Unit 1 Economics and Personal Finance

Associate Degree - A degree that generally takes two years of study and is awarded by a community, junior, or business college

Cosigner - Someone who legally agrees to take responsibility for a person’s debt if they cannot repay it

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

Deferment - A process that allows a borrower to pause their federal student loan payments; interest does NOT accrue during this period on subsidized loans

Direct Plus Loans - A federal loan available to graduate or professional students and eligible parents of dependent undergraduate students to help pay for student’s education at participating schools

Direct Subsidized Loan - A federal student loan available to undergrad students; the federal government pays interest on the loan as long as the student is in school at least part-time

Student Aid Index - A numerical value that colleges use to determine a student’s financial need for federal aid

Federal Student Aid - The largest form of student aid in the country; federal aid programs come in the form of government grants, loans, and work-study opportunities

Financial Aid Officer - The total amount of financial aid (federal and nonfederal) a student is offered by a college, designed to help meet a student’s education costs

Fixed-Rate Loan - A loan with an interest rate that does not change over the life of the loan

Forbearance - A process that allows a borrower to pause their federal student loan payments; interest continues to accrue during this time period and may be capitalized

FAFSA - A free form that students can fill out to determine if they are eligible for federal, state, and school financial aid

Gap Year - A year between high school and college when some students engage in various educational and developmental activities, such as travel or some type of regular work

Gift Aid - A financial aid that does not have to be paid back, such as scholarships and grants

Grace Period - A period of time during which a borrower is typically not required to make loan payments; begins on the day after a borrower graduates, leaves school, or drops below half-time enrollment. This period typically lasts 6-9 months but can change. 

Grants - Student aid coming from the state or federal government, the school, or from private sources that does not need to be repaid

Interest Rates - The rate charged for borrowing money usually expressed as a percent of the amount borrowed

Internship - A temporary paid or unpaid position that involves direct work experience in a career field

Loan Refinancing - A process that REPLACES one or more existing federal or private loans with a new private student loan, ideally with a lower interest rate

Loan Consolidation - A process that allows a borrower to COMBINE multiple federal loans into one, allowing the borrower to make one monthly payment. The new interest rate of the loan is a weighted average of the prior loans’ rates. 

Loan Servicer - The organization 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 loan holder. 

Opportunity Cost - The value of the next best alternative that is given up when making a decision, helps to evaluate the true cost of a decision by considering missed opportunities. 

Net Price - The actual cost a student pays to attend a school, calculated as the sticker price minus grants and scholarships

Principal - Original amount of money borrowed, separate from interest or fees

Private Student Loan - A non-federal student loan made by a bank, credit union, or other entity, which sets the terms and conditions for the interest rate, grace period, and the length of repayment

Repayment Period - The maximum time period over which you must repay your student loan - currently between 10 to 30 yeras for Federal loans

Repayment Plan - A plan that outlines your monthly payment, repayment period, and how much interest you will pay over the life of the loan

Return of Investment (ROI) - A financial metric that measures profitability of an investment, the profit minus the cost divided by cost (profit - cost) / (cost)

Room and Board - Cost of housing and food while at college

Scholarship - A type of aid primarily awarded for academic merit or for something you have accomplished (good grades, volunteer work, athletics, etc.) ; does not need to be repaid

Sticker Price - Total expense of going to college which may include tuition, room, board, fees, books, supplies, transportation, health insurance, etc. This is also known as cost of attendance or a school’s published price

Submission Summary - A report you recieve with the information you submitted in the FAFSA. It contains your SAI and other information that colleges will use to determine your financial aid package 

Trade School - A school that prepares students to enter a specific career directly after training, usually in less than 2 years

Tuition - The sticker price for the academic portion of your college expenses, which does not include room and board, textbooks, or other fees

Variable-Rate Loan - Where the interest rate fluctuates throughout the loan term based on changes in market interest rates; monthly payments can vary depending on market conditions. 

Vocational Learning - Training that is focused on hands-on work that prepares you for skilled trades, like plumbing, cosmetology or car repair

Work-Study - A federal program that provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses