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1040 Form, 1040A Form, 1040EZ Form
The Federal Income Tax Return. Every person who has received income
during the previous year must file a form 1040 with the IRS by April
15.
1099 Form
Form used by businesses to report income paid to a non-employee.
Banks use this form to report interest income.
401(k)
A popular type of retirement fund. It is legal to borrow money from
your 401(k) to help pay for your children's education.
Academic-Year
The period during which school is in session, consisting of at least
30 weeks of instructional time. The school year typically runs from
mid August/early September through early/mid May at most colleges
and universities.
Appeals for Reconsideration
The financial aid administrator (Director), using professional judgment,
can adjust one or more of the data elements used to calculate the
Expected Family Contribution (EFC). The Adjustment must be based
on a student’s individual circumstances and must be documented
in the student’s file. Methodist University uses professional
judgment in cases of divorce or separation, death, loss of a job,
excessive medical expenses and granting independent status to an
otherwise dependent student (by the federal government’s definition).
Award Letter
An official document issued by a school's Office of Financial Aid that
lists all of the financial aid awarded to the student. This letter
provides details on the school’s analysis of your financial
need and the breakdown of your financial aid package according to
amount, source and type of aid. The student MUST sign the award
letter, accepting the aid offered, and sends it back to the Office of Financial Aid.
Award Year
The academic year for which financial aid is requested (or received).
The award year typically runs fall semester through spring semester
with the summer term(s) being optional.
Business Office
The University office that is responsible for the billing and collection
of University charges and the disbursement of federal financial
aid.
Campus-based Aid
Financial aid programs are administered by the University. The federal
government provides the university with a fixed annual allocation,
which is awarded by the financial aid administrator to deserving
students. Such programs include the Federal Perkins Loan, Federal
Supplemental Education Opportunity Grant and Federal Work-Study.
Note: There is no guarantee that every eligible student will receive
financial aid through these programs, because the awards are made
from a fixed pool of money.
Cost of Attendance (COA)
(Also known as the cost of education or "budget") The
total amount it should cost the student to go to school, including
tuition and fees, room and board, allowances for books and supplies,
transportation, and personal and incidental expenses. Loan fees,
if applicable, may also be included in the COA. Schools establish
different standard budget amounts for students living on-campus
or off-campus.
Credit Rating
An evaluation of the likelihood of a borrower to default on a loan.
Credit bureaus and credit reporting agencies provide this information
to banks and businesses to help them decide whether to issue a loan
or extend credit. Your credit rating may include your payment history,
a list of current and past credit accounts and their balances, employment
and personal information and a history of past credit problems.
People who make all their payments on time are considered good credit
risks. People who are frequently delinquent in making their payments
are considered bad credit risks. Defaulting on a loan can hurt your
credit rating.
Custodial Parent
If a student's parents are divorced or separated, the custodial
parent is the one with whom the student lived the most during the
past 12 months and/or is providing more than 50% support for that
physical year. The student's need analysis is based on financial
information supplied by the custodial parent.
Default
A loan is in default when the borrower fails to pay several regular
installments on time (i.e., payments overdue by 270 days) or otherwise
fails to meet the terms and conditions of the loan. If you default
on a loan, the university, the holder of the loan, the state government
and the federal government can take legal action to recover the
money, including garnishing your wages and withholding income tax
refunds. Defaulting on a government loan will make you ineligible
for future federal financial aid, unless a satisfactory repayment
schedule is arranged, and can affect your credit rating.
Deferment
Occurs when a borrower is allowed to postpone repaying the loan.
If you have a subsidized loan, the federal government pays the interest
charges during the deferment period. If you have an unsubsidized
loan, you are responsible for the interest that accrues during the
deferment period. You can still postpone paying the interest charges
by capitalizing the interest, which increases the size of the loan.
Most federal loan programs allow students to defer their loans while
they are in school at least half time. If you don't qualify for
a deferment, you may be able to get a forbearance. You can't get
a deferment if your loan is in default.
Delinquent
If the borrower fails to make a payment on time, the borrower is
considered delinquent and late fees may be charged. If the borrower
misses several payments, the loan goes into default.
Direct Cost
This cost includes the cost of tuition, room, board (meal plan),
and various fees.
Electronic Funds Transfer (EFT)
Used by some schools and lenders to wire funds for Stafford and
PLUS loans directly to participating schools without requiring an
intermediate check for the student to endorse. The money is transferred
electronically instead of using paper, and hence is available to
the student sooner.
Eligible Non-Citizen
Someone who is not a US citizen but is nevertheless eligible for
Federal student aid. Eligible non-citizens include US permanent
residents who are holders of valid green cards, US nationals, holders
of form I-94 who have been granted refugee or asylum status and
certain other non-citizens. Non-citizens who hold a student visa
or an exchange visitor visa are not eligible for Federal student
aid.
