Financial aid terminology

Accrued interest

If you choose not to make interest payments while at university, during your grace period or during an authorized period of deferment the interest will accumulate, and add to your principal amount at repayment.

Cohort default rate

The percentage of Direct borrowers who default before the end of the fiscal year in which they began repayment on their loans. The US Department of Education calculates this rate annually to determine the default experience of students who attended a particular university during a particular period of time. High default rates can result in the loss of a university's ability to participate in the FFELP.

Cost of Attendance (COA)

The total amount it will cost you to attend school in one academic year. It is determined using rules established by law. The COA includes fees, accommodation, estimated living expenses, allowances for books and supplies, purchase of a personal computer, and if applicable dependent care.


Failure to repay a loan according to the terms agreed to when you signed a promissory note. For the FFEL program, default 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 and may affect your credit rating for as long as seven years.


A period during which repaying loan principal is suspended as a result of you meeting one or more of a number of situations or categories established by law. You do not pay interest on subsidised loans during deferment; interest continues to accumulate during deferment of an unsubsidised loan.


If you fail to make a monthly payment within 30 days of the due date, your loan status will be delinquent.


The lender's payment of loan funds to the University. Payment is made by cheque. Disbursement is usually made in two instalments during the year.

Expected Family Contribution (EFC)

Your Expected Family Contribution (EFC) is the amount calculated from the financial information you provided in your FAFSA application. It is the amount that a student and family (if required) are expected to contribute toward the Cost of Attendance (COA).

Federal Family Education Loan Program (FFELP)

Program made up of Federal Direct Loans (subsidised and unsubsidised), Federal PLUS loans (for parents) and Federal Consolidated Loans. All of these are long-term loans insured by state or non-profit guarantee agencies that are reimbursed by the US government for all or any part of insurance claims paid by lenders.

Federal PLUS (Parent Loan for Undergraduate Students)

Parents may borrow this FFELP loan on behalf of their undergraduate, dependent children. Loans are made by lenders such as banks, credit unions, or savings and loan associations. Parents must not have an adverse credit history.

Federal Direct loan (subsidised)

A FFELP loan that provides federally subsidised, low interest loans to students in undergraduate, postgraduate or professional programs. Subsidised loans are awarded on the basis of financial need.

Federal Direct loan (unsubsidised)

A FFELP loan that provides low interest loans to students in undergraduate, postgraduate or professional programs. Unsubsidised loans are not awarded on the basis of financial need.

Financial need

The difference between the student's Cost of Attendance (COA) and the Expected Family Contribution (EFC) plus the student's estimated financial assistance.


The process by which a repayment schedule can be restructured under certain conditions. The amount of the monthly payment may be temporarily reduced or suspended, or months may be added to the repayment term. You must contact your lender directly to receive forbearance.

Free Application for Federal Student Aid (FAFSA)

The form used by universities for the awarding of federal student aid. Information in the FAFSA is analysed according to US deferral guidelines together with Monash University guidelines to determine your family's financial situation.


The person or agency which verifies your eligibility for a particular federal loan program and provides the insurance for those loans.

Grace period

A feature of Federal Direct loans that gives you six months after you leave university or drop below half-time status before you must start making monthly payments on your loan.


The fee that is charged by the lender in exchange for lending the money. The interest rate, usually expressed as a percentage of the loan amount, may stay the same for the term of the loan (fixed rate) or it may change periodically (variable rate).

Master Promissory Note (MPN)

A legally binding document between the borrower and the lender that obligates him or her to repay the loan according to its terms.


The amount borrowed. This is the amount to which interest is charged.

Satisfactory academic progress

The achievement of required Grade Point Average (GPA) within the defined timeframes, to ensure continued access to financial aid.


A company contracted by a lender to handle the administrative aspects of the loan such as collection of payments and correspondence with borrowers.

Student Aid Report (SAR)

The report sent directly to a student that summarises information submitted on the student's FAFSA. It also provides financial-need calculations, including the student's EFC based on submitted figures.

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