Financial Aid Literacy

Helpful Resources

Financial Education Resources List

Financial Literary Guidance from Federal Student Aid

Loan Forgiveness Programs
Public Service Loan Forgiveness Program (Direct Loan Borrowers) encourages individuals to enter and continue to work full time in public services jobs. Many government organizations and non profit,tax exempt organizations are qualified employers. To find out if your Federal educational loans qualify and how to apply, visit, and click on “Loan forgiveness.”

Student Loan Repayment Options
To help provide relief to student who are repaying their student loan, the Department of Education offers 3 repayment plans to help eligible borrowers. The three main plans are Income-Contingent repayment plan (ICR), Income-based repayment plan (IBR) and the newest is Pay as you Earn Plan. These plans base monthly payments on the amount a borrower earns, family size and other criteria. Each of these repayment plans requires students to apply and verify their income.  Not every borrower is eligible for one of these plans but those that are find their payments reduced compared to the ten year standard repayment plan.  Students should contact their loan servicer: or

Glossary of Terms

Academic Year. The DSON Academic Year begins in the fall and ends in June for Days and August for Evening/Weekend students..

Adjusted Gross Income (AGI). A family’s wages, salaries, interest, dividends, etc., minus certain deductions from income as reported on a federal income tax return.

Aggregate Federal Stafford Limit. The total lifetime amount you may borrow in the Federal Stafford Loan Programs. This includes loans with outstanding balances in both the Federal Direct Stafford Loan Program and the Federal Family Education Loan Program if applicable.

Annual Federal Direct Stafford Limit. The maximum yearly amount you may borrow in the Federal Direct Stafford Loan (Link to our page on the website)Program based on your grade level and dependency status.

Auto-debit. Repayment of a loan by auto-debit occurs when the borrower sets up an agreement with the loan servicer to deduct monthly loan payments directly from the borrower’s bank account. Lenders may offer a slight interest rate deduction for this type of payment.

Capitalization. A term used to describe a method of computing interest. To capitalize a loan means to add all interest that has accrued to the principal loan amount. Once a loan is capitalized, the new loan amount (both principal and interest) is the amount upon which interest will accrue.

Consolidation. The process of combining one or more loans into a single new loan.

Co-signer/Co-borrower/Endorser. An additional applicant added to a loan to meet creditworthiness guidelines, often a parent. A co-signer/co-borrower/endorser has the same legal responsibility on the loan as the primary borrower.

Cost of Attendance (COA). A budget constructed to approximate the expenses which a student will incur that are directly related to enrollment.

Credit-Based. Credit-based lending considers past credit history and income to determine eligibility for a loan. Repayment history, delinquencies, and length of time accounts have been established are considerations in determining a borrower’s ability to obtain a loan. The credit history of both the student (if he or she has a credit history) and the co-applicant will be reviewed. PLUS and private loans are credit-based.

Credit Score. Your credit score is a number based on the information in your credit file that shows how likely you may be to pay a loan back on time — the higher your score, the less risk you represent.

Default. Failure to repay a loan according to the terms agreed to in the promissory note which could result in legal consequences.

Deferment. A time during which the borrower is not required to make payment. During deferment, interest will accrue on the loan, although the borrower is not obligated to make payment on the loan amount.

Delinquent. When loan payments are not received by the due dates the loan is delinquent. A loan remains delinquent until the borrower makes up the missed payment(s) through payment, deferment, or forbearance.

Disbursement. Disbursement is the process by which financial assistance (grants, scholarships and loans) are applied to the student’s account.

Discharge. The release of a borrower from the obligation to repay his or her loan.

Electronic Funds Transfer (EFT). The electronic exchange, or transfer of money, from one account to another used by many private alternative loan lenders.

Enrollment Status. Your educational institution’s own classification of your attendance, important to your eligibility for student loans. Federal Direct Stafford, Federal Direct PLUS, and some private alternative loans require that you be enrolled at least half-time. For undergraduates full-time is considered enrollment in at least 12 credits per semester. Half-time for undergraduates is defined at 6 credits per semester. Students who do not meet the above requirements are considered less than half-time.

Entrance/Exit Counseling. Federal Direct Loan requirements where you learn your rights and responsibilities as a borrower and during repayment.

Estimated Financial Aid. The total amount of financial aid you expect to receive for the period in question.

Expected Family Contribution (EFC). A measure of how much money you and your family will be able to contribute toward your educational expenses for one academic year.

