Here is a list of some of the commonly used terms that you should be familiar with while investing in a 529 plan.
Ability-to-Benefit
One of the criteria used to establish student eligibility in order to receive Title IV program assistance is that a student must have earned a high school diploma or its equivalent. Students who are not high school graduates can demonstrate that they have the “ability to benefit” from the education or training being offered by passing an approved ability-to-benefit test.
Academic Year
A period of time schools use to measure a quantity of study. For example, a school’s academic year may consist of a fall and spring semester during which a full-time undergraduate student must complete 24 semester hours. Academic years vary from school to school and even from educational program to educational program at the same school.
Accreditation
The school must have accreditation from an accrediting body recognized by the U.S. Department of Education to be eligible to participate in the administration of federal student aid programs. Accreditation means that the school meets certain minimum academic standards, as defined by the accrediting body.
Award Letter
An award letter from a school states the type and amount of financial aid the school is willing to provide if you accept admission and register to take classes at that school.
Capitalized
With certain loans, such as subsidized FFEL Loans, the U.S. Department of Education pays the interest that accures on these loans while the student is enrolled at least half-time and during periods of deferment. However, with subsidized loans in forbearance, unsubsidized loans or PLUS Loans, the student or student’s parents are responsible for paying interest as it accures on these loans. When the interest is not paid, it is capitalized or added to the principal balance.
Cost of Attendance
The total amount it will cost you to go to school – usually expressed as a yearly figure. It’s determined using rules established by law. The COA includes tuition and fees; on-campus room and board and allowances for books, supplies, transportation, loan fees, and if applicable, dependent care.
Default
Failure to repay a loan according to the terms agreed to when you signed a promissory note. For the FFEL and Direct Loan programs, default is more specific – it occurs if you fail to make a payment for 270 days if you repay monthly or 330 days if your payments are due less frequently. The consequences of default are severe. Your school, the lender or agency that holds your loan, the state and the federal government may all take action to recover the money, including notifying national credit bureaus of your default. This may affect your credit rating for as long as seven years. In addition the IRS can withhold your income tax refund and apply it to the amount you owe. Your employer may be requested to withhold the amount that you owe from your paycheck.
Eligible Noncitizen
You must be one of the following to receive federal student aid:
- U.S. citizen
- U.S. national
- U.S. permanent resident who has an I-151, I-551, or I-551C (Permanent Resident Card)
Eligible Program
A program of organized instruction or study that leads to an academic, professional or vocational degree or certificate, or other recognized educational credential. To receive federal student financial aid, you must be enrolled in an eligible program, with two exceptions:
- If a school has told you that you must take certain course work to qualify for admission into one of its eligible programs, you can get a Stafford Loan for up to 12 consecutive months while you’re completing that preparatory course work.
- If you’re enrolled at least half-time in a program to obtain a professional credential or certification required by a state for employment as an elementary or secondary school teacher, you can get a Federal Perkins Loan, Federal Work-Study, a Stafford Loan, or your parents can get a PLUS Loan, while you’re enrolled in that program.
Expected Family Contribution
Your Expected Family Contribution (EFC) is the number that’s used to determine your eligibility for federal student financial aid. This number results from the financial information you provided in your FAFSA application. Your EFC is reported to you on your Student Aid Report.
Financial Aid Package
The total amount of financial aid a student is offered by the school. The financial aid administor at a postsecondary institution combines various forms of aid into a “package” to help meet a student’s education costs.
General Education Development (GED) Certificate
This is a certificate students receive if they’ve passed a specific, approved high school equivalency test. Students who have a GED may still qualify for federal student aid. A school that admits students without a high school diploma must make available a GED program in the vicinity of the school and must inform students about the program.
Guaranty Agency
The guaranty agency is an organization that administers the Federal Family Education Loan Program in your state. This agency is the best source of information on FFEL Loans. For the name, address, and telephone number of the agency serving your state, you can contact the Federal Student Aid Information Center at 1-800-4-FED-AID. (1-800-433-3243)
Half-time
At schools measuring progress in credit hours and semesters, trimesters, or quarters, “half-time” is at least six semester hours or quarter hours per term for an undergraduate program. At schools measuring progress by credit hours, but not using semesters, trimesters, or quarters, “half-time” is at least 12 semester hours or 18 quarter hours per year. You must be attending school of at least half-time to be eligible for a Stafford Loan.
National Student Loan Data System (NSLDS)
NSLDS is our database for federal student financial aid where you can find out about the aid you’ve received. If you’ve only just applied for the aid, you won’t find any information on NSLDS yet. You can access NSLDS at www.nslds.ed.gov
Promissory Note
A promissory note is a binding legal document you sign when you get a student loan. It lists the conditions under which you’re borrowing and the terms under which you agree to pay back the loan.
Regular Student
A regular student is one who is enrolled or accepted for enrollment at an institution for the purpose of obtaining a degree, certificate or other recognized educational credential offered by that institution.
Satisfactory Academic Progress
To be eligible to receive federal student financial aid, you must meet and maintain your school’s standards of satisfactory academic progress toward a degree or certificate offered by that institution.
Selective Service Registration
To receive federal student financial aid, if you are a male born on or after January 1, 1960, are at least 18 years old and are not currently on active duty in the U.S. Armed Forces, you must register, or arrange to register, with the Selective Service System.
Student Aid Report
After you apply for federal student financial aid, you’ll get your FAFSA results in an e-mail report within a few days after your FAFSA has been processed or by mail in a few weeks. The Student Aid Report details all the information that you provided on your FAFSA.
