NYU Stern
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Glossary

Accrued Interest:
The amount of interest, calculated daily, that has accumulated on the unpaid amount of your loan.

Adjusted Gross Income:
Taxable income from all sources. (See your Federal Income Tax Form 1040 EZ, line three, or Form 1040, line 31.)

Amortization:
The reduction of loan balance by your monthly payments.

Assets:
Items of financial worth which may include your home, business, savings and checking accounts, stock, bonds, real estate, trust funds, etc.

Award Letter:
This official document issued by a college’s Financial Aid Office lists all of the financial assistance offered to a student.

Borrower:
The person to whom a loan is made and who agrees to repay it. The borrower signs a promissory note, which serves as the formal promise to repay the loan.

Capitalization:
A process of adding unpaid interest to the principal balance of your loan. This will increase the loan amount balance due and may increase monthly payments.

Co-Borrower:
A co-borrower is a second or additional party who may receive or benefits from the loan proceeds and agrees to repay the loan.

Co-Signer:
A signer of a promissory note who agrees to pay the loan if the borrower defaults.

Cost of Attendance (COA):
The total amount a student must pay to attend school for one academic year, including tuition, room and board, books, supplies, transportation, and personal expenses. A college’s Financial Aid Office determines this figure.

Credit-Based (Private) Loans:
Loans that are made to you based on your credit worthiness as opposed to Federal Stafford Loans and grants which are determined through a need analysis process based mostly on the cost of education.

Default:
Failure to pay your loan according to the terms disclosed in your promissory note. You are in default if your payments are past due or if you fail to comply with the other terms of the loan.

Deferment:
A period of time during repayment in which the borrower, after meeting certain criteria, is not required to make their regular monthly payments. Note: interest payments may or may not be postponed depending on the type of loan.

Delinquent:
If a payment is not received by the due date, it is considered delinquent. Delinquencies greater than 30 days are generally reported to national credit bureaus.

Disbursement Notification:
A letter that is sent to you acknowledging that your loan is approved and letting you know when the money will be sent to your school, as well as the loan amount and any fees (origination or guarantee). This marks the successful completion of the loan application process.

Disclosure Statement:
A notification of the actual cost and terms of a loan, which includes the interest rate and any additional finance charges.

Education Savings Account (IRA):
This newly established (1998) IRA allows a related taxpayer to deposit up to $500 per year for each child under the age of 18. Interest earned on this type of IRA will be tax-free. In addition, withdrawals from an Education IRA will be tax-free as long as the withdrawals are used for educational expenses. The maximum contribution to an Education IRA is reduced on a pro-rata basis for single taxpayers with income of $95,000 - $110,000 and joint taxpayers with income of $150,000-$160,000. Above the maximum income level, the allowed contribution is zero.

EFT (Electronic Funds Transfer):
The process whereby your bank sends the loan proceeds electronically to your school if the school participates in this program.

Eligible Citizen:
A United States citizen, U.S. national, or resident of certain U.S. territories who qualify to borrow under the FFEL or FDL student lending programs.

Eligible Non-Citizen:
A permanent resident of the United States who is able to present evidence from the Immigration and Naturalization Service that he or she is in the US for other than a temporary purpose with the intention of becoming a citizen or permanent resident.

Expected Family Contribution (EFC):
The amount a family is expected to pay toward college costs. This amount is determined via the FAFSA process by a need analysis formula established by the federal government and can be found on your Student Aid Report (SAR).

FAFSA:
The Free Application for Federal Student Aid (FAFSA) is a standard federal form used to determine your eligibility for most types of financial aid including Federal Government backed loans. The FAFSA is typically completed early in the year and it requires income, asset, and tax information from the students.

Federal Family Education Loan (FFEL) Program:
A loan program authorized by the Federal Government in the Higher Education Act of 1965, as amended. This program includes Federal Stafford, PLUS and Consolidation Loans. These loans are funded by lenders, guaranteed by guaranty agencies and ultimately insured by the federal government.

Forbearance:
A temporary postponement of principal and interest payments during which the borrower may only pay the interest on the loan. If the borrower chooses not to pay the interest, it will be capitalized at the end of the period.

Financial Aid:
The total amount of monetary assistance available to the student including all scholarships and loans available from school, state and federal programs, as listed in a college’s financial aid award letter. Typically, a Stern financial aid package will include a combination of scholarships (where applicable), federal loans and private student loans (private loans are available to domestic and international students), never exceeding the cost of attendance.

Financial Need (or Aid Eligibility): :
The difference between the total cost of attendance and the Expected Family Contribution. The Expected Family Contrubution is calculated by the government based upon the information provided on the FAFSA.

Good thru Date for Payoff:
The date your payoff amount should arrive at the lender or servicing agent.

Grace Period:
An amount of time allowed before principal repayment of a loan must begin after a student graduates, leaves school or drops below half-time status. No payments on your student loans are required during this time. Details of your grace period are specified in your promissory note and are not available for all loans.

Gross Income:
Your income before taxes and deductions.

Guaranty Agency:
A state or non-profit organization, which has an agreement with the Secretary of Education under the Higher Education Act to insure student loans made by lenders. NYU used the New York State Higher Education Services Corporation (HESC) when it participated in the Federal Family Education Loan Program.

Interest:
The fee charged to borrow money, usually a percent of the outstanding amount, which accrues and is paid over the life of a loan.

Late Fee:
An administrative charge that a lender may assess if a student loan payment is not received within 15 days after its due date.

