Consolidation is combining multiple loans into a single loan, often with a lower monthly payment but a longer repayment period.
The Cost of Attendance (COA) is the estimated cost to attend SU for the academic year. This estimate typically includes tuition and fees, room and board, books and supplies, transportation expenses, and personal expenses. It is important to remember the COA is an estimate and costs could vary depending on individual spending habits for non-SU billed items (e.g. clothes, books, recreation, etc.). The COA also represents the maximum amount of financial aid a student can receive, including grants, student and parent loans, work study, and scholarships.
A credit score is a measure of the likelihood a borrower will pay their debt as agreed. For Graduate and Parent PLUS Loans, the borrower or cosigner must not have an adverse credit history. With alternative loans outside the Federal Student Aid Program, a borrower or cosigner’s credit score and history will often determine approval for the loan, as well as influence the interest rate a borrower will receive.
A federal loan is considered to be in default if the borrower fails to keep their monthly payments current. Typically 180 days past due constitutes a default. Defaulting on a loan means the lender can take legal action to recover their funds, including garnishing wages and withholding income tax refunds. It can also make the borrower ineligible for future federal aid and adversely affect their credit rating. Terms of default for an alternative loan will vary depending on the lender.
Deferment is when the borrower is permitted to postpone repayment of the loan, typically while the student maintains at least half-time enrollment. Federal Stafford Loans and Graduate PLUS Loans will have a deferment period. The Parent PLUS Loan does not have a deferment period. In regards to alternative loans, borrowers should contact their lender to discuss postponing repayment.
The grace period is the time period after a student graduates or drops below half-time enrollment before they are required to begin repayment of their student loans. The grace period for Federal Stafford Loans is six months, while the Federal Perkins Loan is nine months. Students are granted only one grace period. Some alternative loans have grace periods as well.
If a student is determined to be independent by the FAFSA, only their and their spouse’s (if applicable) income and assets need to be provided. Dependent students are required to provide their parents’ income and asset information in addition to their own. Please note how the FAFSA defines dependency is different than how dependency is defined by the Internal Revenue Service (IRS) for tax purposes. The questions a student will answer in Step Three of the FAFSA wil determine their dependency status. If there are extenuating circumstances, students are encouraged to contact the Office of Financial Aid.
Entrance Counseling is an on-line tutorial and quiz with the U.S. Department which explains a student’s rights and responsibilities as a Federal Stafford Loan borrower. All first-time borrowers of the Stafford Loan at Shenandoah University are required to complete Entrance Counseling in order to receive these funds.
The Expected Family Contribution (EFC) is the measurement of the family’s financial strength and their ability to fund the student’s education expenses based upon the information provided in the FAFSA. For independent students, only the student’s and their spouse’s (if applicable) financial strength is measured. Please note: the EFC is an estimate used to determine eligibility for financial aid, not what a student and their family is expected to pay.
Financial aid is available to most enrolled degree-seeking students at SU. Financial aid is intended for the student’s educational expenses; including tuition and fees, room and board, books and supplies, and transportation. Most federal aid and all forms of state aid are need-based. The most common types of financial aid are grants, scholarships, loans, and work-study.
A student’s financial need is determined by subtracting the student’s Expected Family Contribution (EFC) as determined by their FAFSA from the Cost of Attendance (COA). Many financial aid programs are awarded on the basis of financial need.
COA – EFC = Financial Need
The purpose of the Free Application for Federal Student Aid (FAFSA) is to determine a student’s Expected Family Contribution (EFC). The FAFSA permits students to be considered for aid such as federal grants, federal loans, and work-study. The FAFSA is submitted at http://www.fafsa.gov/.
Grants are forms of financial aid that do not have to be repaid. Generally, grants are for undergraduate students. The grant amount awarded is often based on the student’s financial need, the cost of attendance for SU, and the student’s enrollment status.
Interest is the monthly effective rate paid on borrowed money. Interest is expressed as a percentage of the sum borrowed.
The Master Promissory Note (MPN) is a binding legal document a student or parent signs in order to obtain a federal educational loan. It lists the conditions under which you are borrowing and the terms under which you agree to pay back the loan. The MPN will include information about the loan’s interest rate, deferment, and cancellation. At SU, MPN’s are valid for 10 years. The MPN is completed at studentloans.gov.
The origination fee is the fee a lender charges to process a loan. For example, the origination fee for the Federal Parent PLUS Loan is 4%. This means a PLUS Loan of $10,000 will have a fee of $400, leaving $9,600 available for the student’s university charges and education expenses.
The Prime Rate and LIBOR Rate are common benchmarks for consumer and business loans set by banks. The interest rate given to borrowers on their loans is often determined as the prime rate/LIBOR rate plus a certain percentage, which represents the lender’s assessment of the risk in lending, PLUS its profit margin. Please note the prime and LIBOR rates apply to alternative loans only; the interest rates for federal loans (Stafford, PLUS, Perkins, Nursing) are set by the federal government.
Loans are borrowed funds that must be repaid with interest. Both undergraduate and graduate students may borrow. Parents may borrow to pay tuition and other educational expenses for dependent undergraduate students. Maximum amounts on student loans are usually based upon the student’s academic level.
The loan principal or principal is the amount of money borrowed or owed a loan, not including interest.
Scholarships are forms of financial aid that do not have to be repaid. Typically, scholarships are awarded upon the basis of academic merit, though at times financial need is considered as well.
The Work Study Program provides jobs for undergraduate and graduate students. These earnings are intended to help pay for a student’s daily educational and personal expenses.