (or servicers) generally offer a combined bill for all of a borrower's loans serviced by that lender/servicer so that the borrower only needs to make one payment per month for all of the loans.
Combining several federal (and possibly private) loans from multiple lenders into a single loan to reduce the monthly payment amount and/or increase the repayment period.
A person who signs the promissory note in addition to the borrower and is responsible for the obligation if the borrower does not pay. A cosigner must be able to pass a credit review and must live in the United States.
Cost of Attendance
Total amount it will cost a student to attend a particular school. This amount includes tuition and fees, room and board, books and supplies, and other educational related personal expenses.
Failure to repay a loan according to the terms agreed to when the borrower signed a promissory note for the loan. Default occurs at 180 days when the delinquency date is prior to 10/7/98, and 270 days when the delinquency date is on or after 10/7/98.
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.
Failure to make monthly loan payments when due. Delinquency begins with the first missed payment.
Dependent Student
A student who does not meet the eligibility requirements for an "Independent Student". Dependency status affects the maximum amount that a student may borrow in Stafford Loans and whether a parent may take out a PLUS Loan on behalf of the student.
The release of loan funds to the school for delivery to the borrower.  Disbursements are usually made in equal multiple installments.  Disbursements may be made electronically or by issuing a check. If a check is issued, it will be co-payable to the borrower and the school or payable to the parent borrower of a NJCLASS loan if the school does not participate in electronic funds transfer (EFT).
The release of a borrower from a loan obligation.
Exit Counseling
Students with Federal educational loans are required to receive counseling before they graduate or withdraw (i.e., leave school), during which the borrower's rights and responsibilities and loan terms and conditions are reviewed with the student. This session may be conducted online, by video, in person with the Financial Aid Administrator or Financial Aid Officer, or in a group meeting.
The Free Application for Federal Student Aid is the form that the student (and parents of dependent students) must complete to apply for federal and NJ State financial assistance, including Stafford Loans.
Federal Default Fee
The fee paid to the guaranty agency to insure the loan. This amount is deducted from the dollar amount of the loan.
Federal Work-Study (FWS) Program
This program provides part-time employment to post-secondary students to help pay their educational expenses.
The Federal Family Education Loan Program which includes Stafford, PLUS and Graduate PLUS Loans. These loans are financed by private lenders and guaranteed by the federal government.
Financial Aid Package
The total amount of financial aid a student is offered by the school. This information which includes grants, scholarships, work-study and loans is listed in the college’s financial aid "Award Letter".
Fixed Interest
On a fixed interest loan, the interest rate remains the same for the life of the loan.
Temporary cessation of regularly scheduled payments or temporarily permitting smaller payments than were originally scheduled.
Garnish Wages
If you default on your student loan, money may be withheld from your paycheck and paid to your lender on your behalf.
Grace Period
The six-month period that begins the day after a Stafford Loan borrower ceases to be enrolled at least half-time at an eligible school. During the grace period, payments of principal are not required.
Graduated Repayment
A repayment schedule where the monthly payments are smaller at the start of the repayment period and become larger later on.
A form of financial aid that doesn’t have to be repaid. Usually awarded to students based on financial need.

An insurance policy on the loan made by the guarantor to the lender if the borrower does not honor their repayment obligation. The guarantor will reimburse the lender and assume collection of the loan. A guaranty is used in student lending because the loan may be based solely on a signature and promise to repay - not always on credit criteria, cosigner, or collateral.

See also guaranty agency.

Guaranty Agency/Guarantor
State agency or private non-profit institution that insures student loans for lenders and helps administer the Federal Family Education Loan Program(FFELP).
Guaranty Agreement
The contract between a Guarantor (or Guaranty Agency) and a lending institution which allows the lending institution to participate in the Federal Family Education Loan Program (FFELP). The Guaranty Agreement provides for loans originated by a lending institution to be guaranteed by the guarantor that signed the guaranty agreement.
The institution that owns a loan.
Independent Student

A student who meets one or more of the following criteria: 

  • is at least 24 years old by December 31 of the financial-aid award year;
  • is an orphan or ward of the court;
  • is serving on active duty in the Armed Forces for purposes other than training;
  • is a veteran of the U.S. Armed Forces;
  • is a graduate or professional student;
  • is a married person;
  • has legal dependents other than a spouse;
  • is a student for whom the school’s financial-aid administrator determines and documents the student’s independent-student status based on the administrator’s professional judgment of the student’s unusual circumstances;
  • is or was an emancipated minor
  • is or was homeless
  • is or was after the age of 13 in foster care
  • is or was in a legal guardianship
  • has children for whom they provide more than half of their support
An amount, calculated as a percent of the principal loan amount, that is charged for borrowed money. See fixed interest and variable interest.
Interest Capitalization
Addition of unpaid interest to the principal balance of a loan which increases the total outstanding balance due. See also capitalization.
Interest-Only Payment
A payment that covers only accrued interest owed on a loan and none of the principal balance. Interest-only payments do not prohibit borrowers from making additional or larger payments at any time if the borrower desires.
The organization that funds education loans for students and parents under the FFELP.