Lifetime Learning Tax Credit:
The Lifetime Learning Tax Credit is available to people beyond the first two years of undergraduate studies, graduate students or working U.S. citizens taking classes to improve or upgrade their job skills. It can be used for qualified tuition and related expenses (i.e. tuition and fees, but not room and board and books) paid by the taxpayers. The tax credit equals 20% of the first $5,000 of expenses paid by the taxpayer after June 30, 1998 through December 31, 2002 and 20% of the first $10,000 after January 1, 2003. The tax credits are reduced on a pro-rata basis for single return tax files with incomes of $40,000 - $50,000 and for joint return tax filers with incomes of $80,000 - $100,000. (Single return tax filers with incomes of $50,000 and joint return tax filers with incomes of $100,000 and above will not be eligible for a deduction.) The Lifetime Learning Credit is part of the Taxpayer Relief Act of 1997.

Loan:
A sum of money borrowed (principal) usually for a specific reason (e.g., to obtain an education, buy a car, etc.). The entity lending the money (e.g. a bank) usually charges interest for use of the money. The amount of money borrowed is typically repaid with interest over a period of time.

Master Promissory Note (MPN):
A Master Promissory Note is a legally binding agreement the borrower signs, in which the borrower promises to pay the loan with interest in periodic installments. Under a MPN the borrower may receive loans for either a single period or multiple periods of enrollment. If used as a multi-year note, most borrowers will sign the MPN once and the note remains valid for a 10 year period.

Multiple Disbursements:
Loan proceeds that are paid in more than one check or electronic transaction. For example, a portion of a loan may go towards the first semester of school and the balance for the second semester.

Non-Direct Lending Schools:
Institutions of higher education which have chosen to place their students' federally insured student loans through the Federal Family Education Loan Program (FFELP). In the FFEL program, borrowers choose a lender from which to borrow and the lender then obtains a loan guarantee from a state or private guarantee agency.

Origination Fee:
A sum charged by the Federal Government on federal loans to offset the cost of processing the loan. The amount of the fee is deducted from the dollar amount of your loan by the lender and paid to the U.S. Department of Education.

Payment Schedule:
A summary of the terms of a loan, which includes the total principal amount, the date payment begins and the interest rate.

Payoff Balance:
This is the total amount you would owe if you were to pay off your entire loan. It includes the outstanding principal plus any unpaid accrued interest.

Principal:
The dollar amount of the loan that must be repaid upon maturity, and upon which interest will be charged.

Principal Balance:
The outstanding amount you owe, excluding accrued but unpaid interest.

Promissory Note:
The binding document a borrower signs to obtain a loan. The note includes all the terms and conditions of the loan and the borrower’s promise to repay the loan with interest.

Repayment Period:
This is the amount of time during which you repay the money borrowed plus interest.

Scholarships:
Scholarships are a form of financial aid that do not have to be repaid. These are available from many sources including community groups, schools and private corporations. Scholarships can be awarded based on a variety of criteria including scholastic achievement, hobbies and college majors.

Stafford Loan:
Loans under the FFEL program awarded on the basis of financial need. They may be subsidized or unsubsidized. These loans can be made from a bank, credit union or other eligible lender or obtained directly from the government under the Federal Direct Lending Program.

Status:
Indicates the condition of your student loan. Examples would include "in school" and "repayment."

Student Aid Report (SAR):
A report sent to a student by the government 2-3 weeks after submitting a FAFSA. The report informs the student of the Expected Family Contribution (EFC) and the financial aid for which the student is eligible. College financial aid offices use the report information to build a financial aid package for a student.

Student Loan Interest Deduction:
Eligible taxpayers may deduct on their federal income tax return the amount of interest they have paid during the tax year on any qualified education loan for the period of time as defined by law. The deduction applies to interest paid after December 31, 1997 and is phased out for single taxpayers with incomes of $40,000-$55,000 and for joint taxpayers with incomes of $60,000-$75,000. Single return tax filers with incomes of $55,000 and joint return tax filers with incomes of $75,000 and above will not be eligible for a deduction. (Qualified education expenses generally include tuition, fees, room and board.) The Student Loan Interest Deduction is part of the Taxpayer Relief Act of 1997.

Subsidized Loan:
A loan on which the government pays the interest for a student while enrolled in school at least half-time and during periods of grace and deferment.
  • Tuition Assistance Program (TAP):
  • TAP helps eligible New York residents pay tuition at approved schools in New York State. Awards for all graduate students range from $75 to $550 for the academic year. Single independent graduate students with no dependents cannot exceed $5,666 NYS net taxable income per year. Dependent graduate students or independent graduate students who are married or have tax dependents cannot exceed $20,000 NYS net taxable income per year.

Title IV Code:
This is a federal school code and is to be included on your Free Application for Federal Student Aid (FAFSA). For New York University, the Title IV code is 002785. There is no separate code for Stern.

Unsubsidized Loan:
A loan on which the borrower is always responsible for paying the interest while in-school and during deferment, forbearance and grace periods.

Variable Interest:
Interest rates that change periodically (e.g. quarterly, annually etc.). The interest rates for Federal Stafford Loans are set by the government each year and change annually on the first of July. Private loan rates change quarterly and cannot be fixed.

W9-S:
This is an IRS form which taxpayers use to certify that loans meet the definition of qualifying education debt and which allows lenders to report to the IRS the amount of interest paid on student loans as interest which qualifies for possible tax deductions.

91-day T-Bill:
Refers to the auction rate determined for 91-day Treasury Bills by the public auction held by the United States Treasury Department. The interest rates for Stafford and PLUS loans are tied to the auction rates held at certain times of the year. The rate(s) can be obtained from the Treasury Department, but is also available in many newspapers including The Wall Street Journal.