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Ability-to-benefit (ATB): Basis on which a student without a high school diploma, a recognized equivalent, or a General Education Diploma (GED) may qualify for federal student financial assistance. The Department of Education maintains a list of approved tests for measuring a student's ability to benefit from the educational program the student seeks. The test must be administered before the school admits the student.

Academic Period: A measured period of enrollment (e.g., a semester, trimester, quarter, or clock hours).

Academic Year: For the purposes of Title IV aid, a period that begins on the first day of classes and ends on the last day of classes or examinations and that consists of at least 30 weeks of instructional time during which an undergraduate, full-time student is expected to complete either of the following: At least 24 semester or trimester hours, or 36 quarter hours in an educational program that measures program length in credit hours. At least 900 clock hours in an educational program that measures program length in clock hours. The Department of Education may, at its option, reduce the minimum number of weeks in an academic year.

Accredited Institution: Any school that meets standards established by a nationally recognized accrediting agency, and for which that agency has provided documented acknowledgment of the school's compliance.

Accrediting Agency: An agency that sets educational standards for schools, evaluates schools, and certifies that schools have met these standards. A "nationally recognized accrediting agency" is one that the Department of Education has recognized to accredit or pre-accredit a particular category of school or educational program according to 34 CFR Parts 602 and 603. The agency grants accreditation status to schools. The Department of Education publishes a list of nationally recognized accrediting agencies or associations that the Department of Education has determined to be reliable authorities as to the quality of education or training offered. If the Department of Education determines that there is no nationally recognized accrediting agency or association qualified to accredit schools in a particular category, the Secretary of Education shall appoint an advisory committee, composed of persons specially qualified to evaluate training provided by schools in such category, to prescribe the standards a school must meet in order to participate in Title IV programs and to determine whether an individual school meets those standards.

Accrued Interest: Interest that accumulates on the unpaid principal balance of a loan.

Act, the: The Higher Education Act of 1965, as amended. Title IV, Part B of the Act addresses FFEL program loans.

Actual Interest Rate: The annual interest rate a lender charges on a loan, which may be equal to or less than the "applicable"-or statutory-interest rate on that loan.

Additional Unsubsidized Stafford Loan: The additional amount of a student's eligibility for unsubsidized Federal Stafford loans. This amount is available only to independent undergraduate students, graduate/professional students, and dependent undergraduate students whose parents are unable to obtain a PLUS loan.

Administrative Cost Allowance: Money provided by the Department of Education to guarantors to help cover the costs of administering the FFELP. Schools also receive ACA's to help with administrative costs for campus-based programs.

Administrative Forbearance: A temporary suspension of, a reduction of, or an extension of time for making principal and/or interest payments on a Federal Stafford, SLS, PLUS, or Consolidation loan that is granted by the holder or lender, upon notice to the borrower or endorser, and that does not require a written request from the borrower or an agreement signed by the borrower before the forbearance is granted.

Administrative Wage Garnishment: Process by which a guarantor, under federal law, may intercept a portion of the wages of a borrower with a defaulted FFELP loan.

Aggregate Loan Limit: The borrower's maximum allowable unpaid principal amount throughout the student's academic career.

Agreement: Any written contract, agreement, or letter of understanding between the guarantor and another entity that specifies the rights and duties of each party with respect to participation in the guarantor's programs and/or utilization of the guarantor's services.

ALAS: See Auxiliary Loans to Assist Students

AmeriCorps: A national and community service program created by the National and Community Service Trust Act of 1993 and administered by the Corporation for National Service. For each year of full-time service in the program, participants will receive education awards to help finance their postsecondary education or pay back their student loans.

Annual Loan Limit: The maximum Federal Stafford or PLUS loan amount that a guarantor may guarantee for a borrower for an academic year.

Annual MPN:See Master Promissory Note

Anticipated Completion (Graduation) Date: The date on which a student is expected to complete an academic program. This date is provided by a school official on the borrower's loan application, and in subsequent enrollment status updates.

Applicable Interest Rate: The maximum annual interest rate (under the Higher Education Act) that a lender may charge on a loan.

Application: The combined form that contains the loan application and the promissory note for a Stafford,  PLUS or Consolidation loan.

Assignment: Language placed on or attached to the application/promissory note indicating a change or transfer of loan ownership.

ATB:See Ability to Benefit

Authority: Any private nonprofit or public entity that may issue tax-exempt obligations to obtain funds to be used for the making or purchasing of FFELP loans. "Authority" also includes any agency, including a state postsecondary institution or any other instrumentality of a state or local government unit, regardless of the designation or primary purpose of that agency, that may issue tax-exempt obligations, any party authorized to issue those obligations on behalf of a governmental agency, and any nonprofit organization authorized by law to issue tax-exempt obligations.

Auxiliary Loans to Assist Students (ALAS): A previous name for what became the SLS loan. The Omnibus Reconciliation Act of 1981 extended the Parent Loans for Undergraduate Students (PLUS) program to include loans for independent undergraduate students and graduate and professional students. These loans were called Auxiliary Loans to Assist Students or ALAS. The Higher Education Amendments of 1986 repealed the ALAS program and authorized two separate loan programs in its place-Supplemental Loans for Students, or SLS loans, for graduate students, professional students, and independent undergraduates, and PLUS loans for parents of dependent students.