Emancipated
To release a child from the control of a parent or guardian. Declaring
a child to be legally emancipated is not sufficient to release the
parents or legal guardians from being responsible for providing
for the child's education. If this were the case, then every parent
would "divorce" their children before sending them to
college. The criteria for a child to be found independent are much
stricter.
Enrollment Status
An indication of whether you are a full-time or part-time student.
Generally you must be enrolled at least half-time (and in some cases
full-time) to qualify for financial aid.
Expected Family Contribution (EFC)
The EFC is a five digit number listed in the top right hand corner
of the student’s Student Aid Report (see below). This is the
actual dollar figure the Federal government estimates a family could
contribute to the student’s education. Colleges use this number
to determine need-based financial aid.
Federal Family Education Loan Program (FFELP)
Includes the Federal Stafford Loan (Subsidized and Unsubsidized),
the Federal Perkins Loan and the Parent Loan for Undergraduate Students
(PLUS). The funds for these loans are provided by private lenders,
such as banks, credit unions and savings & loan associations.
These loans are guaranteed against default by the federal government.
Federal Methodology
The need analysis formula used to determine the EFC. The Federal
Methodology takes family size, the number of family members in college,
taxable and nontaxable income and assets into account. Unlike most
Institutional Methodologies, however, the Federal Methodology does
not consider the net value of the family residence.
Federal Processor
The organization that processes the information submitted on the
Free Application for Federal Student Aid (FAFSA) and uses it to
compute eligibility for federal student aid. There are two different
federal processors serving specific geographic regions.
Federal Work-Study (WS)
Program providing undergraduate and graduate students with part-time
employment during the school year. The federal government pays a
portion of the student's salary, making it cheaper for departments
and businesses to hire the student. For this reason, work-study
students often find it easier to get a part-time job. Eligibility
for WS is based on need. Money earned from a WS job is not counted
as income for the subsequent year's need analysis process.
Financial Aid Estimator
Form provided to all Methodist University students accepted prior
to December 15 which is used to estimate financial aid awards for
the following academic year.
Financial Aid Package
The complete collection of grants, scholarships, loans and work-study
employment from all sources (federal, state, institutional and private)
offered to a student to enable them to attend the college or university.
Note that unsubsidized Stafford loans and PLUS loans are not considered
part of the financial aid package, since these financing options
are available to the family to help them meet the EFC.
Financial Need
This is determined by subtracting the EFC from the cost of attendance.
Free Application for Federal Student
Aid (FAFSA)
Form used to apply for Pell Grants and all other need-based aid.
As the name suggests, no fee is charged to file a FAFSA. The FAFSA
can be completed either by paper form or on line at www.fafsa.ed.gov.
Grace Period
A short time period after graduation during which the borrower is
not required to begin repaying his or her student loans. The grace
period may also kick in if the borrower leaves school for a reason
other than graduation or drops below half-time enrollment. Depending
on the type of loan, you will have a grace period of six months
(Stafford Loans) or nine months (Perkins Loans) before you must
start making payments on your student loans. The PLUS Loans do not
have a grace period.
Grade Point Average (GPA)
An average of a student's grades, converted to a 4.0 scale (4.0
is an A, 3.0 is a B, and 2.0 is a C).
Grant
Free money awarded to a student.
Guarantee
Agency or Guarantor State agencies responsible for approving student
loans and insuring them against default. Guarantee agencies also
oversee the student loan process and enforce federal and state rules
regarding student loans.
Guarantee Fee
A small percentage of the loan that is paid to the guarantee agency
to insure the loan against default. The insurance fee is usually
1% of the loan amount (and by law cannot exceed 3% of the loan amount).
Half-Time
Most financial aid programs require that the student be enrolled
at least half-time (6 hours undergraduate and 3 hours graduate)
in classes required for your eligible program. Some programs require
the student to be enrolled full-time.
Institutional Student Information
Record (ISIR)
The ISIR is the electronic result of the FAFSA.
Once the processing center receives the FAFSA, they process it and
electronically send it to the college. Methodist University receives
an ISIR for every student that has listed Methodist University on
their FAFSA. Once the ISIR is received and the student has been
accepted from the Office of Admissions, the Office of Financial Aid
will make any adjustments or corrections that are needed. If everything
is accurate, the student can be awarded a financial aid package.
Loan
Funds awarded to students that must be repaid usually after graduation
from college or dropping below 6 semester hours for a period of
6 months. A Loan application must be completed to receive the funds.
You can apply online for either Stafford
Loans, Grad/Parent
Plus Loans, or Alternative
Loans.
Loan
Entrance Counseling
A form that must be completed by all first-time Federal Stafford
Loan borrowers before funds will be disbursed.