FAFSA. The Free Application for Federal Student Aid which is required for all financial aid applicants to determine their eligibility for assistance

Federal Loan Repayment Plans.

  • Extended. Allows you to pay your loans over an extended period of time.
  • Graduated. Starts with lower payments that increase every two years.
  • Income-Based. Borrowers pay 15% of their discretionary income for up to 25 years, after which the rest of the loan is forgiven.
  • Income-Contingent. A plan based on adjusted gross income, family size and total amount of Direct Loans
  • Income Sensitive. Payments increase or decrease based on the borrower’s annual income.
  • Pay as You Earn. Borrowers pay 10% of their discretionary income for up to 20 years, after which the rest of the loan is forgiven.
  • Standard. Payments under this plan are fixed and made for up to 10 years.

Federal Methodology (FM). The formula used by the federal government to determine your Expected Family Contribution (EFC).

Financial Aid Denial. Students who fail to meet Satisfactory Academic Progress (SAP) (see The Steeple, page 59) standards for two subsequent semesters are placed into Financial Aid Denial status and notified they are no longer eligible to receive financial assistance.

Financial Aid Probation. Students who fail to meet Satisfactory Academic Progress (SAP) standards after being issued a warning may appeal for one additional semester of eligibility. Students whose appeals are approved are put on Financial Aid Probation status for one semester.

Financial Aid Warning. Students who fail to meet Satisfactory Academic Progress (SAP) standards are placed into Financial Aid Warning status and notified that they have one semester to meet all standards.

Fixed Interest Rate. An interest rate which remains the same throughout the life of the loan, through repayment.

Forbearance. A period during which your monthly loan payments are temporarily suspended or reduced.

Grace Period. The length of time a borrower is granted before the first payment is due. Grace period may refer to the time between disbursement of funds and the first payment if immediate repayment is required, or the length of time from the end of a deferment period to the first payment.back to top

Interest. Money paid for money borrowed. Most interest is computed using a percentage of the outstanding balance of the loan.

Lifetime Eligibility Used (LEU). The amount of all Federal Pell Grant aid (in percentage) awarded to you divided by the amount of Pell Grant aid you would have been eligible to receive based on full-time enrollment.

Loan Forgiveness. The cancellation of all or some portion of your remaining federal student loan balance. If your loan is forgiven, you are no longer responsible for repaying that remaining portion of the loan.

Loan Period. The semesters for which your requested loan funds cover.

Master Promissory Note (MPN)/Promissory Note. A binding legal document that you must sign when you get a student loan. The MPN is used for Federal Direct Loans and is valid for up to 10 years. Most private alternative loans require a new Promissory Note for every loan you borrow.

National Student Loan Data System (NSLDS). A centralized database (keep this link it works)that stores information on federal grants and loans. NSLDS contains information on how much aid you’ve received, your enrollment status, and your loan servicer(s). You can access NSLDS using your Federal Student Aid PIN.

Net Price Calculator. A tool that allows current and prospective students, families, and other consumers to estimate the net price of attending a particular college or career school.

Origination Fee. The fee, charged by the lender, for services provided in connection with the origination and funding of the loan.

Outside Resource. Outside resources are funds designated to be used for educational purposes and awarded to the student by offices or agencies other than the Office of Student Financial Assistance.

Principal. The total sum of money borrowed plus any interest that has been capitalized.

Rebudget. The process where your loan eligibility in reassessed due to a change in circumstances.

Refund. A credit to your student account in excess of your charges for a given semester

Return to Title IV (R2T4). A process to determine the amount of federal aid a student has earned after withdrawing during a semester.

Satisfactory Academic Progress (SAP). Metrics for satisfactory academic progress towards degree or certificate completion.

Serivier. An agency or company that collects payments on a loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a lender.

Student Aid Report (SAR). A summary of the information you submitted on your Free Application for Federal Student Aid (FAFSA). You receive this report via e-mail a few days after your FAFSA has been processed or by mail within 7-10 days if you did not provide an e-mail address. If there are no corrections or additional information you must provide, the SAR will contain your EFC.

Title IV. The portion of the Higher Education Act of 1965 that covers the administration of federal financial aid.

Variable Interest. An interest rate that may change depending on the terms of the loan.

Verification. Verification refers to the process by which a student’s eligibility for need based assistance is validated.