Award Year: The period between July 1 of a given calendar year and June 30 of the following calendar year.

Award Letter: An official document issued by a financial aid office listing all the financial aid awarded to the student.

Bankruptcy: Judicial action to stay the normal collection of debts against the petitioner, and cause those debts to be satisfied at the direction of the court. Bankruptcies are classified by "chapters," which refer to parts of a larger volume-the U.S. Bankruptcy Act.

Base Stafford Loan Amount: The base amount of a student's eligibility for a subsidized and/or unsubsidized Federal Stafford loan(s). The base amount equals the loan limit applicable to a dependent undergraduate student.

Base Year: For need analysis purposes, the calendar year preceding the award year.

BBAY: See Borrower Based Academic Year

Blanket Endorsement: A separate form indicating the transfer of contract rights and ownership of a group of loans. If a blanket endorsement is used to indicate ownership change, a copy of the endorsement must be placed in the borrower file of each loan purchased by the lender or secondary market.

Borrower: An individual to whom a FFELP loan is made.

Borrower-Based Academic Year (BBAY): An academic year that is individualized per borrower and generally "floats" with the borrower's attendance and progress. For borrowers enrolled in programs of study at schools that are not term-based, the academic year is always a BBAY. A student's BBAY must begin with a term the student actually attends. For further discussion, See "Principles to Determine the Frequency for Annual Loan Limits" in the appendix to chapter 10 of The Federal Student Financial Aid Handbook.

Borrower-Specific Deferment: Refers to the federal requirement that eligibility for a deferment be applied to all of a borrower's loans, rather than to each separate loan. For example, a borrower who has used the maximum 24 months of internship deferment is not entitled to an additional internship deferment.

Branch Campus: A permanent location of a school that is geographically apart and independent of the main campus; that offers courses leading to a degree, certificate, or other recognized educational credential; that has its own faculty and administration or supervision; and that has its own budgetary and hiring authority. A branch campus is one type of "additional location" at which schools may offer instruction to students. A school must establish eligibility for each of its locations.

Campus-Based Programs: The Federal Perkins Loan, Federal Work-Study, and Federal Supplemental Educational Opportunity Grant programs. These programs are administered by a school's financial aid office. A student's financial aid package may contain aid from one or more of these programs.

Cancellation (of a Guarantee): The revocation of a loan guarantee, which occurs if any of the following conditions exist: No loan proceeds were disbursed to the borrower. The lender check(s) was never cashed. None of the loan proceeds were negotiated within 120 days of the date on which they were disbursed. EFT and master check loan proceeds in the school's account are not delivered to the borrower within 120 days after being transferred to the account. The loan is repaid in full within 120 days of final disbursement. The guarantee is not lost on the remainder of the loan if one disbursement is canceled.

Capitalization: An increase in the principal balance of a Stafford, SLS, PLUS, or Federal Consolidation loan that occurs when a lender adds the interest accrued on the loan to the outstanding principal balance.

Capitalized Interest: Accrued interest added to the borrower's outstanding principal. Subsequent interest accrues on the new total principal balance, which includes any capitalized interest.

Certification: The act of attesting that something is true or meets a certain standard. For example, the school completes its section of the application, thereby confirming the borrower's eligibility for the guarantee and, if applicable, interest benefits and special allowance. The borrower completes the borrower's section of an application or deferment form, thereby confirming that certain eligibility criteria have been met.

CFR: See Code of Federal Regulations

Change of Control: An occurrence that signifies that a different person, partnership, or corporation has obtained authority to control the actions of a school. For example, a change of control can occur when stock is transferred to the parent corporation; when schools merge or divide; when a company is retained to manage a school; or when a school transfers assets or liabilities to the parent corporation.

Chapter 7: This is the most common form of bankruptcy, often referred to as "liquidation." In a Chapter 7 bankruptcy, the eligible assets of the borrower are liquidated and distributed among the creditors by a trustee, with preference given to secured creditors. This type of bankruptcy is frequently used by borrowers who are unemployed or have few or no assets.

Chapter 11: A bankruptcy in which the borrower's debts are reorganized. This type of bankruptcy is seldom used by student borrowers and is most often used by financially troubled businesses.

Chapter 12: Chapter 12 bankruptcy, which is similar to a Chapter 13 bankruptcy, applies only to certain farms and family farm operations with specific debt ceilings.

Chapter 13: This is commonly referred to as the "wage earner" plan. A Chapter 13 bankruptcy allows individuals with regular incomes to satisfy their debts through a court-directed payment plan. Usually, the Chapter 13 debtor(s) has significant debts, but sufficient income to eventually pay the debts.

Check: A draft (drawn on a financial institution) that is payable on demand and that requires the personal endorsement or other written approval of the borrower to be cashed.

Citizen/Eligible Non-citizen: An eligibility requirement that must be met by Federal Stafford, PLUS, and SLS loan borrowers and recipients.

Claim: A request that the lender (servicer) files with the guarantor for reimbursement of its losses on a Federal Stafford, SLS, PLUS or Consolidation loan due to the borrower's death, disability, default, or bankruptcy; school closure; or false certification of the borrower's eligibility.

Clock Hour: A time period consisting of one of the following: 50-60 minutes of class, lecture, or recitation in a 60-minute period. 50-60 minutes of faculty-supervised laboratory, shop training, or internship in a 60-minute period. 60 minutes of preparation in a correspondence course.

