Financial Aid Guide · 2015-08-11 · AAA Student Lending Program Financial Aid Guide Your trusted...

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AAA Student Lending ProgramFinancial Aid Guide

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Important Deadline Dates

October 1 First available date to complete the CSS PROFILE® (www.collegeboard.com)

January 1 FAFSA available to be filled out at www.fafsa.ed.gov

February 15 Connecticut state FAFSA completion deadline

March 1 RI state FAFSA completion deadline

May 1 Massachusetts, Maine, New Hampshire and New York state FAFSA completion deadline

June 30 Federal FAFSA completion deadline

Please remember each college has its own deadline to apply for financial aid. To be eligible for financial aid, remember to contact each college you are applying to and submit your FAFSA and other documents they require by their deadline.


Table of Contents

Financial Aid Basics 2 Types of Financial Aid

Get Ready to Apply

Key Deadlines

How to Apply

After You Apply for Financial Aid 8 Financial Aid Award Letters Arrive

Award Letter Breakdown

How Awards are Determined

Paying Tuition 12 Core Principles

Funding Options

Federal Student Loans 14 Federal Loan Types

The Perkins Loan

The Stafford Loan

The PLUS Loan

The GradPLUS Loan

Private Student Loans 20 Private Loan Types

Eligibility

Borrowing Limits

How to Save

Interest and Other Charges

Repayment 24 Benefits of Consolidation

Combining Student Loan Debt

Interest Rate

Estimated Payments

Resources and Services 26 FAFSA Filing Assistance

Guidance Counselors

Scholarship Information

Webinar and Seminar Series

College Tours

Newsletter

Glossary 28

1

234

5

6

7

8

2

Financial Aid BasicsTypes of Financial Aid

Gift Aid

Grants and scholarships: Money that does not need to be repaid. Keep in mind some

scholarships could have a service component or may be taxable. You can find more

information on scholarships at www.AAA.com/ScholarshipInfo.

Self-Help Aid

Loans: Borrowed money that is usually repaid with interest by students and/or

parents. Loans can be from Federal or private lending sources. Learn more about

your loan options in the Federal and Private Student Loan Sections of this guide or

at www.AAA.com/FinancialAid.

Work-Study: Money a student can earn through on- or off-campus employment.

This money usually helps students pay for indirect expenses and should not be

considered as a resource to pay tuition.

In this chapter:

• Types of Financial Aid

• Get Ready to Apply

• Key Deadlines

• How to Apply

1This guide has been created to help families understand the types of aid available and

how to properly apply for financial aid. Additionally, this guide takes a close look at all

college funding options available, as well as ideas on how to reduce college costs. You will

not receive financial aid if you do not apply.

Each year, billions of dollars are available to help families pay for college tuition. This aid

comes in a variety of forms and from a variety of sources including the Federal

government, states, colleges, and private institutions.


3

Financial Aid Eligibility

To be eligible, the student must:

• Be a U.S. citizen or eligible non-citizen* with valid Social Security number.

• Be working toward a degree or certificate in an eligible program*.

• Be qualified to obtain post-secondary education.

This can mean any of the following:

– Having a high school diploma or a GED certificate.

– Meeting other standards established by your state.

– Completing a home school program approved by the state.

• Register with Selective Service, if you’re a male between ages 18 – 25.**

• Maintain Satisfactory Academic Progress (SAP) as determined by your college.

*See glossary for additional details. **www.SSS.gov

TIP:

Students with financial

need usually receive a

combination of both

types of financial aid.

(Detailed on page 2)

FAFSA DefinedFAFSA stands for Free Application for Federal Student

Aid. This is the gateway application to all financial aid and

should be completed by each family every year. It can be

filed online. In this guide you will learn how, when, and

where to file. www.FAFSA.ed.gov

4

Get Ready to ApplyThe senior year of high school is filled with a host of activities and deadlines, so it is best to prepare

to apply for financial aid in the junior year or the summer before the senior year. These simple

steps below can help.

Create a financial aid folder for all your documents. You will need to access

these documents for the next four years or more. Keeping your documents in one

place will make applying each year easier.

Apply for your Federal PIN (Personal Identification Number) ID at www.PIN.ed.gov.*

Each student and parent will need their own unique PIN. PIN IDs can be used to

electronically “sign” your Free Application for Federal Student Aid (FAFSA) as well

as any Federal student loan Master Promissory Notes for parents and students.

Research deadlines for each college a student applies to. Make sure to inquire

about additional financial aid paperwork required by each college. Some Private

colleges may also require submission of the CSS PROFILE, or an institutional

financial aid form. Most colleges will post this information on their financial aid web

page. It is extremely important to submit ALL the financial aid documents required by

each college. Use a calendar or spreadsheet to keep track of all deadlines.

The FAFSA is designed to instruct the student on how to complete the form, but

since parents usually end up filling it out, this can make for some confusing reading

in the instructions. However, it is a good idea for parents to fill it out or at least

review the information before it is submitted because it is a complex form. A

small mistake could have a big impact on the amount of aid offered.

Note: The majority of students under the age of 24 will be considered a dependent by

the Federal government and are required to report their parents’ financial information on

the FAFSA and other financial aid documents. For independent/dependent guidelines,

see the glossary on page 28.

12

TIP:

Remember financial aid is

awarded on a first-come,

first-served basis. The

sooner you submit your

documents the better.

3

* Note: If you opted to receive your PIN by e-mail, you should add [email protected] to your e-mail address book or “safe list” to help avoid delivery problems.


5

Key Deadlines

FAFSA deadlines for each state can be

found at www.FAFSA.ed.gov. To the right are

a few deadlines for our region. Remember

each college may have their own deadline

which may be earlier than the state

deadline. Adhere to the earliest deadline,

not the student’s state of residency.

TIP:

For families using the paper

FAFSA application; remember

the form is color-coded.

Purple is for parental

information and orange is

for student information.

These colors may change

from year to year.

How to Apply for Financial AidAll colleges require the FAFSA in order to offer any Federal financial aid. Be sure to

apply early, and adhere to both state and college deadlines, as most financial aid is

limited. Remember, some financial aid is administered on a first-come, first-served basis.

If your student selects colleges that require the CSS PROFILE, you can fill out and submit this

document at www.collegeboard.com. There is a fee associated with the PROFILE which is

charged by The College Board. Some families may qualify for a fee waiver; ask your high

school guidance counselor for details. If the institution has requested additional required

financial aid documents of their own, be sure to submit them on time.

Submit the FAFSA document as soon as possible after January 1st. The data you submit

on the FAFSA will be used by the government to calculate your family’s Expected

Family Contribution (EFC). The EFC helps to measure your family’s financial situation.

Each college you elect to receive your FAFSA will use the data to create a Financial

Aid Award Letter, which you will receive in the spring. There are five simple steps to

submit the FAFSA efficiently, detailed on the next page.

