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Financial Aid Glossary

Consolidation Loan: Loan that allows borrowers to lower their monthly payments by replacing their original loans with one loan. Consolidation loans typically have longer repayment periods and greater interest.

Cooperative Education (Co-op): Many college programs offer paid opportunities to gain professional, full-time work experience while enrolled in college.

Cosigner: Individual who assumes responsibility for a loan if the borrower fails to repay.

Cost of Attendance: Also known as the budget, it includes tuition and fees, room and board, allowances for books and supplies, transportation, and personal and incidental expenses.

Custodial Parent: In cases where a student’s parents are divorced or separated, the custodial parent is the parent with whom the student lived the most during the past 12 months.

Default: Failure to repay or otherwise meet the terms and condition of a loan. Default typically occurs after six months of delinquent payments. Penalties include a bad credit rating, loss of future financial aid eligibility, withholding of tax refunds, garnishing wages and loss of monthly payment options.

Deferment of Loan: Period during which the repayment of the loan is suspended because the borrower meets certain eligibility requirements (e.g., enrolled in college at least half time).

Delinquency: Failure to make a scheduled loan payment.

Dependency Status: A student’s dependency status determines the degree to which the student has access to parent financial resources. An independent student is at least 24 years old as of January 1, is married, is a graduate or professional student, has a legal dependent other than a spouse, is a U.S. Armed Forces veteran or is/was an orphan or ward of the court.

Direct Loans: A new federal program where the school becomes the lending agency and manages the loan funds directly, with the federal government providing the loan funds. Not all schools currently participate in this program.

Disbursement: The process by which financial aid funds are made available to students for use in meeting educational and related living expenses. Funds may be disbursed directly to the student, or applied to the student’s account.

Early Action/Early Admission/Early Decision: An early action program has earlier deadlines and earlier notification dates than the regular admissions process. If accepted, students are not committed to attending that college. An early admission program allows exemplary high school juniors to skip their senior year and enroll directly in college. An early decision program has earlier deadlines and earlier notification dates than the regular admissions process and students who apply to an early decision program commit to attending the school if admitted (which means the student must accept the offer of admission before they see their financial aid package.)