COA: See Cost of Attendance

Code of Federal Regulations (CFR): The collection of federal regulations promulgated by the U.S. government. The Department of Education's regulations are codified in Volume 34.

Cohort Default Rate: The percentage of Stafford and SLS loan borrowers who default before the end of the fiscal year following the fiscal year in which they entered repayment on their loans. The Department of Education calculates this rate annually to determine the default experience of students who attended a particular school during a particular period of time. Unless otherwise specifically indicated, the cohort default rate includes the FFELP cohort default rate or the weighted average cohort rate.

Collection Charges: Costs incurred by the lender or its agents in collecting overdue payments. These charges may include, but are not limited to, attorney's fees, court costs, and telegrams; they may not include routine costs associated with preparing letters or notices or making telephone calls to the borrower.

Co-make or Co-borrower: One of two joint PLUS, Federal Consolidation or Private Loan borrowers, who are each held equally liable for the loan's repayment. Before the introduction of the common Stafford loan application/promissory note, some lenders may have required co-makers on old subsidized Stafford loans.

Commissioned Salesperson: A person who receives compensation related to, or calculated on the basis of, student applications for enrollment, actual student enrollments, or student acceptances for enrollment.

Common Application: A standardized application and promissory note developed by FFELP participants and approved by the Department of Education by which a borrower applies for a FFELP loan. Different application forms are required for Federal Stafford loans. Common applications are periodically revised and approved to reflect major changes in FFELP regulations.

Confirmation: A process by which the school, lender, or guarantor (on behalf of the school or lender) advises the borrower of the proposed loan types and amounts. The borrower must take action to confirm the loan type or request a specific loan amount.

Congressional Methodology (CM): A discontinued need analysis formula for campus-based and student loan programs that has been replaced by the Federal Need Analysis Methodology.

Consolidation Loan: A federally guaranteed loan to refinance multiple educational loans into one new loan with a new repayment term, monthly payments, and interest rate. Often the monthly payment amount can be reduced with consolidation.

Consummated Loan: A loan for which a disbursement check has been negotiated or EFT or master check funds have been delivered to the borrower. For example, the loan would be considered consummated if the borrower had cashed the check, if an individual check, or the school had applied the proceeds to the student's account, if included in a master check or EFT transmission before the school returned the proceeds to the lender.

Correspondence Study: A course of study in which the school provides instructional materials, including examination on those materials, to students who are not physically attending classes at the school. Instruction may be provided, in whole or in part, by video technologies. If the school offers 50% or more of its total courses by telecommunications, or by a combination of telecommunications and correspondence courses, the telecommunications courses offered by that school are considered "correspondence courses." A home-study course for which instruction is provided by video cassettes or discs is also considered a correspondence course during any award year unless the school provides instruction via the same media, during the same award year, to its on-campus students. If a course is a combination of correspondence work and residential training, the entire course is considered correspondence study.

Cosigner: A signer of a promissory note who is secondarily liable for a loan obligation. This term is no longer used in federal regulations. See also Endorser.

Cost of Attendance (COA): An estimate of the student's educational expenses for a period of enrollment.

Cost of Education:See Cost of Attendance

Cost-Less-Aid: A figure calculated by deducting all financial assistance the student has been or will be awarded for the loan period from the cost of attendance for the same period of enrollment.

Cumulative Loan Limit: Reinstatement of a loan's guarantee upon completion of a prescribed series of loan collection activities; also the process by which the loan's guarantee is reinstated.

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Deactivation: Loss of eligibility for a lender to participate in the FFELP. Since December 1994, the Department of Education has notified lenders that have failed to submit an ED Form 799 for two consecutive quarters that they are candidates for deactivation.

Dear Partner Letter (DPL): A communication from DOE that explains and clarifies DOE's guidance regarding federal regulations and statutes. Previously known as the Dear Colleague Letter (DCL).

Debt-Management Counseling: Counseling provided to a student about debt and accumulated indebtedness. Counseling is required both before the student receives the first disbursement of the student's first loan-often referred to as entrance counseling, and when the student is scheduled to complete an academic program-commonly referred to as exit counseling.

Default: The failure of a borrower (or endorser, if any) to make installment payments when due, or to meet other terms of the promissory note or other written agreement(s) with the lender under circumstances where the Department of Education or guarantor of the loan reasonably concludes that the borrower no longer intends to honor the borrower's obligation to repay a loan, provided that this failure persists for the most recent consecutive 180-day period (for a loan repayable in monthly installments) or the most recent 240-day period (for a loan repayable in less frequent installments).

Deferment: A period of time during repayment in which the borrower, upon meeting certain conditions, is not required to make payments of loan principal.

Delayed Delivery: The federally mandated delay in the delivery of the first disbursement of loan funds for first-year, first-time undergraduate Stafford loan borrowers. Delivery of the first disbursement must be delayed until the student has completed the first 30 days of the loan period for which the loan was intended. Schools that maintain a 10% cohort default rate for three years are exempt (See chapter 6, page 23 of the July 2001 Common Manual).

Delayed Disbursement: See Delayed Delivery

Delinquency: A period that begins on the day after the due date of a payment when the borrower fails to make the equivalent of one full payment.

Department of Education, (DOE or ED): The U.S. Department of Education.

