Glossary of Terms

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Accruing interest:
The adding of interest to a loan amount. For some loans, interest charges begin to add up as soon as the loan is made, increasing total due.

The person who assumes legal obligations for the repayment of the loan principle plus interest. In the case of a Federal Perkins Loan or Federal Stafford Loan, the borrower is the student.

Combining two or more loans into one new loan that may be a longer repayment period, and a single monthly payment that is smaller than the sum of pervious monthly payments. By consolidating eligible federal student loans and extending the repayment period, repayment can be easier. Although this may help with the borrower's monthly expenses, consolidation can add significantly to the amount of overall interest that is paid over time.

A signer other than the borrower who agrees to assume responsibility for repayment in the event that the borrower fails to repay. Private educational alternative loans may require cosigners but federal loans usually do not.

Cost of Attendance (Budget):
The student's cost of attendance includes not only tuition and fees but also living expenses while attending school. The cost of attendance is determined by the school using guidelines established by federal regulations.

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A borrower's failure to repay according to the terms agreed upon when the promissory note was signed. Default can also occur when a borrower fails to submit requests for deferment or cancellation, and is generally referred to as a "technical default". When a borrower defaults on a federal student loan, the school, the organization holding the loans, the guarantee agency, and the federal government can all take action to recover the funds. A borrower is considered to be in default when payments are 180 or more days overdue and no satisfactory arrangements for deferment or forbearance have been made. Assets, including Internal Revenue Service (IRS) refunds may be seized, and the borrower's credit record or history is negatively affected. Student loan borrowers cannot get out of default until they pay back their loan in full, sign new loan agreements, or reschedule their debt. They are also ineligible for additional federal student aid, including grants and loans.

An authorized period of time during which a student loan borrower may postpone making payments. Borrowers must file deferment forms with their lenders and be approved for deferments. Deferments are available if borrowers are enrolled in school at least half-time, enrolled in a graduate fellowship program or rehabilitation training program, unemployed, or experiencing demonstrated economic hardship. The federal government makes interest payments on subsidized Stafford loans during deferment periods.

For an individual to be considered your dependent, they must live with you and you must provide them with more than half of their financial support. Spouses do not count as dependents. A student is considered dependent if he/she is required to include parent information on the FAFSA.

The process by which funds are made available to students for use in meeting educationally related expenses. Funds are first credited to the student's account. Refunds will be issued by the Business Office within 14 business days of the start of classes for that semester.

Disclosure Statement:
Lenders are required to provide the borrower with a disclosure statement prior to issuing a loan. The disclosure statement provides the borrower with information about the actual cost of the loan, including the interest rate, origination, insurance and loan fees, and any other kinds of finance charges.

Entrance/Exit Counseling:
Counseling sessions borrowers are required to attend according to federal regulations before they can receive their first federal loan disbursement, and again prior to leaving school (reasons for separation include graduation, withdrawal, dropping below half-time, or going on leave of absence).

Expected Family Contribution (EFC):
The amount that a student can reasonably be expected to contribute toward college costs, as determined by Federal Methodology.  See also Federal Methodology.

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Free Application for Federal Student Aid (FAFSA):
A form distributed and processed by the U.S. Department of Education, used in applying for all federal Title IV student aid programs. The FAFSA collects the information required to determine need and eligibility according to Federal Methodology. It is available online at, and from the BTS Office of Admissions and Financial Aid. We suggest using “FASFA on the Web” which will shorten the response time.
Federal Family Education Loan (FFEL):
Education loans provided by private lenders and guaranteed by the federal government that must be repaid. Subsidized and unsubsidized Stafford loans and PLUS loans are included.

Federal Methodology:
The formula according to which a student's eligibility for Federal Title IV funds is determined. The formula takes into account income, some assets, expenses, family size, and other factors.

Federal Pell Grant:
The Federal Pell Grant is available to students who have demonstrated the highest financial need according to Federal Methodology, as a result of information submitted on the FAFSA. This grant is gift aid that does not need to be repaid. It is only available to undergraduate (Bangor Plan) students.

Federal Perkins Loan:
The Federal Perkins Loan is available to students who have demonstrated financial need according to Federal Methodology, as a result of information submitted on the FAFSA. The federal government pays the interest on this loan while the student is enrolled at least half time. The interest rate is fixed at 5%, and the loan will go into repayment 9 months after the student leaves school.

Federal Supplemental Educational Opportunity Grant (FSEOG):
The Federal Supplemental Educational Opportunity Grant is available to students who have demonstrated the highest financial need according to Federal Methodology, as a result of information submitted on the FAFSA. This grant is gift aid that does not need to be repaid. It is only available to undergraduate (Bangor Plan) students.