 Financial Aid News

CONTACT: Greg Vadala 202-225-6111
Nov. 21, 2013

Washington, D.C. – U.S. Reps. Allyson Y. Schwartz (PA-13), Jared Polis (CO-2) and Tim Bishop (NY-1) today reintroduced the Know Before You Owe Act to ensure that families and students have greater access to critical information about their student loan options. The legislation requires schools to counsel students on the financial aid options available to them from both the federal government and the private market. It also requires private lenders to adopt common-sense measures to protect student borrowers.

“This bill empowers students and families to make the most informed choices about how to afford college and invest in their future without taking on unnecessary debt,” Schwartz said. “Strengthening the transparency of student loan options can help make college more affordable and provide a safeguard against those who might try to deceive students and families facing difficult financial decisions.”
“In today’s knowledge-based economy, a college degree is the best investment that a student can make for their future,” Polis said. “However with the rising costs of higher education, today’s students are being hamstrung by record debt levels, forcing them to delay other important investments in their futures, including saving for a secure retirement or purchasing a home. By empowering students with simple disclosure and coordination about the federal financial aid options before they turn to more expensive private loans, the Know Before You Owe Act will go a long way to help students make smart choices about the most affordable student loan opportunities available to them. Through simple coordination and disclosure, we can save student loan borrowers billions of dollars and make their education more affordable.”

Americans face more than $1 trillion in student loan debt, and 40 percent of students with private loans have not exhausted all of their federal loan options, according to the Consumer Financial Protection Bureau.

There are several major differences between private student loans and federal student loans. Federal loans offer lower, fixed interest rates, consumer protections and manageable repayment options. In contrast, private student loans typically have uncapped, variable rates, hefty fees and few consumer protections.
Higher education costs have steadily increased across the United States, and the Federal Reserve Bank of New York reports that student loan debt continues to exceed credit card debt. In Pennsylvania, tuition and fees average more than $12,000 at public four-year universities and over $35,000 at private universities. In 2011, 70 percent of college seniors in Pennsylvania graduated with student loan debt, with the average amount approaching $30,000, according to the Institute for College Access and Success. Pennsylvania ranks 7th in the nation for the number of college graduates saddled with student loan debt.
“The Know Before You Owe Act would ensure that aid administrators are a part of the process of issuing private loans and that students and parents do not borrow more than they need to meet their postsecondary education-related expenses. It also guarantees that the institutions’ financial aid officers have an opportunity to counsel students about loan choices and indebtedness before they borrow.  On behalf of PASFAA I want to thank Rep. Schwartz for her hard work on this issue and her dedication to helping Pennsylvania’s students and families gain access to postsecondary education,” said Cheryl De Paolis, President of the Pennsylvania Association of Student Financial Aid Administrators (PASFAA).

“Students deserve to know what they’re signing up for when they enroll in college. As Millennials compare different colleges, transparency is key. I applaud Rep. Schwartz for introducing the Know Before You Owe Act, an important step to help prospective college students gather the necessary information needed to make smart investments for their future,” said Anne Johnson, Executive Director of Generation Progress.
Organizations Supporting the Know Before You Owe Act:
Pennsylvania Association of Student Financial Aid Administrators (PASFAA), National Association of Student Financial Aid Administrators, National Association for College Admission Counseling, National Council of La Raza, Generation Progress, Council for Opportunity in Education, Young Invincibles, National Consumer Law Center, The Institute for College Access and Success, National Consumers League, American Federation of Teachers, The Education Trust, U.S. Public Interest Research Group, Consumer Action, Democrats for Education Reform,  American Podiatric Medical Students’ Association, American Podiatric Medical Association, Association of American Medical Colleges, Demos, and Student Administrator Affairs in Higher Education.

The Know Before You Owe Act requires private lenders to:

  • Certify with the borrower’s school that the student is enrolled and the amount the student is eligible to borrow before issuing a private loan.
  • Provide the borrower with quarterly updates on their loans, including accrued but unpaid interest and capitalized interest.
  • Report information to the Consumer Financial Protection Bureau about their student loans.

The bill requires institutions of higher education to:

  • Inform students about their federal financial aid availability and eligibility; their ability to select a private lender of their choice; the impact of a private loan on their eligibility for other forms of financial aid; and their right to accept, reject or cancel a private loan as allowed under current law; and
  • Notify students about the terms and conditions of federal and private student loans.
    Sens. Richard J. Durbin of Illinois and Tom Harkin of Iowa re-introduced companion legislation (S. 113) in the Senate on Jan. 23, 2013.