Key Deadlines

RI March 1

MA, ME, FL May 1 NH, NY, PA

CT February 15

VT No state deadline,

check with your

college for dates.

NJ June 1

6

1Gather the necessary documents.

23

It is highly

recommended

to submit your

FAFSA online

because it is a

more timely

submission…

Dependent students will need the above listed documents for both parents and

students. Independent students will only need their own documents and/or your

spouse’s information. For students with divorced parents, use the information of the

parent you lived with most in the last 12 months even if the student is not claimed

as dependent on taxes. If the parent has remarried, you will need to include the

stepparent’s information.

Print the FAFSA online worksheet at www.FAFSA.ed.gov. Printing and

pre-filling the FAFSA worksheet can save a lot of time when you file your FAFSA online.

File the FAFSA online. It is highly recommended to submit your FAFSA online

because it is a more timely submission, offers built-in edits, more detailed instruction,

and provides for an easy renewal process each year. You can apply online at

www.FAFSA.ed.gov. If you have questions or need help filing the FAFSA, contact

the AAA Student Lending Program at 1-888-422-2536.

• Social Security numbers

• Driver’s license (if any)

• Most recent W-2 Forms and

other records of income earned

• Most recent Federal Income

Tax Return – 1040, 1040A,

1040EZ, etc. including any

foreign tax returns

• Most recent untaxed income

records – Social Security,

Temporary Assistance to Needy

Families, welfare, or veterans’

benefits records

• Most recent bank statements

• Most recent business and

investment information, business

and farm records, stock, bond,

and other investment records

• Alien registration number or

permanent resident card (see

eligible non-citizen in glossary

on page 29 for details)

A quick glance.

1. Gather Documents

2. Print Worksheet

3. File FAFSA

4. Receive EFC

5. Receive SAR


7

Receive your Expected Family Contribution (EFC): The EFC is the amount that your

family is expected to contribute to the student’s education for the academic year. This is

NOT the amount you will pay. This EFC is calculated from the data reported on your

FAFSA. The family contribution is determined by a formula (Federal Methodology Need

Analysis Formula) approved by Congress. Colleges use this formula to determine what

sources of aid the family qualifies for, including grants, scholarships, work-study,

and loan programs.

Receive your Student Aid Report (SAR):

• 3-5 days after submitting an online FAFSA and signing with your

PIN ID with valid e-mail address

The SAR allows you to correct any mistakes, update any changes in financial

circumstances or add new colleges where you would like your information to be

sent. An electronic copy of your SAR is also made available to the colleges you’ve

listed on your FAFSA.

Study Abroad: Many U.S. students study abroad each year. The Higher

Education Act (HEA) of 1992 allows a student to receive financial aid for

study abroad at qualified colleges. Most foreign colleges require U.S. students

to mail a copy of their SAR to the foreign college. Foreign colleges typically

cannot receive your Student Aid Report (SAR) electronically. Check with the

foreign colleges you listed on the FAFSA to see if they will need a paper copy

of the SAR. This will start the financial aid process. Remember, financial aid

for foreign colleges takes much longer to process; therefore it is a good

idea to start early.

4

5

TIP:

The Higher Education Act (HEA) of 1992 allows a student

to receive financial aid for study abroad at qualified colleges.

8

2In this chapter:

• Award Letters Arrive

• Award Letter Breakdown

• How Awards are Determined

After You Apply for Financial Aid

The data you submitted on the FAFSA is used to calculate your family’s EFC (Expected

Family Contribution). This information is sent to all colleges listed on the FAFSA. Most

colleges receive this information electronically. To determine your financial aid eligibility,

each college will use the FAFSA data, and sometimes the CSS PROFILE data, and/or

institutional data collected. Each college will then compile a Financial Aid Award Letter.

Financial Aid Award Letters ArriveAfter completing all the financial aid documents required by each college, you will receive a Financial

Aid Award Letter from each college. Your letter may come via U.S. mail, e-mail, or for some colleges,

you will need to access it online. To make an informed decision, you may want to wait for all your

award letters before you accept one (but be careful not to miss an acceptance deadline from one

college while waiting for another to reply). This will allow your family the opportunity to compare

the aid offers side-by-side. Certainly the least expensive may not be the most appropriate college

for your student. All factors should be considered including: costs, academic challenge, college

setting, social fit, etc. Think about attending the AAA Student Lending Webinar titled “Financial

Aid Award Letters.” Register at www.AAA.com/Register.

Award Letter Breakdown Financial Aid Award Letters are not standardized. Some letters are very clear and contain all

the information you need such as: scholarships, grants, loans, tuition costs, and instructions

on how to appeal, accept, or deny the awards. Others may not include tuition costs or

may only offer generic tuition costs. All award letters should contain Gift Aid (grants

and scholarships) and Self-Help Aid (work-study and loans) if they are being offered

to your student.

TIP:

Financial Aid Award Letters

may come via:

1. Mail

2. E-mail

3. Online with College

These letters will be sent to

the students.


9

Sample

XXX University 123 School Street

Financial Aid Award Letter

Anywhere, State 12345James Smith Student ID: 00625

Award Date: 03/01/15

Dear James,

After a careful and thorough review of your financial aid application, XXX University is pleased to offer you the

following financial aid assistance.Award

Fall

Spring Total

The XXX Grant $6,000

$6,000 $12,000

Federal Perkins Loan $750

$750 $1,500

Federal Stafford Loan Subsidized* $1,750

$1,750 $3,500

Unsubsidized* $2,000

$2,000 $4,000

Federal Work-Study $900

$900 $1,800

$22,800

This award is based on estimates of you and your parent(s)’ income reported on the FAFSA. The Office of

Financial Aid reserves the right to modify or cancel the financial aid award(s) listed at any time due to lack

of satisfactory academic progress, changes in enrollment, eligibility, financial misrepresentation, or any other

reason as specified by federal, state, or institutional regulations or policies. Kindly check the appropriate response below; then sign, date, and return one copy of this letter. Although your

response must be postmarked by May 1, we would appreciate receiving it as soon as possible.

__ I accept the award(s) indicated above and will enroll at XXX University

__ I decline some or all of the award(s) offered but still plan to attend XXX University

__ I fully decline the award(s) because I will not attend XXX UniversityMy signature below certifies that I have read the Financial Aid Guide, understand the terms and conditions

of this award letter, and give XXX University permission to apply any Federal financial aid I may receive to any

and all expenses charged to my student account. I understand I may rescind or withhold such authorization by

so notifying the University Bursar in writing.

Student Signature Date

TIP:

Financial Aid

Award Letters are

not standardized.

*See glossary for details.

10

The Gift Aid portion of the award letter will

itemize all grants and scholarships your student

is being offered. Some may be taxable or

conditional; contact your financial advisor,

Financial Aid Office or refer to IRS

publication 970 at www.IRS.gov for details.