Dependent Student: A student who does not meet the eligibility requirements for an "Independent Student," under the Higher Education Act of 1965, as amended. See Independent Student.

Diligent Effort: An attempt to perform a required activity in a matter that complies with federally mandated procedures and requirements.

Direct Loan: The Direct Loan program is formally named the William D. Ford Direct Loan Program and is offered directly by the DOE.  This program competes with the FFELP program and against private lenders.

Disability: A medically determined condition that renders a person unable to work and earn money, or to attend school. A borrower (or his spouse or dependent) is considered to be temporarily totally disabled if the condition is expected to be of a short and finite duration; a borrower is considered totally and permanently disabled if this condition is expected to continue for a long or indefinite period of time.

Disbursement: The transfer of loan proceeds by individual check, master check, or electronic funds transfer (EFT) by a lender to a borrower, a school, or an escrow agent. For a Consolidation loan, disbursement is the transfer of borrower loan proceeds from the consolidating lender to the current holder of the loan being consolidated

Disbursement Date: For a loan disbursed by check or draft, the date the check or draft is issued. For a loan disbursed by electronic funds transfer (EFT) or wire transfer, the date the funds are transferred from the lender to the school or escrow agent.

Discharge: The release of a borrower from a loan obligation due to the borrower's bankruptcy, the closing of a borrower's school, the borrower's (or student's) death, the borrower's total and permanent disability, or the school's false certification of the borrower's eligibility for a FFELP loan.

Disclosure Statement: A statement of the total cost of a loan including relevant data such as loan amount, interest rate, projected maturity and any additional finance charges.

Disposable Income: That part of a borrower's compensation from an employer and other income from any source that remains after the deduction of any amounts required by law to be withheld, or any child support or alimony payments that are made under a court order or legally enforceable written agreement. Amounts required by law to be withheld include, but are not limited to, federal and state taxes, social security contributions, and wage garnishment payments.

Documentation: A written or printed paper, a supporting reference, or a record that can be used to furnish evidence, proof, or information.

Due Diligence: The procedures required for attempting to satisfactorily resolve a delinquency and prevent a default in accordance with federal regulations. The lender must document the performance of these attempts, and the attempts must be at least as forceful as those generally used for consumer loans.

Economic Hardship: A period during which the borrower is working full time but is earning an amount that does not exceed the greater of the minimum wage or the poverty line for a family of two. Economic hardship also exists if a borrower's monthly payments on federal education loans are equal to or greater than 20 percent of the borrower's total monthly gross income, as defined in FFELP regulations.

ED: The US Department of Education.

ED Form 799: Lender's Interest and Special Allowance Request and Report, a federal form that a lender uses to report loans made (and resulting origination fees owed) by the lender to the Department of Education and interest benefits and special allowance earned by the lender. The fees owed are usually deducted from what the Department of Education owes the lender for interest benefits and special allowance.

EFA: See Estimated Financial Assistance

EFC: See Expected Family Contribution

Electronic Funds Transfer (EFT): The electronic transfer of Stafford or PLUS loan proceeds from the lender to an account at the school or the school's financial institution.

Electronic Signature (E-Sign): A method of legally signing a document electronically.

Eligible Borrower: A borrower or potential borrower who meets federal eligibility criteria for a Federal Stafford loan or, in the case of a parent borrower, a Federal PLUS loan.

Eligible School: A post-secondary institution of higher education or a vocational school declared eligible by the Department of Education to participate in the FFELP. Some guarantors may require schools to complete a separate agency-specific participation agreement.

Eligible Student: A student who meets federal student eligibility criteria.

Eligibility Letter: A term used to describe the materials the Department of Education's Institutional Participation Division sends to a school that has received federal approval for participation in the Title IV programs. The "letter" includes an Approval Notice and a copy of the school's Program Participation Agreement.

Emergency Action: A special action taken by the guarantor or the Department of Education to temporarily immediately suspend a school, lender, or servicer from participation in the guarantor's programs prior to the initiation of formal Limitation, Suspension, and Termination procedures.

Endorser: A signer of a promissory note who is secondarily liable for a loan obligation, i.e., who agrees to pay if the borrower does not. A lender may require a PLUS borrower with adverse credit to obtain a creditworthy endorser in order to receive the loan.

Enrolled: The status of a student who has met either of the following requirements: Completed the registration requirements (except for the payment of tuition and fees) at the school the student is attending. Has been admitted into an educational program offered predominantly by correspondence and has submitted one lesson, completed by the student after acceptance for enrollment and without the help of a representative of the school.

Enrollment Update Report: See Loan Transaction Statement

Entity: Any organization, institution, government agency, nonprofit corporation, or other group that participates in federal student financial aid programs.

Entrance Counseling (or Entrance Interview): See Debt-Management Counseling

Escrow Agent: A guarantor or other eligible lender that receives the proceeds of a FFELP loan as an agent of an eligible lender for the purpose of transmitting those proceeds to the borrower or the borrower's school.

E-Sign: See Electronic Signature.

Estimated Financial Assistance (EFA): The school's estimate of the amount of financial assistance from federal, state, institutional, or other sources that a student (or parent on behalf of a student) will receive for a period of enrollment. This may include scholarships, grants, financial need-based employment, or loans. EFA does not include certain loans used to replace the expected family contribution or Federal Perkins Loans or Federal Work-Study funds that the student has declined.