Federal Work-Study:
Federal Work-Study allows a student to earn money by working a part-time job, which can be on campus or off campus at selected nonprofit organizations. Students must demonstrate financial need according to Federal Methodology to be offered work-study. Federal Work-Study is not subtracted from a student's bill; instead the student receives a paycheck every two weeks that can be applied to miscellaneous expenses such as personal supplies and books.

Financial Aid:
Assistance provided to students to help them meet both direct costs of education (tuition/fees, on campus room and board, books) and indirect costs (travel, personal expenses, off campus room and board). There are four sources of financial aid: federal government, state government, private organizations, and postsecondary institutions.

Financial Aid Award:
An offer of financial assistance to a student attending a postsecondary educational institution. This award may be in the form of one or more of the following types of financial aid: repayable loan, a non-repayable grant and/or scholarship, and/or student employment.

Financial Aid Award Letter:
A letter sent to students, once a decision has been made, of aid offered for an academic year. To accept or decline aid, students must return the accompanying Award Acceptance letter to Bangor Theological Seminary’s Office of Admissions and Financial Aid.

Financial Need:
The difference between what it costs to attend a particular college and the amount that is determined that a student  can afford to pay towards those expenses (EFC). Sometimes also called "demonstrated financial need".

The period during which a borrower is permitted to temporarily cease making payments or reduce the amount of the payments. The borrower is responsible for the interest that accrues on the loan during the forbearance period. In many cases, forbearance is granted at the lender's discretion; in instances, borrowers are entitled for forbearance.

Grace Period:
A specified period of time after a student leaves school or drops below half time status during which he/she is not required to make payments on either principal or interest. The grace period is typically six to nine months, depending on the type of loan.

Money that doesn't need to be repaid. Grants may be from available from church and denominational bodies as well as community and philanthropic organizations.

A state, regional, or national organization that acts as an agent for the federal government in the administration and insurance of FFEL loans made by private lenders. Maine's guarantee agency is the Finance Authority of Maine (FAME).

The institution with legal title to a borrower's loan. The holder may be the lender that originally made the loan, a secondary market to which the lender has sold the loan, or, in the event of default, the guarantee agency or the federal government.

The fee charged to a borrower for the use of someone else's money, computed as a percentage of what is borrowed. The interest rate may remain constant throughout the life of the loan (fixed) or may change at specified times (variable). As of October 1, 1993, all Federal Stafford and PLUS loans have variable interest rates.

ISIR (Institutional Student Information Report):
This is an electronic record sent to the school of choice as a result of completing the Free Application for Federal Student Aid (FAFSA). See SAR for more information.

A financial institution such as a bank, a savings and loan association, a credit union, or a qualified program that makes FFEL and/or private loans.

To be enrolled at an eligible institution working toward a degree or certificate in an eligible program.

Outside Assistance:
Outside assistance includes scholarships, grants, waivers, and loans to be used toward the student's college expenses. Students are required to notify the Financial Aid Office in writing of any outside financial assistance. Students may be notified of changes in their financial aid award as a result of outside assistance.

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PIN Number:
A number that defines the student and/or parent to the federal student aid programs. A PIN number allows you to electronically sign the Free Application for Federal Student Aid (FAFSA). Apply for a PIN number at Your PIN number will be mailed to you within 7 to 10 days of the time you apply.

Promissory Note:
The legal document that binds a borrower to the repayment obligations and other terms and conditions that govern a loan program.

The original amount borrowed. Origination and guarantee fees are deducted from this amount before disbursement, and interest is computed as a percentage of principal. If a student borrows $2,500 a year for four years of college, the principal is $10,000. The borrower pays interest on the outstanding (or remaining) principal each month until the entire loan is paid off.

Satisfactory Academic Progress:
The program required of a financial aid recipient in acceptable studies or other activities to fulfill a specified educational objective.

Selective Service Registration:
All male students 18 years old and born after December 31, 1959 must be registered with selective service in order to receive federal student aid. Registration materials are available at your local post office.

Student Aid Report (SAR):
The SAR is sent to the student after completion and processing of the Free Application for Federal Student Aid (FAFSA). The SAR summarizes the information included in the FAFSA and contains the Expected Family Contribution (EFC).

Student Contribution:
The amount that a student can reasonably be expected to contribute towards his or her own education expenses, based on federal guidelines.

The process of verifying information submitted on student aid applications through the comparison of specified documents to the data on the Student Aid Report (SAR).