Private scholarships your student receives

outside of the college will not be listed, but

should be reported to the college. Grants,

scholarships and awards are considered

free monies.

Self-Help Aid is money you earn or borrow.

The Federal Work-Study Program is one way

your student may be able to earn money for

college expenses. It is important NOT to include

work-study as a source to pay tuition. It will be

listed on your award letter; however these funds

are typically used for personal expenses.

Self-Help Aid also includes loans which are

usually repaid with interest. Colleges may list

both Federal and Private loans on award letters.

It is important to use all your Federal loan

sources before considering any Private loan

options. Federal student loans in general offer

more protection and repayment options for

students and parents. To learn more about

Federal loans, refer to page 14 or log on

to www.AAA.com/FinancialAid. To learn

more about Private student loans

offered through the AAA Student

Lending Program, refer to page 20 or log on

to www.AAA.com/FinancialAid. You may also

contact the AAA Student Lending Program for

help understanding loan terms and conditions at

1-888-422-2536.

Ask about benefits for students and parents

available through the AAA Student Lending

Program.

There are certain Federal programs available to

help students entering particular professions.

Learn more about Federal loan reward programs

at www.StudentAid.ed.gov.

Special Circumstances

Sometimes families have financial concerns that

are not evident simply by analyzing their FAFSA

data. In this case, a family should consider

appealing their Financial Aid Award Letter. Most

colleges have appeal policies and procedures in

place. It is important to submit your appeal in

writing. An appeal is serious and should only be

considered under extenuating circumstances

such as long-term unemployment, unusual

medical bills, or other situations that have

impacted or will impact your family’s finances.

The AAA Student Lending Program Webinar

titled “Financial Aid Award Letters”

reviews types of appeals in detail. Go to

www.AAA.com/Register to register.

More on

Work-Study:

When you fill out the

FAFSA you will be

asked if your student

is interested in work-

study. It is a good idea

to say yes to be sure

it is available if you

are eligible, although

you are not obligated

to accept. A student

will not be eligible for

these programs if

you do not select it

on your FAFSA

application.


11

FAFSA Asset*

College Savings Plans

such as Coverdell savings

accounts, 529 college savings

plans and the refund value

of 529 prepaid tuition plans

should be reported as follows:

For a student who does not

report parental information,

the accounts owned by the

student (and the student’s

spouse) are reported as

student investments.

For a student who must

report parental information,

accounts are reported as

parental investments, including

all accounts owned by the

student and all accounts

owned by the parents for any

member of the household.

Small Business does not

include the value of a small

business if your family owns

and controls more than 50

percent of the business and

the business has 100 or fewer

full-time or full-time equivalent

employees. For small business

value, your family includes (1)

persons directly related to

you, such as a parent, sister

or cousin, or (2) persons who

are or were related to you by

marriage, such as a spouse,

stepparent or sister-in-law.

To learn more on

this subject go to

www.StudentAid.ed.gov.

How Financial Aid Awards are DeterminedThe data you submit on the FAFSA is used to calculate your family’s EFC. For colleges that

request additional financial aid documents such as the CSS PROFILE or institutional forms,

this data will also be considered when determining aid.

Financial aid for most Federal programs is awarded based on need, except for the unsubsidized

Federal Stafford Loan and Federal PLUS Loan. The EFC is a measure of your family’s financial

strength and indicates how much money your family is expected to contribute to your student’s

education for one academic year. This information is sent to each college you listed on the FAFSA

form. Remember, if you are an independent student (see glossary for dependency information)

your parents’ income and assets will not be used to calculate your EFC.

Your EFC is calculated according to a formula established by law.

Below are the factors considered in the calculation:

• Total Income, which includes

earned income for parents and student.

Remember, if you are an independent

student you will not include your

parents’ income. Untaxed income and

benefits received includes retirement

contributions made during prior year

(not total value of account), social

security, public assistance, etc.

• Age of Older Parent.

• Net Assets for parents and student

which includes: cash on hand, savings,

checking, stocks, bonds, investments,

CDs, trust funds, and equity in real

estate outside of the family home and

farm equity.

• Family Size.

• Family Members in College, not including parents.

Financial aid for most Federal programs are

awarded based on need…

*Source: U.S. Department of Education

12

Paying Tuition

The AAA Student Lending Program is committed to educating families about financial aid

as well as how to use low-cost funding options when paying tuition. Student loan debt is

an ever-increasing concern for parents and students. Making good choices today can make

all the difference when it is time to repay your student loans. We offer seminars,

webinars, online tools and resources and access to Educational Loan Specialists to help

families navigate financial aid and college funding options.

3In this chapter:

• Core Principles

• Funding Options

Making good choices today can make all the difference

when it is time to repay your student loans.

College Funding Core Principles Funding a college education can be challenging and costly. Below are some suggestions and

guidelines to help families focus on using low-cost funding options first.

Past income – First, consider using savings, college funds, and other investments.

Check with your financial advisors to ensure you are not using investments which

carry penalties or tax implications for your family.

Present income – Next, consider using a tuition payment plan. Most colleges

offer tuition payment plans which allow you to spread annual tuition payments over

ten to twelve monthly installments. Most programs charge a small fee to participate.

This option allows families to use their monthly cash flow to pay tuition and limit

loan debt. As an additional incentive for first-year college students, the Parent

PLUS Loan payment is usually not due until March of the following year. However,

parents have the option to defer Parent PLUS Loan payments until six months after

the student graduates, leaves college or drops below half-time status.

12


13

Future income – Finally, consider using Federal, institutional, and Private loans

offered to parents and students. You should only consider loans after you have

maximized all grant and scholarship opportunities. It is important to exhaust all of

your Federal loan options first before considering other loans, as they generally offer

lower interest rates, flexible repayment options, and more protection. Typically a family

will use a variety of loans to meet tuition and educational expenses.

Tax deductions and credits – Remember, Congress has created substantial tax

deductions and credits to help families pay for college. Due to lack of awareness,

these tax advantages may go unused. To learn more, print a copy of IRS publication

970 at www.IRS.gov.

College Funding Loan OptionsOnce the student chooses their college, you will need to decide how to fund expenses remaining

after financial aid has been deducted. After applying the core principles of college funding

(previous page), you should consider loan options. Most families will use a combination of loan

types, but it is important to stay within the Federal Student Loan Program

options when possible. They generally provide better fixed interest rates

and more protection such as deferment, forbearance, and cancellation

options (see glossary for details). Students can and should use their

full Federal Stafford Loan each year. Students that are offered a

Federal Perkins Loan on their award letters should also take full

advantage of this loan.

Next, parents should consider using the Federal PLUS

Loan to fund the remaining cost. The following

sections will cover Federal and Private loan types.

4

3 Most families

will use a

combination

of loan types,

but it is

important to

stay within

the Federal

Student Loan

Program

options when

possible.