Exit Counseling (or Exit Interview): See Debt-Management Counseling

Expected Family Contribution (EFC): The amount a student and the student's spouse or family are expected to pay toward the student's cost of attendance. The Federal Need Analysis Methodology must be used to calculate the EFC.

FAO: Financial aid office.

FAA: See Financial Aid Administrator

FAFSA: See Free Application for Federal Student Aid

FAPS:See Financial Aid Processing System

FAT: See Financial Aid Transcript

FDLP: See Federal Direct Loan Program

Federal Consolidation Loan: See Consolidation Loan.

Federal Direct Loan Program (FDLP): A student loan program authorized on July 23, 1992, by Title IV, Part D, of the Higher Education Act. The Federal Direct Loan Program offers Federal Direct (Subsidized) Stafford loans, Federal Direct Unsubsidized Stafford loans, Federal Direct Consolidation loans, and Federal Direct PLUS loans. The FDLP is similar to the FFELP, except that funding comes directly from the U.S. Treasury rather than from private lending institutions.

Federal Family Education Loan Programs (FFELP): Loan programs authorized by Title IV, part B of the Higher Education Act of 1965, as amended, including the Federal Stafford, Federal PLUS, Federal SLS, and Federal Consolidation Loan Programs. These loan programs are funded by lenders, guaranteed by guarantors, and reinsured by the federal government. These programs are defined individually in 34 CFR 668.

Federal Interest Benefits: The federal government's payment of accrued interest on subsidized Stafford loans to the lender on behalf of the borrower during in-school, grace, and deferment periods. Some Consolidation loans also may qualify for interest benefits.

Federal Need Analysis Methodology (FM): The formula used to calculate the expected family contribution with regard to determining the amount of Title IV assistance available to a borrower.

Federal Pell Grant: See Pell Grant.

Federal Perkins Loan: See Perkins Loan.

Federal PLUS Loan: See PLUS Loan.

Federal Register: A federal government publication, published each weekday (except federal holidays), that lists regulations, regulatory amendments, notices, and proposed regulatory changes for all federal executive agencies.

Federal Stafford Loan: See Stafford Loan.

FFELP: See Federal Family Education Loan Program

Final Demand: A letter that the lender sends to the borrower demanding full payment of a delinquent or ineligible account. The letter is required as part of the due diligence procedures for collecting a loan that is seriously delinquent or ineligible. The Final Demand letter is sent on or after the 151st day of delinquency for loans payable in monthly installments. The letter must be sent at least 30 days before the lender files a default claim.

Final Regulations: Federal program rules, which are published in the Federal Register. Final regulations usually take effect 45 days after the date of publication.

Financial Aid Administrator (FAA): A staff member at an eligible school who is charged with the administration of financial aid programs.

Financial Aid Package: The total amount of financial aid that a school awards a student. Federal and nonfederal aid such as loans, grants, or work-study are combined into a "package" to help meet the student's need. Using available resources to give each student the best possible aid package is one of the major responsibilities of a school's financial aid administrator.

Financial Aid Processing System (FAPS): EDFUND's financial aid information system that maintains the FFEL program.

Financial Aid Transcript: An official record of the federal financial aid a student has received at schools the student previously attended. The record is used to assess the amount of federal financial aid the student has received and to prevent the award of federal funds for which the student or the parent of a dependent student is not eligible. The record may be obtained from the National Student Loan Data System (NSLDS) or may be a paper report received from the previous schools.

Financial Need: The student's cost of attendance less the expected family contribution. In determining a student's eligibility for a subsidized Stafford loan and a FFELP borrower's total loan amount, the student's estimated financial assistance is also subtracted from the cost of attendance.

Forbearance: A period of time during which the borrower is permitted to temporarily cease making payments or reduce the amount of the payments. The borrower is liable for the interest that accrues on the loan during the forbearance period. Some forbearance's are entitlements for eligible borrowers; others are granted at the discretion of the lender.

Foreign School: An eligible school located outside the United States and its territories.

Free Application for Federal Student Aid (FAFSA): The form the student must complete to apply for federal Title IV financial assistance, including Stafford loans. The student must include financial information on the student's household so that the expected family contribution can be calculated.

Full-Time Student: A student enrolled in an institution of higher education (other than a student enrolled in a program of study by correspondence) who is carrying a full academic workload as determined by the school under standards applicable to all students enrolled in that student's particular program. The student's workload may include any combination of courses, work, research, or special studies, whether or not for credit, that the school considers sufficient to classify the student as a full-time student.

Funds: Any monies (including checks, drafts, or other instruments); any commitment to provide money; or any commitment of insurance that has been, or may be, provided under the guarantor's programs to a borrower enrolled at and attending a participating school, or a borrower accepted for enrollment at a participating school.

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Gap: A period during the servicing of a loan in repayment when due diligence activities are required by regulations but no due diligence activities (collection activities) are performed. For a loan serviced under regulations published December 18, 1992, a gap greater than 45 days (greater than 60 days in the case of a transfer) results in the loss of the loan's guarantee. Previously, the term "gap" was defined in Appendix D of 34 CFR 682, and was applicable to loans serviced under due diligence provisions published November 10, 1986. For loans serviced under these "old" due diligence provisions, a gap in due diligence activities did not result in a loss of the loan's guarantee unless the lender had committed a violation of at least one due diligence requirement.