Loan
Exit Counseling
A form that must be completed by all Federal Stafford Loan borrowers
before graduation.
Loan Request Form
A form used by the Office of Financial Aid and completed by the student
and/or parent to initiate the loan process for the current academic
year. Get request forms for either Stafford
Loans or PLUS
Loans.
Monthly Payment Plan
Families may choose to make ten (10) monthly interest-free payments
from June 1-March 1 rather than the standard one (1) payment per
semester. There is a $60 enrollment fee for this payment option.
Visit Payment Plans for more information.
Need
The difference between the COA and the EFC is the student's financial
need -- the gap between the cost of attending the school and the
student's resources. The financial aid package is based on the amount
of financial need. The process of determining a student's need is
known as need analysis.
Cost of Attendance (COA)
- Expected Family Contribution (EFC)
---------------------------------------------------
= Financial Need
Need Analysis
The process of determining a student's financial need by analyzing
the financial information provided by the student and his or her
parents (and spouse, if any) on a financial aid form. The student
must submit a need analysis form to apply for need-based aid. Need
analysis forms include the Free Application for Federal Student
Aid (FAFSA) and the Financial Aid PROFILE.
Need-Based
Financial aid that is need-based depends on your financial situation.
Most government sources of financial aid are need-based.
Origination Fee
Fee paid to the bank to compensate them for the cost of administering
the loan. The origination fees are charged as the loan is disbursed,
and typically run to 4% of the amount disbursed. A portion of this
fee is paid to federal government to offset the administrative costs
of the loan.
Outside Resource
Aid or benefits available because a student is in school and is
counted after need is determined. Outside scholarships, prepaid
tuition plans and VA educational benefits are examples of outside
resources.
Outside Scholarship
A scholarship that comes from sources other than the school and
the federal or state government.
Overawards
A student who receives federal support may not receive awards totaling
excess of his or her financial need. Should a student receive additional
aid after having been awarded, the Staffords loans and/ or other
aid may be reduced to bring the student’s total package equal
to the COA.
Packaging
The process of assembling a financial aid package.
Parent Contribution (PC)
An estimate of the portion of your educational expenses that the
federal government believes your parents can afford. It is based
on their income, the number of parents earning income, assets, family
size, the number of family members currently attending a university
and other relevant factors. Students who qualify as independent
are not expected to have a parent contribution.
Parent Loans for Undergraduate Students (PLUS)
Federal loans available to parents of dependent undergraduate students
to help finance the child's education. Parents may borrow up to
the full cost of their children's education, less the amount of
any other financial aid received. PLUS Loans may be used to pay
the EFC. There is a minimal credit check required for the PLUS loan,
so a good credit history is required If your application for a PLUS
loan is turned down, your child may be eligible to borrow additional
money under the Unsubsidized Stafford Loan program.
Pell Grant
A federal grant that provides funds based on the student's financial
need.
Professional Judgment
Professional Judgment may be used by the Director of Financial Aid
for extenuating or “special circumstances” a family
has either at the time the FAFSA
is being completed or after. Extenuating circumstances may be, but
are not limited to, the loss of a job, the death of a parent or
spouse, a divorce or separation, loss of child support or social
security. You may complete the on-line form for professional judgment
or contact the Office of Financial Aid to have a form mailed to you.
You must submit the complete federal tax return “signed”
for the year in question with all W-2/1099 forms with the special
circumstance worksheet to the Office of Financial Aid. Upon receipt
of all forms, the Director may ask for additional documentation.
Once all documentation is received, the Director may or may not
use professional judgment based upon the circumstances. It is the
student’s/parents’ responsibility to contact the Office of Financial Aid, usually within two weeks after submission of all paperwork,
as to whether the professional judgment was granted or not.
Promissory Note
The binding legal document that must be signed by the student borrower
before loan funds are disbursed by the lender. The promissory note
states the terms and conditions of the loan, including repayment
schedule, interest rate, deferment policy and cancellations. The
student should keep this document until the loan has been repaid.
Satisfactory Academic Progress (SAP)
A student must make this status in order to continue receiving federal
aid. If a student fails to maintain an academic standing consistent
with the school's SAP policy, they are unlikely to meet the school's
graduation requirements. A detailed description of SAP guidelines
is provided at: http://www.methodist.edu/Financial_Aid/sap.htm.
Scholarship
A form of financial aid given to undergraduate students to help
pay for their education. Most scholarships are restricted to paying
all or part of tuition expenses, though some scholarships also cover
room and board. Scholarships are a form of gift aid and do not have
to be repaid. Many scholarships are restricted to students in specific
courses of study or with academic, athletic or artistic talent.