14

Federal Student LoansFederal Student Loan Types

4In this chapter:

• Federal Loan Types

• The Perkins Loan

• The Stafford Loan

• The PLUS Loan

• The GradPLUS Loan

Perkins Loan Quick Glance

Borrower Student

Complete FAFSA Yes

Interest Rate Type Fixed

Standard Repayment Term 10 years

Extended Terms Available Yes

Deferment and Forbearance Options

Yes

Credit Check No

Consolidation Yes

Stafford Loan Quick Glance

Borrower Student

Complete FAFSA Yes





Yes

Credit Check No

Consolidation Yes

Parent PLUS Loan Quick Glance

Borrower Parent

Complete FAFSA Typically





Yes

Credit Check Yes

Consolidation Yes

Endorser Permitted Yes

GradPLUS Loan Quick Glance

Borrower Student

Complete FAFSA Yes





Yes

Credit Check Yes

Endorser Permitted Yes

Consolidation Yes

For graduate students that have maximized their Stafford Loan

For undergraduate and graduate students

For parents (or legal guardians) of undergraduate dependent students

See www.StudentAid.ed.gov for any updated information.

Federal interest rates are set by congress and are subject to change every academic year. You

can visit www.studentaid.gov or the financial aid section on your college’s website to see the

exact federal loan rates for the current academic year.


15

The Federal Perkins LoanA Federal Perkins Loan is a need-based student loan offered by the Department of Education to assist

students in funding their undergraduate and graduate education. If your student is eligible for the

Federal Perkins Loan, it will be listed on the Financial Aid Award Letter. Availability and the amount

offered will vary from college to college. Unlike the Federal Stafford Loan, a student can only sign

the Federal Perkins Loan application with the college the student attends. Most colleges will

send information on how to secure a Federal Perkins Loan with the Financial Aid Award Letter.

Disbursement of Funds: Federal Perkins

Loan funds are sent directly to the college

in a minimum of two equal payments. Funds

are traditionally disbursed in the beginning

of the fall semester and then again at the

beginning of the spring semester. The

Federal Perkins Loan is a Federal program

which is administered by the college the

student attends.

Federal Perkins Loan Grace Period: This

loan does not need to be repaid until nine

months after the student graduates, drops

out, or ceases to be enrolled half-time.

Half-time status is established by the

college the student is attending.

Federal Perkins Loan Interest Rate

The Federal Perkins Loan interest rate is

established by the Federal government. It is

currently a fixed rate of 5 percent. The

Federal Perkins Loan is fully subsidized,

which means the government will pay the

interest while the student is in college. To

learn more about the Federal Perkins Loan visit


How to Save on the Federal Perkins Loan

Under certain circumstances you may be

eligible to receive a partial or full discharge

or cancellation from the Federal

government. Teachers in low-income

areas, special education teachers, early

intervention professionals, nurses,

medical technicians, law enforcement,

certain employees of the Head Start

program, Vista or Peace Corps

volunteers, and military personnel

may be eligible. To learn more

about discharge or

cancellation options visit


TIP:

The availability of the

Federal Perkins Loan and

the amount offered will vary

from college to college.

For the latest information on Perkins Loans: 1-888-422-2536 | www.StudentAid.ed.gov

16

Federal Loan Options

The Federal Stafford Loan Access to the Federal Stafford Loan is not dependent upon your family’s income. This is a common

misconception. All qualified undergraduate and graduate students are eligible to borrow under

the Federal Stafford Loan Program. The amount you can borrow is determined by the student’s

part-time or full-time status and their year in college. Refer to the Federal Stafford Loan Limit

Chart below for loan amount. Applicants for these loans are required to complete the FAFSA

and sign a Master Promissory Note.

Due to legislation change in 2010, all Federal Stafford Loans are required to be secured through

the Direct Lending Program. Master Promissory Notes can be signed and entrance counseling

can be completed via the website (www.studentloans.gov).

Disbursement of Funds: Stafford Loan funds are sent directly to the college in a minimum of two

equal payments. Funds are traditionally disbursed in the beginning of the fall semester and then

again at the beginning of the spring semester. Colleges using trimesters will have three

disbursements. If you applied for extra funds for educational expenses, the college will usually

send you a check for the residual after paying tuition, fees, etc.

TIP: Stafford Loan

If you are a freshman or

transfer student, be sure

to complete your Financial

Aid Entrance Counseling

online with your college

or Federal loan funds will

not disburse.

Federal Stafford Loan Limit Chart*

Academic YearDependent

Undergraduate Students

IndependentUndergraduate

Students

Graduate Students

Year 1 $5,500 $9,500 $20,500

Year 2 $6,500 $10,500

Year 3-5 $7,500 $12,500

Maximum Stafford Loan Limits

$31,000 $57,500 $138,500**

*Loan limits are set by congress and are subject to change. **This includes undergraduate Federal Stafford Loan Debt. For updates see www.StudentAid.ed.gov.


17

Federal Stafford Loan Grace Period: This

loan does not need to be repaid until six

months after the student graduates, drops

out, or ceases to be enrolled half-time.

Half-time status is established by the college

the student is attending.

Federal Stafford Loan Interest Rate

The Federal Stafford Loan interest rate is

established by the Federal government. It is

established every academic year (not to

exceed 8.5%). However, a portion of your

Federal Stafford Loan may be subsidized

(determined by the financial data submitted

on the FAFSA). For subsidized Federal

Stafford Loans the interest rate is generally

lower than the unsubsidized, but it is also

established every academic year (not to

exceed 8.5%). This should be itemized on

your Financial Aid Award Letter.

How to Save on a Federal Stafford Loan

Under certain circumstances you may be

eligible to receive a discharge or cancellation

of up to $5,000 from the Federal government

on any Federal Stafford Loan. Some teachers

may also be eligible for loan forgiveness up

to $16,000 (available for mathematics,

science, and special education teachers

under the TEACH GRANT). To qualify,

you must not have had an outstanding

balance on a Federal Stafford Loan as of

October 1, 1998. To learn more about

discharge or cancellation options visit


How to Save Even More on a Federal Stafford Loan

The government offers additional ways to

save on your Stafford Loan. Borrowers that

set up automatic debit payments once in

repayment can receive .25% off their

Stafford Loan interest rate.

For the latest information on Stafford Loans: 1-888-422-2536 | AAA.com/StaffordLoan

Under certain circumstances you may

be eligible to receive a discharge or

cancellation of up to $5,000 from the

federal government…


18


Federal PLUS Loans(Parent Loans for Undergraduate Students)

TIP: Federal PLUS Loan

If a parent is denied for a

Federal PLUS Loan, the

student may be eligible

for an additional $4,000-

5,000 to be added to the

student’s Federal Stafford

Loan. Typically, a school will

request a copy of the PLUS

Loan denial.