Grace Period: The time period after graduation during which the borrower is not required to begin repaying a student loan; six months on Stafford loans and nine months on Perkins loans; no grace period on PLUS loans.

Grade Level: A student's academic class level, as provided by a school official on the student's application and promissory note. Undergraduate students are 01 (freshman/first year) through 05 (fifth year/other undergraduate); graduate and professional students are A (first year) through D (fourth year and beyond).

Graduate or Professional Student: A student who, is enrolled in a program or course above the baccalaureate level at an institution of higher education, or enrolled in a program leading to a first professional degree. Has completed the equivalent of at least three years of full-time study at an institution of higher education, either before entrance into the program or as part of the program itself and is not receiving Title IV aid as an undergraduate student for the same period of enrollment.

Graduated Repayment Schedule: A repayment schedule under which the amount of the borrower's installment payment is scheduled to change (usually by increasing in two or more increments) during the course of the repayment period. The Graduated Repayment Schedule cannot exceed 10 years, excluding in-school, grace, deferment, or forbearance periods.

Grants: Financial aid awards that do not have to be repaid, available through the federal government, state agencies and colleges.

Guarantee: A conditional legal obligation, as defined in an agreement by and between a guarantor and a lender, for the guarantor to reimburse the lender for some portion of a FFELP loan that is not repaid by the borrower due to default, death, disability, bankruptcy, borrower ineligibility, false certification of borrower eligibility, or school closure.

Guarantee Disclosure: The form used by the guarantor that serves as evidence that the loan identified on the form has been insured (guaranteed) against loss due to the borrower's default, death, disability, bankruptcy, false certification of the loan's application, or closing of the school while the borrower was enrolled. The form also provides relevant financial data, including the loan amount, interest rate, guarantee fee, origination fee (if applicable), and projected maturity date. Some lenders use their own forms; others use a guarantor's form.

Guarantee Fee: A fee charged by a guarantor for each loan it guarantees. In most cases, the lender reduces the amount of the loan proceeds by this amount, and the fee is remitted to the guarantor. The Higher Education Act limits this fee to no more than one percent of the principal.

Guarantor (or Guaranty Agency): A state or private nonprofit organization that has an agreement with the U.S. Secretary of Education to administer a loan guarantee program under the Higher Education Act.

Guaranty Agency: See Guarantor

Half-Time Student: A student who is: (1) enrolled in a participating school; (2) carrying an academic workload that amounts to at least half of the workload of a full-time student, as determined by the school; and (3) not a full-time student. A student enrolled solely in an eligible program of study by correspondence is considered a half-time student.

HEA: The Higher Education Act of 1965, as amended.

HEAL Program Loan: Health Education Assistance Loan, available to graduate health professional students.

Hearing: The orderly presentation of arguments and evidence before a Hearing Officer.

Hearing Officer: A person with no prior involvement in a dispute under the Limitation, Suspension, and Termination procedures. The Hearing Officer for any hearing will be selected by the guarantor.

Holder: An eligible lender in possession of a FFELP loan promissory note that is payable to or has been assigned to the lender. A federal or state agency or an organization or corporation acting on behalf of such an agency and acting as a conservator, liquidator, or receiver of an eligible lender may also be considered a holder.

ICA/Location Cure: See Intensive Collection Activities

Incarcerated: The status of a borrower who is serving a criminal sentence in a federal, state, or local penitentiary, prison, jail, reformatory, work farm, or other similar correctional institution. A borrower who is living in a half-way house or in home detention or who has been sentenced to serve only weekends is not considered to be incarcerated.

Income-Contingent Repayment Schedule: A repayment schedule for some FDLP loans under which the borrower's monthly payment amount is adjusted annually, based on the total amount of the borrower's Direct loans, the borrower's family size, and the Adjusted Gross Income reported on the borrower's most recent income tax return. In the case of a married borrower, who files a joint income tax, the AGI includes the spouse's income.

Income-Sensitive Repayment Schedule: A repayment schedule for some FFELP loans under which the borrower's monthly payment amount is adjusted annually, based solely on the borrower's expected total monthly gross income received from employment and other sources during the course of the repayment period.

Independent Student: A student who meets one or more of the following criteria: an individual who is at least 24 years old by December 31 of the award year. An orphan or ward of the court. A veteran of the U.S. Armed Forces. A graduate or professional student. A married person. An individual with legal dependents other than a spouse. A student for whom the school's financial aid administrator determines and documents the student's independent student status based on the administrator's professional judgment of the student's unusual circumstances.

Ineligible Borrower: A borrower who does not meet federal eligibility criteria for a Federal Stafford loan or, in the case of a parent borrower, a Federal PLUS loan.

In-School Period: The time during which a student is enrolled on at least a half-time basis at a participating school.

Institution: Generally refers to a school participating in the Title IV programs.

Institution of Higher Education: A school that admits as a regular student only a person who has a certificate of graduation from a secondary school or a recognized equivalent or has demonstrated the ability to benefit from the school's education or training program by passing a federally approved standardized test, is legally authorized in each state in which it is physically located to provide, and provides within that state, a program of postsecondary education that awards an associate, bachelor's, graduate, or professional degree or provides a program of not less than two years in length that is acceptable for full credit toward such a degree or training program of at least one year that leads to a certificate, degree, or other recognized credential and prepares students for gainful employment in a recognized occupation and is a public or other nonprofit school and is accredited by a nationally recognized accrediting agency or association approved by the U.S. Department of Education for this purpose, or if not so accredited, is a school that the Department of Education determines will meet the accreditation standards of such an agency or association within a reasonable period of time.

