We have provided a dictionary to explain Financial Aid's most commonly used terms: Aid to Families with Dependent Children (AFDC): untaxed income asked for in the income section of the Free Application for Federal Student Aid (FAFSA). A person receives AFDC or ADC through the Family Support Division of their county. Also named Temporary Assitance to Needy Families (TANF). Borrower: Person responsible for repaying a loan who has signed and agreed to the terms in the promissory note. Also see Loan Programs. Budget: Estimated cost of attendance to go to school. Usually includes tuition, books, supplies, room and board, transportation and other personal expenses. Campus Based Aid: Federal College Work Study (FWS), Perkins Loan, and SEOG Grant. Capitalization: When interest is added to the loan's principal balance and future interest is calculated on the balance including the capitalized interest. A student who defers the interest on their unsubsidized Stafford loan needs to understand this term and how it affects the amount they must repay: it adds up quickly, Central Processing System (Federal Processor): This is where the FAFSA is processed. Collection Costs: Costs the government incurs when collecting a delinquent or defaulted loan. These costs are charged to the borrower. Cost of Attendance: See Budget. Default: Failure to repay a loan in accordance with the terms of the promissory note. Deferment: The temporary postponement of loan payments. Delinquency: Incidents of late or missed loan payments, as specified in the terms of the promissory note and the selected repayment plan. Direct Loan Consolidation: One or more federal education loans combined into a single loan under the Direct Loan Program. Only one monthly payment is made to the U.S. Department of Education. Direct Loan Servicing Center: The place where Direct Loan borrowers send their loan payments. The Servicing Center can answer questions you might have about your Direct Loan. The toll-free telephone number is 1-800-848-0979. Discharge (cancellation): The release of borrowers from their obligations to repay their Direct Loans. Borrowers must meet certain requirements to be eligible for discharges. Disclosure Statement: Statement that is sent to the borrower of a student loan outlining the actual cost of the loan including the interest rate, and any loan fees and estimated disbursement date(s). Entrance Counseling: A group or individual session during which Direct Loan borrowers receive important information about their loan obligations. Entrance counseling is required before receiving the first disbursement of loan funds. Exit Counseling: A group or individual session during which Direct Loan borrowers who are leaving school or dropping below half-time enrollment receive important information about their repayment obligations and update information about themselves. To see a schedule of exit counseling dates offered at William Paterson, go to our Counseling Section. Expected Family Contribution (EFC): Parent contribution plus student contribution. This is the amount the family is expected to pay toward the student's cost of attendance. Federal College Work Study (FWS): A part-time employment program which helps provide jobs for students who are in need of earnings to meet a portion of their educational expenses. Federal Direct Loan Program: The William D. Ford Federal Direct Loan Program, also referred to as the Direct Loan Program, is a federal program that provides loans to student and parent borrowers directly through the U.S. Department of Education. The loans are Federal Direct Stafford/Ford Loans, Federal Direct Unsubsidized Stafford/Ford Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans. Federal Direct Stafford/Ford Loan: Formerly the GSL (Guaranteed Student Loan) Program; a federally financed and subsidized student loan made on the basis of the student's financial need and other specific eligibility requirements. The federal government does not charge interest on these subsidized loans while borrowers are enrolled at least half-time, during the six-month period, or during authorized periods of deferment. When repayment does begin, the interest rate of the loan depends on when the student first borrowed in the program. Federal Direct Unsubsidized Stafford/Ford Loan: A federally financed student loan made to students meeting eligibility requirements. Students need not demonstrate financial need. Interest is charged throughout the life of the loan. The borrower may choose pay the interest charged on the loan or allow the interest to be capitalized (added to the principal) when the loan enters repayment. Federal Methodology: Federally-approved standardized formula to determine a student's financial aid eligibility. Federal Supplemental Educational Opportunity Grant (SEOG): Grants to undergraduate students with exceptional financial need who have not completed their first baccalaureate degree. Financial Aid Transcript (FAT): Form that must be received by the financial