Federal Parent PLUS Loan

Parents of undergraduate dependent students are eligible to borrow under the Federal PLUS

Loan Program. The borrowing limit is determined by the Cost of Attendance (COA) minus other

financial aid received. Although it is not a Federal requirement to submit a FAFSA in order to apply

for a Federal PLUS Loan, many times it is a school policy. It is always a good idea to submit a

FAFSA each year as this will give your student access to the Federal Stafford Loan as well.

Federal GradPLUS Loan

Graduate and professional students are now eligible to borrow under the Federal GradPLUS Loan

Program. The limit is determined by the cost of attendance minus other financial assistance

received. Applicants for these loans are required to complete the FAFSA. In addition, they must

have applied for their maximum annual Federal Stafford Loan (see Federal Stafford Loan Limit Chart

on page 16).

Disbursement of Funds: Federal PLUS

Loan funds are most often sent directly to the

college in a minimum of two equal payments.

Funds are traditionally disbursed in the

beginning of the fall semester and then again

at the beginning of the spring semester.

Colleges using trimesters will have three

equal disbursements. If you applied for extra

funds for educational expenses the college will

usually send you a check for the residual

after paying tuition, fees, etc.

Federal PLUS Loan Grace Period: For

parents of undergraduate students, repayment

begins 60 days after the last disbursement,

which is typically March. Parents have the

option to defer up to six months after a student

graduates or leaves school. Repayment of

Federal GradPLUS Loans does not begin until

60 days after a student graduates, drops out,

or ceases to be enrolled half-time. Half-time

status is established by the college the student

is attending. Federal GradPLUS borrowers will

be given an automatic in-school deferment.

Graduate and professional students are now eligible to

borrow under the GradPLUS Loan Program.


19


Federal PLUS Loan Interest Rate

The Federal Parent PLUS and Federal

GradPLUS Loan interest rates are

established by the federal government. The

Parent PLUS loan rate is capped at 10.5%

and the GradPLUS loan rate is capped

at 9.5%.

How to save on Federal PLUS or Federal GradPLUS Loans

Borrowers can further reduce their interest

rate by making automatic debit payments

by .25%. These borrower benefits are

available to both Federal PLUS and Federal

GradPLUS borrowers.

Why use Federal Loans

• Flexible repayment options

• Fixed percentage rates

• Loan Cancelation Programs

• Deferments and Forbearance Options

How to Apply

You can apply online for Federal PLUS/

Federal GradPLUS at www.studentloans.gov.

You will need your Federal PIN ID to sign your

application. For Parent Plus Loans, be sure

to use the PIN ID assigned to the parent,

not the student or spouse.

TIP: Parents have the option

to defer payments up to

six months after a student

graduates or leaves school.

You can apply online

for Federal PLUS/Federal

GradPLUS Loans in as

little as 15 minutes at

www.studentloans.gov.

For the latest information on PLUS Loans: 1-888-422-2536 | AAA.com/PLUSLoan

20

Private Loans through the AAA Student Lending Program

Private LoansPrivate Loan OverviewThere are several funding sources available to pay for a college education. Private student

loans fill the gap that remains after scholarships, grants, and Federal loans are exhausted. The

terms and conditions of private loans, as well as the amounts one may borrow, vary among

lending institutions. Since Private loans are not Federally administered, but rather are a private

agreement made between the borrower and lender, filing the FAFSA is not required.

Types of Private LoansThere are a variety of Private student loans and Private student loan lenders in the marketplace.

When considering private student loans you should consider:

The type of loan you will need such as, undergraduate, graduate,

certificate, or continuing education.

What the loan funds are to pay for, such as, tuition, books, uniforms,

traveling expenses, bar exam expenses, living expenses on or off

campus living, etc.

General Eligibility RequirementsApplying with a qualified co-signer is strongly recommended for students under 24 or

without a credit history. A solid co-signer, such as a parent or other creditworthy adult,

makes you a stronger loan candidate. It increases your chances of fast approval and

could even lower your costs with a better interest rate.

5In this chapter:

• Types of Private Loans

• Eligibility Requirements

• Borrowing Limits

• How to Save

• Interest and Other Charges

21


21


Most lenders will require undergraduate and graduate student borrowers to be enrolled at least

half-time in a degree program at an eligible school/college and meeting (SAP) Satisfactory

Academic Progress as defined by your college. An eligible college is typically a college that

meets the credit and default requirements set by the lender.

Borrowers and co-borrowers will also need to satisfy credit requirements set by the lender.

Below is a list of typical borrower requirements:

• Be a U.S. citizen or a permanent resident who has resided in the

U.S. for the previous two years.

• Be at least 18 years of age, some lenders will allow borrowers to be

age 17 with a qualified co-signer.

• Have a minimum of two years of continuous employment for borrower,

or if applicable, co-borrower.

• Have a minimum of 24 months of credit experience and a satisfactory

credit history for borrower, or if applicable, co-borrower.

• Acceptable Debt to Income Ratio and must pass a Credit Check.

Most lenders will require undergraduate

and graduate student borrowers to

be enrolled at least half-time in

a degree program at an

eligible school.

TIP:

A solid co-signer, such as a

parent or other creditworthy

adult, makes you a stronger

loan candidate.

For the latest information on Private Loans: 1-888-422-2536 | AAA.com/FinancialAid

22

Borrowing LimitsMost lenders will allow you to use the money you borrow to cover the cost of tuition as well

as a wide range of education-related expenses like books, lab fees, room and board, and

travel home. Lenders will typically have a minimum and maximum amount you can borrow per

academic year, as well as a maximum debt amount.

• Minimum amounts vary from lender to lender, $500 – $2,500 per academic year.

• Maximum amounts vary from lender to lender and may be based on your cost

of attendance.

• Most lenders will set an overall maximum collective debt amount.

This is typically between $100,000 – $250,000.

How to Save on Your Private LoanSome lenders will offer “borrower benefits.” This is just another way to save money. These borrower

benefits may include an interest rate reduction for making automatic debit payments. Other

borrower benefits may include an interest rate reduction after a number of on-time payments or

upon graduation. Be sure to ask for these benefits in writing and save your original promissory

note in a Financial Aid file for future reference. These interest rate reductions can certainly add

up over time. When you are funding a college education, every penny counts!

Most lenders will allow you to use the

money you borrow to cover the cost of

tuition as well as a wide range of

education-related expenses…



23

The amount of your interest rate margin is based on

your loan program and your credit history.

TIP:

Borrowers and co-borrowers

with higher credit scores

may qualify for zero origination

fees with some Private

student lenders.

For the latest information on Private Loans: 1-888-422-2536 | AAA.com/FinancialAid


Interest and Other ChargesMost Private student loans have variable and fixed interest rates based on a Prime Rate or

LIBOR Rate plus a margin of interest which varies depending on the credit-worthiness of the

borrower and any co-signer. The amount of your interest rate margin is based on your loan

program and your credit history. This means you will need to apply for a Private student loan

before you will know your individual interest rate. Additionally, you should always know what

the interest rate cap is on any Private student loan you decide to use.