Institutional Student Information Record (ISIR): An electronic version of the Student Aid Report (SAR), which is sent to the school.

Insurance Premium: See Guarantee Fee

Intensive Collection Activities (ICA): A series of collection activities performed within an abbreviated time frame. Performance of the activities within the time frames prescribed reestablishes the guarantee on loans on which the lender's noncompliance with due diligence requirements has resulted in the cancellation of the guarantee.

Interest: The charge made to a borrower for use of a lender's money.

Interest Benefits: See Federal Interest Benefits

Interim Period: The period during which a Stafford loan borrower is in the in-school or grace period. If the borrower returns to school before the grace period is fully used, the borrower continues to qualify for in-school status and to be considered in the interim period.

Invalid Telephone Number: For purposes of lender due diligence requirements in the collection of loans, a functioning telephone number that has been assigned to someone who has no knowledge of or relationship with the borrower.

Invoice: Refers to the Insurance Premium Fee Billing invoice that EDFUND sends to lenders and services at month-end. When applicable, lenders and services are invoiced monthly for insurance (guarantee) fees associated with refunds (returns of Title IV aid), paid-in-full returned checks, disbursements and refund reversals.

IRS Offset: An interception by the U.S. Internal Revenue Service (IRS) of the income tax refund of a borrower with a defaulted FFELP loan. The amount offset-less a processing fee-is forwarded to the Department of Education by the guarantor and ultimately applied to the defaulted loan.

ISIR: See Institutional Student Information Record

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Last Date of Attendance (LDA): The last day the student was physically present in class, as confirmed by the student's attendance records.

Late Charges: Charges that the lender may require the borrower to pay if the borrower fails to pay all or a portion of a required installment payment within 15 days after it is due. This charge may not exceed 6 cents for each dollar of each late installment.

Late Conversion: The scheduling of a Stafford, SLS, PLUS, or Consolidation loan borrower's first payment due date beyond the normal regulatory time limits for establishing that date on the regulatory time frames.

Late Disbursement or Delivery: A disbursement made by a lender or delivered by a school after the end of the loan period or the date on which the student ceased to be enrolled on at least a half-time basis.

LDA:See Last Day of Attendance

Leader, Summer Term: A summer term that comes at the beginning of a school's Scheduled Academic Year.

Leave of Absence: A break in enrollment, not including semester or spring break(s), that is requested by the student and sanctioned by the school. The leave of absence may be no longer than 60 days, and the student may be granted no more than one leave of absence during a 12-month period.

Legal Guardian: An individual appointed by a court to be a "guardian" of a person, and specifically required by the court to use his or her financial resources for the support of that person.

Lender Fee: A fee that the holder of the loan must pay to the Department of Education on any loan first disbursed on or after October 1, 1993. The fee is equal to 0.5% of the principal amount of the loan and is deducted from interest and special allowance due the lender. The lender remits the fee by making an entry on the ED Form 799 that results in an offset of the amount of quarterly interest and special allowance benefits due to the lender. The lender may not pass this fee on to the borrower.

Lender ID: A code assigned to a lender eligible to participate in the FFEL Program. It is assigned by the DOE.

Lender of Last Resort (LLR): A lender (or guarantor, in some cases) that agrees to make a subsidized Stafford loan to an otherwise eligible borrower who has been unable to find a lender willing to make a loan.

Lender Participation Questionnaire for New Lenders: The application form that a lender must complete and return to the Department of Education before receiving approval to participate in the FFELP.

Lender's Request for Assistance (LRA): A form or procedure by which a lender requests preclaims assistance from the guarantor. See Preclaims Assistance.

Limitation: The continuation of a school's eligibility to participate in the guarantor's programs, subject to compliance with special conditions or restrictions established by agreement with the Department of Education or the guarantor.

LLR: See Lender of Last Resort

Loan Assignment: See Assignment

Loan Period: The period of time for which a loan application is certified.

Loan Proceeds: The amount of loan funds that have been guaranteed.

Loan Transaction Statement: A guarantor report, also referred to as an enrollment update report, that provides enrollment updates to the lender.

Loan Transfer: A change in the identity of the party that owns a borrower's loan(s), or the servicer of the loan.

Loan Verification Certificate: The form used to verify loans to be included in a Federal Consolidation Loan. It is used to verify terms of the existing loans.

Location Cure (ICA): See Intensive Collection Activities.

LVC: See Loan Verification Certificate.

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Mandatory Administrative Forbearance: Forbearance that a lender is required to grant for periods during which the borrower is involved in a local or national emergency or military mobilization or resides in a designated disaster area. A lender is also required to grant a mandatory administrative forbearance for up to three years if the borrower's repayment period must be extended due to the effect of changes in the variable interest rate on standard or graduated repayment terms and for up to five years to accommodate income-sensitive repayment schedules.

Mandatory Forbearance: Forbearance that a lender is required to grant for medical or dental internships and residencies after the borrower's in-school deferment period has expired, for service in AmeriCorps, for excess student loan debt burden, for participation in the student loan repayment programs as administered by the U.S. Department of Education of Defense, and for non-medical or dental internships.