LIBOR is the interest rate that banks charge each other for one-month, three-month, six-month and one-year loans. LIBOR is an acronym for London InterBank Offered Rate. This rate is that which is charged by London banks, and is then published and used as the benchmark for bank rates all over the world.


LIBOR is compiled by the British Bankers Association (BBA), and is published 11 am each day in conjunction with Reuters. It is comprised from a panel of banks representing countries in each currency.

LIBOR v. APR (Annual Percentage Rate)
APR stands for Annual Percentage Rate. LIBOR stands for London Interbank Offered Rate. The main difference is that in most cases, a loan with a predetermined APR will never adjust. A loan that uses the LIBOR to calculate rate can adjust regularly and dramatically. A LIBOR student loan can also be called an adjustable loan, depending on the language in the contract.
A type of financial aid that is available to students and their parents. Student loan programs have varying interest rates and repayment provisions. An education loan must be repaid.
Loan Counseling
Students with federal educational loans are required to receive counseling before they receive their first loan disbursement and before they graduate or withdraw, during which the borrower's rights and responsibilities and loan terms and conditions are reviewed with the student. These sessions may be conducted online, by video, in person with the FAA or FAO, or in group meeting. See also exit counseling.
Loan Proceeds
The money the borrower receives from a loan (or the amount borrowed minus fees).
Master Promissory Note (MPN)
The promissory note is a promise to repay a debt that a student signs when taking out a Stafford Loan. The Master Promissory Note covers both the Subsidized and Unsubsidized Stafford Loans the student may receive for the same enrollment period. If the student is attending a four-year or graduate school, the Master Promissory Note also covers Subsidized and Unsubsidized Stafford Loans the student may receive for future enrollment periods.
Origination Fee
An amount 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 federal 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.
Parent Loans for Undergraduate Students (PLUS)
Federally-insured loans for parents of dependent students.
Perkins Loan
A low-interest loan for undergraduate and graduate students with exceptional need. This is a campus based loan, where the school serves as the lender.
Payment received for a borrower account for more than the amount due.
Prime Rate
The prime interest rate is the rate charged by commercial financial institutions for short-term loans to corporations or individuals whose credit standing is so high that little risk to the lender is involved in making the loan. This rate fluctuates based on economic conditions and may be different among financial institutions. The prime rate serves as a basis for the interest rates charged for other, higher-risk loans.
Amount borrowed, which may increase as a result of interest capitalization, and the amount on which interest is calculated. Also known as principal balance.
Private Loans
Private loans can provide supplemental funding when other financial aid does not cover costs. These loans are offered by banks, other financial institutions, and schools to parents and students.
Promissory Note
A contract between a borrower and a lender that includes all the terms and conditions under which the borrower promises to repay the loan.
Recommended or Suggested Lender List
A list of lending institutions which a school may provide to assist borrowers in selecting a lender for their Federal or private student loan. Schools that recommended or suggested lender lists are required to follow strict Federal regulations regarding how lenders are selected and are also required to explain the selection process.
The time during which a borrower actively pays back an education loan.
A form of financial aid that doesn’t have to be repaid. These awards come from many different sources and are based on a wide variety of criteria.
Secondary Market
An organization that purchases education loans from lenders in order to replenish the supply of money for new education loans. The secondary market obtains funds from investors and uses those funds to purchase existing education loans from lenders. The lenders then use the proceeds of those sales to make new education loans.
Combining several loans into one account so that the borrower only pays one monthly bill. Original loan terms do not change with serialization.
Organization that administers and collects loan payments. May be either the loan holder or an agent acting on behalf of the holder.
Stafford Loans
Loans, both Subsidized (need based) and Unsubsidized (non-need based), guaranteed by the federal government and available to students to fund education.
Standard Repayment
A repayment schedule reflecting equal monthly payments over a 10 to 15 year period.
Student Aid Report (SAR)
This report is sent to you by the government 7-10 days after your FAFSA has been processed. This report will show all the information you provided on your FAFSA and will contain your Expected Family Contribution (EFC).
Student Eligibility Notice (SEN)
An official document used by HESAA to inform a TAG applicant of their award eligibility at their selected college or university.
Subsidized Stafford Loans
Subsidized Stafford Loans are awarded to students who demonstrate financial need (i.e., need-based loans). Because the Department of Education subsidizes the interest, borrowers are not charged interest while they are enrolled in school at least half-time and during grace and deferment periods.
A length of time in which to repay a loan. The term is usually agreed to by lender and borrower within the borrower's contract or promissory note. Also refers to language used in legal documents, such as the promissory note, that defines how a loan will be borrowed and repaid. Also refers to some postsecondary educational institutions' academic period.
Tuition Aid Grant (TAG)
A program that provides grants, based on financial need, to New Jersey residents attending approved New Jersey colleges or universities.
Unsubsidized Stafford Loans
Unsubsidized Stafford Loans are available to students regardless of financial need (i.e., non-need based). Borrowers are responsible for the interest that accrues during any period.
Variable Interest
With a variable interest loan, the interest rate changes periodically. For example, the interest rate might be affected by the cost of U.S. Treasury Bills (e.g., T-Bill rate plus 1.7%) and be updated monthly, quarterly, semi-annually, or annually.
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