In general, some Private and most Federal student loans have additional fees. As fees can vary

from lender to lender, you should always ask if there are repayment fees, origination fees or any

other fees associated with your loan.

Other things to knowAll Private student loans will require the student fill out and return

a Self-Certification Document in order to disburse any funds.

This document will be provided by your lender or college.

You will need to list:

• Your Expected Family Contribution*

• Your Expected Financial Aid*

• Your Cost of Attendance*

Note: Return the document to lender upon completion.

*See glossary for details.

24

The AAA Student Lending Program

Repayment

Repayment can be challenging for both students and parents. Typically, parents will begin

repayment well before their students. Repayment can be further complicated when it involves

Private and Federal loans. As the use of Private student loans has increased significantly

over the past decade, many families will need to balance repayment of both types of loans.

This section will give you a head start on your choices and what to expect during repayment.

A Federal consolidation loan is a practical way to refinance education debt by bundling all

Federal loans into a single loan. Parent borrowers have the opportunity to consolidate at any time,

regardless of the student’s enrollment status. There is no credit check during the loan process; anyone

who has a Federal loan is eligible unless they are currently in default on a Federal student loan.

Benefits of a Federal Consolidation Loan

6In this chapter:

• Benefits of Consolidation

• Combining Student Loan Debt

• Interest Rate

• Estimated Payments

• One bill

• One monthly payment

• Lower monthly payment

• Fixed rate

• Extend repayment up to 30 years

TIP:

A Federal Consolidation Loan takes 6-10 weeks to

process. It is important to continue making student

loan payments until you are notified that your

consolidation loan is in place.

TIP:

Some lenders offer

combined billing and

extended repayment options.

Students can consolidate all of their Federal student loans once they graduate, drop

below half-time status or drop out. There is a 6–9 month grace period with most

Federal student loans.


25

The AAA Student Lending Program

Combining Private and Federal Student LoansConsolidation of Private and Federal student loans is not allowed under the Federal consolidation

program. However, combining Private and Federal loans is allowed under some Private

consolidation loan programs. This will void your Federal loan benefits such as income based

repayment plans, teacher forgiveness programs, military benefits and others. You should carefully

consider what benefits you are giving up before you consolidate Federal loans into Private loans.

Federal Consolidation Interest Rate

The interest rate for a

Federal consolidation

loan is set according

to a formula established

by Federal law. The

fixed rate is based on

the weighted average

of the interest rates on

the loans at the time

you consolidate,

rounded up to the

nearest one-eighth of

a percent. The interest

rate cannot exceed

8.25 percent. The

consolidation rate is

fixed for the life of the

loan, which protects

you from future

increases in variable

rate loans but prevents

you from benefiting

from future decreases

in variable rates.

Estimated Consolidation Payments

Loan Example Amount

Old PaymentBased on 10 Year Term

New Paymentwith Consolidation

$10,000 $115.08 $89.19 (15 years)

$20,000 $230.16 $153.56 (20 years)

$30,000 $354.24 $230.34 (25 years)

$60,000 $690.48 $394.16 (30 years)

These are estimates. Your actual payment amounts may be different. Current Payment amount based on interest rate of 6.80%. New Payment amount based on interest rate of 6.875%.

To learn more about Consolidation Loans: 1-888-422-2536 | AAA.com/Consolidate

For step-by-step instructions on how to

consolidate your student loans, you can visit

AAA.com/Consolidate.

Private Consolidation LoansIf you have more than one private student loan, your loans can be consolidated by private lenders.

You should ask the same questions you did when you were looking for a private student loan. To

learn more, visit AAA.com/FinancialAid.

26

7In this chapter:

• FAFSA Filing Assistance

• Guidance Counselors

• Scholarship Information

• Seminar and Webinar Series

• College Tours

• Newsletter

• Tax Benefits

Resources and ServicesThe AAA Student Lending Program offers a variety of tools, resources, products, and

services to help families properly plan and pay for college. We understand the many

challenges families face when trying to navigate the financial aid process, as well as the

sometimes confusing funding options available to them for educational costs. Our

resources and services are designed to educate and help families understand the

importance of using low-cost funding options. We continually look for opportunities to

expand our resources. To learn more about our latest offerings go to www.AAA.com/

FinancialAid or call our Educational Loan Specialists to help guide you at 1-888-422-2536.

FAFSA Filing Assistance The AAA Student Lending Program assists members with applying for Federal Financial Aid in a

variety of ways such as one-on-one appointments, Financial Aid seminars, webinars and online

resources to guide families through the process.

A Word to Guidance Counselors High school Guidance Counselors play a vital role in helping students and their families

prepare for college. Students and their parents often approach Guidance Counselors with

questions about financial aid. Each year we provide Professional Training Days to help

Guidance Counselors stay current with Financial Aid topics, legislation, and scholarship

opportunities. To register for a Professional Training Day, log on to www.AAA.com/Register

or call 1-888-422-2536.

We also offer comprehensive webinar services for your parents to help educate them

on a variety of Financial Aid topics.

TIP:

The AAA Student Lending

Program offers podcasts

that can be downloaded

from AAA.com/FinancialAid,

also available in Spanish.

• Financial Aid 101

• FAFSA Line by Line

• CSS Profile

• Scholarships 101

• Financial Aid Award Letters

• College Funding Options


27

Scholarship InformationWe offer online information when it comes to applying and searching for scholarships.

Each month we highlight a scholarship in our online Student Lending Newsletter.

Additionally, we offer webinars dedicated to the subject of scholarships. For more

information visit www.AAA.com/ScholarshipInfo.

Webinar and Seminar Educational SeriesThe AAA Student Lending Program Seminar Series is designed to educate families on the

various topics and challenges during the college planning years. These seminars are also

designed to assist families with students already attending college. To register for a seminar or

webinar, contact us at 1-877-888-8609 or log on to www.AAA.com/Register.

Topics include:

TIP:

Each month we highlight a

scholarship in our Student

Lending Newsletter.

• Financial Aid 101

• Scholarship Workshop 101

• Financial Aid Award Letters

• FAFSA Line by Line

• College Funding Options

• Consolidation 101

College ToursA successful college tour is key to helping your student make more informed choices. Members

can plan their own customized college tour using AAA TripTik Travel Planner online or have one

of our travel specialists do the work for them by calling 1-877-874-7845. Our staff can provide

directions from home to one or more campuses, locate hotels along the way, identify AAA rates,

and make all reservations.

NewsletterWe offer a brief, one-page monthly online Student Lending Newsletter to help families

keep current on important information: financial aid topics, deadlines, timelines, and more.

Every month we highlight a scholarship and ways to save. To subscribe to the Student Lending

Newsletter, e-mail a request to [email protected].

Tax Benefits

Tax deductions and tax

credits are another way

educated consumers

can help pay for college.