Selective Service System
Registration for the military draft. Male students who are US citizens
and have reached the age of 18 and were born after December 31,
1959 must be registered with Selective Service System to be eligible
for federal financial aid. If the student did not register and is
past the age of doing so (18-25), and the school determines that
the failure to register was knowing and willful, the student is
ineligible for all federal student financial aid programs. The school's
decision as to whether the failure to register was willful is not
subject to appeal. Students needing help resolving problems concerning
their Selective Service System registration should call 1-847-688-6888.
Servicer
An organization that collects payments on a loan and performs other
administrative tasks associated with maintaining a loan portfolio.
Loan servicers disburse loans funds, monitor loans while the borrowers
are in school, collect payments, process deferments and forbearances,
respond to borrower inquiries and ensure that the loans are administered
in compliance with federal regulations and guarantee agency requirements.
Simple Interest
Interest that is paid only on the principal balance of the loan
and not on any accrued interest. Most federal student loan programs
offer simple interest. Note, however, that capitalizing the interest
on an unsubsidized Stafford loan is a form of compounded interest.
Simplified Needs Test
If the parents have an adjusted gross income of less than $50,000
and every family member was eligible to file an IRS Form 1040A or
1040EZ (or wasn't required to file a Federal income tax return),
the Federal Methodology ignores assets when computing the EFC. If
you filed a 1040 but weren't required to do so, you may be eligible
for the simplified needs test. Details on the eligibility requirements
appear on the Simplified Needs Test Chart.
Stafford Loans
Federal loans that come in two forms, subsidized and unsubsidized.
Subsidized loans are based on need; unsubsidized loans aren't. The
interest on the subsidized Stafford Loan is paid by the federal
government while the student is in school and during the 6 month
grace period.
Undergraduates may borrow up to $23,000 ($3,500 during the freshman
year, $4,500 during the sophomore year and $5,500 during the third,
fourth and fifth years) and graduate students up to $65,500 including
any undergraduate Stafford loans ($8,500 Subsidized and $12,000
Unsubsidized per year). These limits are for subsidized and unsubsidized
loans combined. The difference between the subsidized loan amount
and the limit may be borrowed by the student as an unsubsidized
loan.
Student Aid Report (SAR)
Report that summarizes the information included in the FAFSA and
must be provided to your school's FAO. The SAR will also indicate
the amount of Pell Grant eligibility, if any, and the Expected Family
Contribution (EFC). You should receive a copy of your SAR four to
six weeks after you file your FAFSA. Review your SAR and correct
any errors on part 2 of the SAR. Keep a photocopy of the SAR for
your records. To request a duplicate copy of your SAR, call 1-319-337-5665.
Student Contribution (SC)
The amount of money the federal government expects the student to
contribute to his or her education and is included as part of the
EFC. The SC depends on the student's income and assets, but can
vary from school to school. Usually a student is expected to contribute
about 35% of his or her savings and approximately one-half of his
summer earnings above $1,750.
Subsidized Loan
With a subsidized loan, such as the Perkins Loan or the Subsidized
Stafford Loan, the government pays the interest on the loan while
the student is in school, during the six-month grace period and
during any deferment periods. Subsidized loans are awarded based
on financial need and may not be used to finance the family contribution.
See Stafford Loans for information about subsidized Stafford Loans.
Supplemental Education Opportunity Grant
Federal grant program for undergraduate students with exceptional
need. FSEOG grants are awarded by the school's Office of Financial Aid.
To qualify, a student must also be a recipient of a Federal Pell
Grant.
Title IV
Title IV is grant or loan money from the government. All Title IV
money, with the exception of the PLUS loan, is need-based and awarded
from the results of the FAFSA.
The Pell Grant, SEOG, Stafford and PLUS Loans, Perkins Loan, and
Work Study Program are all sources of Title IV money.
Unmet Need
In an ideal world, the FAO would be able to provide each student
with the full difference between their ability to pay and the cost
of education. Due to budget constraints the FAO may provide the
student with less than the student's need (as determined by the
FAO). This gap is known as the unmet need.
Unsubsidized Loan
A federal loan for which the government does not pay the interest.
The borrower is responsible for the interest on an unsubsidized
federal loan from the date the loan is disbursed, even while the
student is still in school. Students may avoid paying the interest
while they are in school by capitalizing the interest, which increases
the loan amount. Unsubsidized loans are not based on financial need
and may be used to finance the family contribution. See Stafford
Loans for information about Federal Subsidized Stafford Loans.
Verification
The processing center randomly selects at least one-third of all
applicants applying for federal aid for a process called Verification.
If selected, the Office of Financial Aid will request additional information,
such as copies of signed Federal Income Tax Returns, 1099 forms,
W-2 forms and a Verification Worksheet to be completed by the student
and/or parent(s). If not selected by the government, the Office of Financial Aid has the right to select students for verification.
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