aid office if a student has attended another post-secondary institution whether or not they received aid at the institution, when they are a mid-year transfer. Financial Need (Need): The difference between the student's cost of attendance and the expected family contribution. Forbearance: An arrangement to postpone or reduce a borrower's monthly payment amount for a limited and specified period, or to extend the repayment period. The borrower is charged interest for forbearance. Free Application for Federal Student Aid (FAFSA): Federal form that a student must file in order to apply for any student aid except the Parent Loan. Students may also apply electronically through the Internet by accessing a web site called FAFSA On The Web. Grace Period: A six-month period before the first payment must be made on a Direct Subsidized or Unsubsidized Loan. In the case of a federal Perkins Loan, the grace period may be six or nine months in length. The grace period starts the day after the borrower ceases to be enrolled at least half-time. During the grace period on a Direct Unsubsidized Loan, accumulating interest must be paid or it will be capitalized. Graduated Repayment Plan: A plan that allows monthly payment amounts to start out at one level and then increase every two years during the repayment period. Borrowers have up to 30 years to repay, depending on the amount they borrowed. The minimum payment must cover interest that accumulates monthly and mist be at least half of the payment that would be required under the Standard Repayment Plan. The maximum amount may not be more than 1-1/2 time the payment that would be required under the Standard Repayment Plan. Income Contingent Repayment Plan: A plan that allows the monthly payment amount to vary with the borrower's income. A borrower has up to 25 years to repay. NJ TAG (New Jersey Tuition Aid Grant): Grant awarded by the NJ Office of Student Assistance that is based on financial need. Institutional Student Information Record (ISIR): The paper record that contains the information the student mailed to the Central Processing System. Interest: A loan expense charged by the U.S. Department of Education and paid by the borrower for the use of borrowed money. The expense is calculated as a percentage of the principal amount (loan amount) borrowed. Internal Revenue Service (IRS): The federal agency that collects and processes your tax returns. Loan: Money borrowed that must be repaid. Loan Principal: The total sum of money borrowed. Need Analysis: A system used to analyze the household and financial information and calculate an estimated family contribution. Need Based: Financial aid that is available for those students whose financial need is demonstrated through the federal application process. Overaward: Any amount of financial aid that exceeds financial need. Parent Loan for Undergraduate Students (PLUS): Loan available to parents to help finance an education for students; not based on need. Also see Loan Programs. PELL: Federal grant for which eligibility is determined by the EFC (Expected Family Contribution) and cost of attendance. Perkins Loan: A Federal loan given to students who have exceptional financial need. The interest rate is 5% and is not variable. Although this is a federal loan program, William Paterson University, not the Federal Government, is considered the lender. Prepayment: Any amount paid on a loan before it is required to be paid in the terms of the promissory note. There is never a penalty for prepaying principal or interest on Direct Loans. Promissory Note: A legally binding contract between the U.S. Department of Education and a borrower. In this document, the borrower promises to repay the loan. The promissory note contains the terms and conditions of the loan, including how and when the loan must be repaid. Please also see our introduction of the Master Promissory Note. Repayment Schedule: A statement provided by the Direct Loan Servicing Center to the borrower that lists the amount borrowed, the amount of monthly payments, and the date payments are due. Satisfactory Academic Progress (SAP): Maintaining successful progress towards completing a degree. Measured by completion of hours with a passing grade, GAP. Also see Satisfactory Academic Policy. Standard Repayment Plan: A plan that requires a borrower to pay at least $50 a month and allows up to 10 years to pay. Student Aid Report (SAR): These forms are sent to the student from the processing agency. These forms should be reviewed by the family for accuracy. If accurate, they should be kept by the family for their records. If inaccurate, they should be corrected, signed by the appropriate individuals, and returned to the processor. USED, ED or US Dept. of Ed: Terms used to denote the United States Department of Education. Verification: Process of collecting documentation (tax returns, etc.) to ensure that information provided on the aid application is accurate. Also see Verification Procedures for more information.