These tax benefits

have been created

by Congress to help

address college

affordability. You can

find this updated

information online at

www.IRS.gov under

publication 970.

For additional resources and services: 1-888-422-2536 | AAA.com/FinancialAid

28

8In this chapter:

• Glossary Financial Aid Glossary-A-

Ability-to-Benefit: One of the criteria used to establish student eligibility in order to receive Title IV program assistance is that a student must have earned a high school diploma or its equivalent. Students who are not high school graduates (or have not earned a GED) can demonstrate that they have the “ability to benefit” from the education or training being offered by passing an approved ability-to-benefit (ATB) test.

Accreditation: The school must have accreditation from an accrediting body recognized by the U.S. Department of Education to be eligible to partici-pate in the administration of Federal student aid programs. Accreditation means that the college meets certain minimum academic standards, as defined by the accrediting body.

Accrued Interest: Interest that accumulates on the unpaid principal balance of a loan.

AGI (Adjusted Gross Income): All taxable income less IRS allowable adjustments to income. This figure is from U.S. IRS tax forms.

Annual Percentage Rate (APR): The interest maintained on a loan for a one-year period.

Award Letter or Financial Aid Award Letter: An official document issued by a financial aid office listing all the financial aid awarded to the student. The award letter will include information about the cost of attendance and terms and conditions for the financial aid.

-B- Borrower: The person who receives the loan.

-C-

Campus-Based Aid: Financial aid programs administered by the university. The government provides the university with a fixed annual allocation, which is awarded by the financial aid administrator to deserving students. The Perkins Loan Program, Supplemental Education Opportunity Grant (SEOG),

and Federal Work-Study are examples of campus-based aid.

Cancellation (Discharge): A discharge or cancellation releases you from all obligation to repay the loan. Two examples are death or permanent disability. Other cancellations are loan-specific. For a complete list of cancellation provisions visit www.dl.ed.gov.

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

Consolidation: Combining several education loans into a new loan with a new payment schedule and interest rate.

COA (Cost of Attendance): The total cost of attending a post-secondary institution for one academic year. The cost of attendance usually includes tuition, fees, room, board, supplies, transportation, and personal expenses. Most colleges have a COA for on-campus students, off-campus students, commuter students, and part-time students.

-D-

Default: The failure to repay a loan in accordance with the terms of the promissory note. Default occurs after 270 days of non-payment of Federal student loans. The consequences of default are severe.

Deferment: 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.

Dependent Student: A student who does not meet any of the criteria for an independent student. An independent student is one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents other than a spouse.


29

When you were age 13 or older, were both your parents deceased, were you in foster care or were you a dependent/ward of the court?

As of today, are you an emancipated minor as determined by a court in your state of legal residence?

As of today, are you in legal guardianship as determined by a court in your state of legal residence?

At any time on or after July 1, 2008, did your high school or school district homeless liaison determine that you were an unaccompanied youth who was homeless?

At any time on or after July 1, 2008 did the director of an emergency shelter program funded by the U.S. Department of Housing and Urban Development determine that you were an unaccompanied youth who was homeless?

At any time on or after July 1, 2008 did the director of a runaway or homeless youth basic center or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless? Parents of a dependent student must submit parental information on the FAFSA in order for their student to be consid-ered for financial aid. Parents of dependent students are eligible to borrow under the Federal PLUS Loan Program.(See also independent student.)

Direct Lending (DL) Program: A student loan program administered by the U.S. Department of Education. Students borrow directly from the Federal government instead of from a private lender. Learn more at www.DLenote.ed.gov. (See FDSLP in glossary.)

Disclosure Statement: Statement of the total cost and amount of a loan, including the interest rate and any additional finance charges issued by the Guarantor or Lender.

-E-

ED, DOE, USED, or DE (U.S. Department of Education): Government agency that administers several student financial aid programs, including

the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loan, the FFELP, and the FDSLP.

EFA (Expected Financial Aid Award): Your EFA is the total amount of Financial Aid (grants, scholarships, Federal loans, etc.) listed on your Financial Aid Award Letter. When you apply for a Private student loan, the EFA is required on the self-certification document you must submit to the lender. Do not include Federal PLUS loans or work-study money in this calculation.

EFC (Expected Family Contribution): Your Expected Family Contribution (EFC) is the number that’s used to determine your eligibility for Federal student financial aid. This number results from the financial information you provided in your FAFSA application. Your EFC is reported to you on your Student Aid Report (SAR).

Early Decision: An admission program with earlier deadlines and earlier notification dates than the regular admissions process. Students who apply through an early decision program commit to attending the school if admitted. Thus, a student can apply for early decision to only one school.

Eligible Non-Citizen: You must be one of the following to receive Federal student aid:

• U.S. citizen

• U.S. national (includes natives of American Samoa or Swain’s Island)

• U.S. permanent resident who has an I-151, I-551, or I-551C (Permanent Resident Card)

If you’re not in one of these categories, you must be an eligible non-citizen, and you must have an Arrival-Departure Record (I-94) from the U.S. Department of Homeland Security (DHS) showing one of the following designations:

• Refugee

• Asylum Granted

• Cuban-Haitian Entrant, status pending

• Conditional Entrant (valid only if issued before April 1, 1980)

• Victims of human trafficking, T-visa (T-2, T-3, or T-4 etc.)

• Indefinite Parolee

30

If you have only a Notice of Approval to Apply for Permanent Residence (I-171 or I-464), you aren’t eligible for Federal student aid. If you’re in the United States on certain visas, including an F1 or F2 student visa, or a J1 or J2 exchange visitor visa, you’re not eligible for Federal student aid. Also, persons with G series visas (pertaining to international organizations) are not eligible.

Eligible Program: A program of organized instruction or study that leads to an academic, professional, or vocational degree or certificate, or other recognized educational credential. To receive Federal student aid, you must be enrolled in an eligible program with two exceptions:

• If a college has told you that you must take certain course work to qualify for admission into one of its eligible programs, you can get a Stafford Loan for up to 12 consecutive months while you’re completing that preparatory course work. You must be enrolled at least half-time, and you must meet the usual student aid eligibility requirements.

• If you’re enrolled at least half-time in a program to obtain a professional credential or certification required by a state for employment as an elementary or secondary school teacher, you can get a Federal Work- Study, Federal Perkins Loan, a Federal Stafford Loan, or your parents can get a PLUS Loan while you’re enrolled in that program.

Enrollment Status: An indication of whether you are a full-time or part-time student. Generally you must be enrolled at least half-time in a degree or certificate program to qualify for financial aid.

Entrance Counseling: Students receiving Federal Stafford or Perkins Loans are required to complete a loan counseling session before they receive their first disbursement. This counseling session reviews terms, conditions, interest rates, and repayment options. Most schools will have a link to their online entrance counseling tool on their Financial Aid website. Many schools will offer the counseling session during Student Orientation Day.

