Financial Aid Terminology

Financial aid comes with its own official language. This guide may help you navigate the jargon.

Academic Year

At McDaniel College, academic programs are calculated in credits and measured by semesters (fall and spring). The academic year for full-time students is defined as follows:

Undergraduate- 30 weeks
Graduate – 30 weeks

For financial aid purposes, the definition of an academic year is important because it affects how payment periods are calculated. McDaniel makes financial aid payments based on the college’s semester. A student's financial aid is calculated by semester rather than by weeks or classes attended.

Accrual Date

The day from which interest charged on an educational loan begins to accrue.

Award Letter

The official document issued by the Financial Aid Office which lists all the aid awarded to the student.

Capitalization

The process by which unpaid interest is added to the principal balance of a loan, thereby increasing the total amount to be repaid.

Citizen/ Eligible Non-citizen

To receive financial aid, you must be:

  • a U.S. citizen
  • a U.S. national (includes natives of American Samoa or Swain’s Island)
  • a U.S. permanent resident with an I-151, I-1551, or I-551C (Alien Registration Receipt Card)

If you are not included in the above categories, you must have an Arrival-Departure Record (I-94) from the U.S. Immigration and Naturalization Service (INS) showing one of the following designations:

  • Refugee
  • Asylum Granted
  • indefinite parole and/or humanitarian parole
  • Cuban-Haitian Entrant, Status Pending
  • Conditional Entrant (valid only if issued before April 1, 1980)
  • Other eligible noncitizen with a Temporary Resident Card (I-688)

You can also be eligible based on the Family United Status category, with approved I-797s, or if you have a suspension of deportation case pending before Congress. Permanent residents of the Marshall Islands and Micronesia are eligible for Pell Grants, SEOG, or Work Study only.

You are NOT eligible for financial aid if you only have a Notice of Approval to Apply for Permanent Residence (I-171 or I-464A), or if you are in the United States on an F1, F2, J1, J2, or G series visa.

Consolidation

The loan created when a borrower combines various educational loans. By extending the repayment period and allowing a single monthly payment, consolidation can make loan repayment easier for some borrowers.

Cost of Attendance (COA)

The Cost of Attendance (COA) is the estimated total cost of attending college for one year. It includes tuition and fees, room, board, books & supplies, personal expenses, and travel expenses.

Default

Failure to repay a student loan according to the terms agreed to when you signed a promissory note. If you default, your school, the organization that holds your loan, the state, and the federal government can all take action to recover the money, including notifying national credit bureaus of your default. Your wages and/or tax returns may be garnished, and you will no longer be eligible to receive federal or state financial aid.

Deferment

An authorized period of time during which a borrower may postpone principal and interest payment. Deferments are available while borrowers are in school at least half time, enrolled in a graduate fellowship program or rehabilitation training program, and during periods of unemployment or economic hardship. Other deferments may be available depending on when and what you borrowed. Contact your lender for additional details.

Entrance/Exit Interviews

Counseling sessions borrowers are required to attend before receiving their first loan disbursement and again before leaving school.

Expected Family Contribution (EFC)

An amount, determined by a formula established by Congress, that indicates how much of your financial resources should be available to help pay for school. The EFC is used in determining your eligibility for financial aid. A dependent student’s family includes parents and stepparents. An independent student’s family includes the student and the student’s spouse.

FAFSA

The federal aid application. This must be completed by all students who wish to be considered for financial aid at McDaniel College.

Financial Aid Counselor

A representative of the Financial Aid Office that reviews a student's application and awards aid, and helps the student in all aspects of the financial aid process.

Financial Aid Package

The total financial aid a student receives. The package may include federal and non-federal aid such as grants, loans, work-study, and scholarships are combined in a "package" to help meet the student's need.

Financial Need

The difference between the Cost of Attendance and the Estimated Family Contribution. This amount is your total eligibility for aid from all sources, and is used in determining what your aid package will be.

Forbearance

An authorized period of time during which the lender agrees to temporarily postpone a borrower's principal repayment obligation. Interest continues to accrue and usually must be paid during the forbearance period. Forbearance may be granted at the lender's discretion when a borrower is willing to repay their loan but is unable to do so.

Grace Period

The period between the time a borrower leaves school or drops below half-time and the time they are obligated to begin repaying their loans - usually six or nine months, depending on the type of loan.

Grant

A type of financial aid award based on need or merit that is not repaid by the student.

Guaranty agency

The organization that administers the Federal Stafford Loan and Federal PLUS Loan programs in your state. The federal government sets loan limits and interest rates, but each state is free to set its own additional guidelines, within federal regulations.

Guaranty fee

An insurance premium deducted from the borrower's loan proceeds prior to disbursement and paid to the guaranty agency that insures the loan. By law the fee cannot exceed 1% of the loan amount.

Interest

A fee charged for the use of borrowed money. Interest is calculated as a percentage of the principal loan amount. The rate may be constant throughout the life of the loan (fixed rate) or it may change at specified times (variable rate). As of July 1, 2006, all federal education loans made to new borrowers have fixed interest rates.

Lender

A financial institution (bank, savings and loan, or credit union) that provides the funds for students and parents to borrow educational loans.

Needs Analysis

A process of reviewing a student's aid application to determine the amount of financial aid a student is eligible for. Completing a needs analysis form (FAFSA) is the required first step in applying for most types of financial aid.

New Borrower

A borrower who has no outstanding (unpaid) loan balances on the date (s)he signs the promissory note for a specific educational loan. New borrowers may be subject to different regulations than borrowers who have existing loan balances.

Origination Fee

A fee charged by the federal government and deducted from loan proceeds before disbursement to partially offset administrative costs of the Federal Family Education Loan Program (FFELP).

Pell Grant

A federal grant program for first-time undergraduates with financial need.

Principal

The amount borrowed. Interest is charged on this amount, and guaranty and origination fees will be deducted prior to disbursement.

Promissory Note

The legal document borrowers sign when they get an education loan. It lists conditions under which the money is borrowed and the terms under which borrowers agree to repay the loan with interest. Borrowers should keep the borrower copy of their promissory notes until the loans are fully repaid.

Repayment Schedule

Discloses the borrower's monthly payment, interest rate, total repayment obligation, due dates and length of time for repaying the loan.

Satisfactory Academic Progress (SAP)

The policy of measuring quantitative, qualitative, and maximum academic progress for financial aid eligibility. If a student fails to meet the minimum standards required by this policy, the financial aid award to that student is canceled.

SEOG (Supplemental Educational Opportunity Grant)

A federal grant program for needy students pursuing their first undergraduate degree.

Student Aid Report (SAR)

A form sent to the student after submitting the FAFSA to the federal processor. The SAR shows the information that was processed and allows the student to make corrections to their information. Since McDaniel College can also make electronic corrections, the student should consult with their financial aid advisor before mailing any corrections on their Student Aid Report.

Subsidized Loan

A need-based loan on which the interest is paid by the federal government during the in-school, grace, and deferment periods.

Unmet Need

The amount of financial aid eligibility that is not met with financial aid awards.

Unsubsidized Loan

A non-need-based loan on which interest is not paid by the federal government. Borrowers are responsible for interest on all unsubsidized loans from the date the loan is disbursed. Borrowers can elect to pay the interest periodically or to ask the lender to add the interest to the principal of the loan for repayment at a later date.

Verification

A process of review to determine the accuracy of the information on a student's financial aid application. Students are selected by the processing agency after the FAFSA is filed. Approximately 30% of applicants are selected. The Financial Aid Office will notify you if additional verification documents are needed.