Personal Finance Ch. 2

Grants

A form of federal or state financial aid that does not need to be repaid; usually given to students who demonstrate financial need.

Associates Degree

A two-year degree that can offer specialized training and a flexible schedule that allows you to work while you earn your degree.

FAFSA

A form that is completed annually by current and prospective college students to determine their eligibility for financial aid.

Net Price

The remaining amount of the tuition that must be paid — either with savings or student loans.

Interest Rate

The rate charged for borrowing money, usually expressed as a percent of the amount borrowed.

Default

Long-term failure to repay a loan according to the terms agreed to, which has a substantial negative impact on the borrower’s credit score.

Scholarship

A form of financial aid that does not need to be repaid; usually awarded on the basis of academic, athletic, or other achievements.

Promissory Note

A contract signed by the student agreeing to pay back all student loan obligations.

Direct UNsubsidized loans

Available to UNDERGRADUATE STUDENTS and GRADUATE STUDENTS; there is no requirement to demonstrate financial need. The borrower is responsible for paying the interest during all periods.

Grace Period

A period of time that generally begins on the day after a borrower graduates, leaves school, or drops below half-time enrollment and ends on the day before the repayment period begins.

Tuition

The price you pay for taking classes at your college

Principal

Original amount of money borrowed, separate from interest or fees.

Direct PLUS loan

Available to eligible parents and graduate or professional students, where the U.S. Department of Education is your lender.

Pell Grant

A federal program based on substantial financial need and which does not need to be repaid.

Work study

A program that allows students to work part-time, on campus, while continuing their studies. You don’t necessarily get a paycheck; your pay goes towards your tuition.

Delinquency

Describes the status of being behind on one or more loan payments.

On-the-job training

Usually, a professional trainer serves as the course instructor and uses a combination of hands-on activities and formal classroom training.

Loan servicer

The organization that collects payments on a federal student loan.

Debt

Owing anything to anyone for any reason.

Direct subsidized loans

Available to UNDERGRADUATE STUDENTS with financial need. Your school determines the amount you can borrow, and the amount may not exceed your financial need. The U.S. Department of Education pays the interest while you are still in school.

Trade School

Allows students to learn basic professional skills in two years or less; typically cuts out many of the general courses required by traditional universities.

Sticker Price

The overall cost of tuition and fees that is advertised by the college.

Repayment period

The maximum time period over which you must repay your student loan — currently between 10 and 30 years for federal loans.

Capitalized Interest

Unpaid interest that has been added to the principal balance of a federal student loan.