-F-

FAFSA (Free Application for Federal Student Aid): The form that must be completed by students

and parents applying for Federal financial student aid.

FDSLP: The Federal Direct Student Loan Program. Stafford and PLUS Loans are available directly from the government rather than through commercial lenders. Selected colleges and universities participate in this program. (See Direct Lending (DL) Program in glossary)

Federal Methodology: The need analysis formula mandated by law to determine a student’s eligibility for student aid programs.

Federal Processor: The organization that processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and submits the results to students and colleges.

Financial Aid: Financial assistance in the form of scholarships, grants, work-study, and loans for education offered through state, Federal, and state agencies.

Financial Need: The difference between the cost of attendance at a college and the Expected Family Contribution.

Fixed Interest: On a fixed interest loan, the interest rate remains the same for the life of the loan.

Forbearance: If you temporarily can’t meet your repayment schedule but are not eligible for a deferment, your lender might grant you a forbearance for a limited time. Forbearance occurs when your lender or servicer agrees (in writing) to either postpone or reduce your payments temporarily. Generally, a forbearance is granted up to 12 months at a time, for a maximum of 3 years.

-G-

Gift Aid: Financial aid, such as grants and scholarships, which does not need to be repaid.

Grace Period: After borrowers graduate, leave college, or drop below half-time enrollment, loans that were made for that period of study have several months before payments are due. This period is called the “grace period.” During the grace period, no interest accrues on subsidized loans. Interest accrues on unsubsidized loans during grace periods, and this interest is capitalized when


31

borrowers’ loans enter repayment.

Grants: Financial aid awards that do not have to be repaid. Grants are available through the government, state agencies and colleges.

Guarantor (Guaranty Agency): The agency or institution that repays lenders in the event of a default on a student loan.

-I-

Independent Student: A student who is either married, 24 years of age or older, enrolled in a graduate or professional education program, has legal dependents other than a spouse, is an orphan or ward of the court, or a veteran of the U.S. Armed Forces.

When you were age 13 or older, were both your parents deceased, were you in foster care or were you a dependent/ward of the court?

As of today, are you an emancipated minor as determined by a court in your state of legal residence?

As of today, are you in legal guardianship as determined by a court in your state of legal residence?

At any time on or after July 1, 2008, did your high school or school district homeless liaison deter-mine that you were an unaccompanied youth who was homeless?

At any time on or after July 1, 2008 did the director of an emergency shelter program funded by the U.S. Department of Housing and Urban Development determine that you were an unac-companied youth who was homeless?

At any time on or after July 1, 2008 did the director of a runaway or homeless youth basic cen-ter or transitional living program determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk of being homeless?

In-School Deferment: If the student is attending college at least half-time at a postsecondary school or approved Graduate Fellowship program the student may qualify for a deferment until the student

graduates, drops below half-time, or leaves college.

Interest: An amount calculated as a percent of the principal loan amount, which is charged for borrowed money.

-L-

LIBOR (London Interbank Offered Rate): A daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale interbank market.

-N-

National Student Loan Data System (NSLDS): NSLDS is a database for federal student financial aid where you can find out about the Federal loans and grants you’ve received. If you’ve only just applied for aid, you won’t find any information on NSLDS yet. NSLDS receives data from schools, guarantors and U.S. Department of Education programs. The NSLDS website is generally available 24 hours a day, seven days a week. By using your Federal PIN ID, you can access your information. You can access the NSLDS database at www.NSLDS.ed.gov.

Need: The difference between the cost of education and the Expected Family Contribution (EFC) is the student’s financial need.

-O-

Origination Fee: Fee, 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 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.

-P-

Pell Grant Program: The largest grant program. Eligibility and award amounts are determined by the college based on established guidelines. Pell Grant eligibility will be posted on the student’s Financial Aid Award Letter.

32

Perkins Loans: Federally insured loans funded by the government and awarded by the college. The loans feature a low interest rate and are repayable over an extended period.

PIN: Personal Identification Number. Your PIN serves as your electronic signature and gives you access to your personal records with the Department of Education. A PIN allows applicants to complete the FAFSA online. The PIN ID can be used to sign Stafford and PLUS Loans online.

PLUS (Parent Loans for Undergraduate Students): Federally insured loans for parents of dependent students. The PLUS Loan is now available to graduate and professional students.

Post-Secondary: This term means ‘after high school’ and refers to all programs for high school graduates, including programs at two- and four-year colleges, and vocational & technical schools.

PROFILE: (CSS/Financial Aid PROFILE): A customized financial aid application form required by certain private colleges and scholarship programs, which collects additional financial information to determine eligibility for institutional aid. You can file the PROFILE at www.CollegeBoard.com.

Promissory Note: Contract between a borrower and a lender that includes all the terms and conditions under which the borrower promises to repay the loan.

-S-

SAR (Student Aid Report): Your Student Aid Report (SAR) summarizes the information you submit on your Free Application for Federal Student Aid (FAFSA) and provides you with your Expected Family Contribution (EFC).

Scholarships: Funds used to pay for higher education that do not have to be repaid. Scholarships may be awarded based on any number of criteria, such as academics, achievements, talents, and affiliations with various groups, or career aspirations.

Self-Help Aid: Financial aid in the form of loans or student employment.

SEOG: Supplemental Educational Opportunity Grant Program; grant funds made available through some schools to a limited number of undergraduate students with financial need.

Servicer: An organization that acts on behalf of the lender to administer a student loan account. Often the borrower deals with the loan servicer when there are questions about repayment.

Stafford Loans: Loans made available to students through the Direct Lending Program.

Subsidized Loans: A loan for which a borrower is not responsible for the interest while in an in-school, grace, or deferment status. Subsidized loans include: Direct Subsidized and Direct Subsidized Consolidation Loans.

-U-

Unsubsidized Loans: A loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan. Unsubsidized loans include: Direct Unsubsidized Loans, Direct PLUS Loans and Direct Unsubsidized Consolidation Loans.

-V-

Variable Interest: With a variable interest loan, the interest rate changes periodically. For example, the interest rate might be linked to prime rate or LIBOR plus additional percentage rate and be updated monthly, quarterly, semi-annually, or annually.

-W-

Work Study: A program, awarded by the college, through which students work part-time to help fund their education. These funds are typically used for indirect college costs such as living expenses.

©Copyright 2015 AAA Southern New England Bank

Loans and the AAA Student Lending Program offered through AAA Southern New England Bank. This Guide is intended for informational purposes and should not be construed as legal or financial advice.

References in this guide to “Source: U.S. Department of Education” are to U.S. Department of Education, Federal Student Aid, Students Channel, Funding Education Beyond High School: The Guide to Federal Student Aid 2010 – 11, Washington, D.C., 2007

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AAA Southern New England Bank

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Financial Aid Guide · 2015-08-11 · AAA Student Lending Program Financial Aid Guide Your trusted...

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