Terms and Definitions
Free Application for Federal Student Aid (FAFSA) - A free form distributed by the federal government for use by students applying for federal financial aid programs. File your FAFSA at http://www.fafsa.ed.gov/ or click here for a mini FAFSA tutorial
Expected Family Contribution (EFC) - This number is a result of the information provided on the FAFSA and represents the amount a student and his or her family may be expected to contribute toward the student's education. The college uses the EFC to determine how much federal, state and institutional aid the student may be eligible to receive
Stafford Loans - Federal loans that come in two forms: subsidized and unsubsidized. Subsidized loans are based on need; unsubsidized loans are not based on need.
Unsubsidized Stafford Loans - A federal Loan for which the government does not pay the interest. The borrower is responsible for the interest on an unsubsidized loan from the date the loan is disbursed even while the student is n in school. Students may avoid paying the interest while they are in school by capitalizing the interest which increases the loan amount.
Subsidized Stafford Loans - A federal loan for which the government pays the interest on the loan while the student is in school, during the grace period and during any deferment periods. Subsidized loans are awarded based on financial need.
Alternative/Private Student Loan - Private loans are credit based, not federally backed, and are in the student's name. These loans almost always are variable rate loans. Not all lenders participate in private loans and all offer different services and benefits. It is very important to do your research when looking into a private student loan.
Defaulting on a student loan - If you do not make any payments on your student loans for 270 days and do not make special arrangements with your lender to get a deferment or forbearance, your loans will be in default. Defaulting on your student loans has serious consequences. You are responsible for repaying your student loans even if you do not graduate, have trouble finding a job after graduation, or just didn't like your school.
Forbearance - A special arrangement you make with your lender where your interest on your loan will continue to accrue but you will not be required to make a regularly scheduled payment. This happens most often when students run into hard times and have difficulty making a payment.
Deferment - A special arrangement you make with your lender where you are not required to make payment and interest does not accrue while the loan is in deferment. This occurs most often when a student is enrolled in classes at least part-time.
Fixed Rate Loans - Loans that have a cap on the interest so that the interest rate can never exceed a certain amount.
Financial Need - The cost of education minus a student's EFC minus all other financial aid
Variable Rate Loans - Loans that have interest rates that are able to fluctuate without limit.
Educational Costs - The cost of an education at Nescom includes your housing, transportation, food, tuition, fees, insurance, and supplies.
Parent Plus Loan - This is a loan taken out by the student's parent. The borrower may request up to the full cost of the student's education, less the amount of any other financial aid received. PLUS loans require a credit check so good credit history is required. The borrower is the parent of a dependent undergraduate student. If a parent's application for a PLUS loan is denied, the student may be eligible to borrow additional funds under the Unsubsidized Stafford Loan Program.
Entrance/Exit Counseling - Two different mandatory programs for students that have borrowed federal loans. The first is to inform a first time borrower of a federal loan (Stafford or Perkins) of their rights and responsibilities as a borrower. The exit counseling informs the borrower of the terms and conditions of paying back, deferring, forbearing, and defaulting on a federal student loan.
Scholarships - A financial award that does not need to be repaid
Grants - A financial award that does not need to be repaid under normal circumstances.
Master Promissory Note (MPN) - The MPN is a legally binding agreement the borrower signs, in which the borrower promises to repay the loan with interest. Under an MPN, the borrower may receive loans for multiple periods of enrollment. If used as a multi-year note, most borrowers will sign the MPN once and the note then remains valid for up to 10 years.
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