Master Check: A single check issued from a lender or disbursing agent to a school that includes loan disbursements for two or more borrowers; a non-electronic process for transferring funds that mirrors electronic funds transfer (EFT).

Master Promissory Note (MPN): A promissory note under which the borrower may receive loans for either a single period of enrollment or multiple periods of enrollment.

MPN: See Master Promissory Note.

Multiple Data Entry (MDE) Processor: An organization under contract with the Department of Education that collects all the data required to calculate eligibility for the Pell Grant program and performs need analysis.

Multiple Disbursements: Disbursement at pre-designated times of a Federal Stafford or PLUS loan-usually in two or more installments of approximately equal increments.

National and Community Service Trust Act: The federal legislation that created a national and community service program, including AmeriCorps. The program is administered by the Corporation for National Service.

National Credit Bureau: A credit reporting agency with a service area encompassing more than a single region of the country.

National of the United States: A citizen of the United States or, as defined in the Immigration and Nationality Act, a non-citizen who owes permanent allegiance to the United States.

National Student Loan Data System (NSLDS): A database comprised of information from guarantors, schools, lenders, and the Department of Education which contains information on Title IV aid received by students.

Need Analysis: A standardized assessment of the ability of a student or of a student's family to contribute toward educational expenses.

New Borrower: A borrower who has no outstanding balance on a FFELP loan at the time he or she signs a Promissory Note for a FFELP loan.

Non-subsidized Loan: A loan that is not eligible for federal interest benefits. The borrower is responsible for paying the interest on the outstanding principal balance of a non-subsidized loan throughout the life of the loan. During in-school, grace, and deferment periods, these interest payments are normally made on a monthly or quarterly basis, or are capitalized.

Non-Term-Based Institution: A school that measures its academic year in credit or clock hours rather than academic terms (e.g., semesters, trimesters, or quarters).

Normal Commercial Skip Tracing: Techniques used to locate a person whose address is unknown. Examples of these techniques may include contacting an endorser (e.g., to locate a borrower), a borrower (e.g., to locate an endorser or co-maker), a relative, a reference, individuals, entity identified in a borrower's loan file, Directory Assistance or a comparable database; attempting to contact the person by calling the last known telephone number; performing a social security number search via a credit report; reviewing city directories; processing information contained on the current credit report; or checking with a state licensing agency, a trade association, or a motor vehicle bureau.

Notification (as it relates to MPN): A process by which the school, lender or guarantor notifies the borrower of the proposed loan types and amounts. The borrower is required to take action only to reject or reduce the amount of the loan.

Notice of Disclosure: See Disclosure Statement.

NSLDS: See National Student Loan Data System (NSLDS)

Official: The person at the guarantor with the responsibility for initiating an Action under the Limitation, Suspension, or Termination procedures.

One-Academic-Year Training Program: A program that is at least at least 30 weeks in length during which the student earns at least: 24 semester or trimester hours or units, or 36 quarter hours or units at a school using credit hours or units to measure academic progress. 900 clock hours of supervised training at a school using clock hours to measure academic progress. 900 clock hours in a correspondence program.

Origination Fee: A fee charged to offset the cost of interest, special allowance, and reinsurance payments by the federal government on a FFELP loan. This fee, like the guarantee fee, is subtracted from the borrower's proceeds.

Overaward: Any amount of a student's total financial assistance (excluding Pell Grants) that exceeds the student's financial need.

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Parent: A student's natural or adoptive mother, father, or court-appointed legal guardian. See also Legal Guardian.

Partial Cancellation: Cancellation of a disbursement or a portion of a disbursement rather than of an entire loan.

Payment Period: The basis on which a school must schedule and deliver disbursements for a particular loan period. A payment period is determined based on the structure of the school's academic program. At a school that does not use standard terms, a payment period is measured in credit or clock hours completed by the student in relation to the length of the student's program of study. The payment period requirement does not eliminate the multiple disbursement requirement for a school to deliver loan proceeds in substantially equal installments, with no installment exceeding one-half of the loan amount.

Pell Grant: A federal need-based grant.

Period of Enrollment: As defined by federal regulation, the period for which a Stafford or PLUS loan is intended. The period of enrollment must coincide with a bona fide academic term established by the school for which the school's charges are generally assessed, i.e., semester, trimester, quarter, length of the student's program or the school's academic year. The period of enrollment is also referred to as the loan period. In addition, the term "period of enrollment" is commonly used by the financial aid community to refer to the period of time during an academic year when a student is enrolled at the school.

Perkins Loan: Federally insured loans funded by the federal government and awarded by the school, featuring a low interest rate and repayable over an extended period.

Permanent Resident of the United States: A person who meets certain requirements of the Immigration and Naturalization Service (INS). Valid documentation of permanent residency includes the following: I-551, I-151, I-181, I-94, or a passport stamped processed for I-551, "Temporary evidence of lawful admission for permanent residence."

PLUS Loan: Parent Loans for Undergraduate Students - federally insured loans for parents of dependent students.

Post-Deferment Grace Period: A period following a deferment during which payments are not required. The 6-month post-deferment grace period applies only to loans disbursed before October 1, 1981, and, in some cases, to loans for borrowers who participated on active-duty status in certain emergency military mobilizations, such as Operations Desert Shield/Desert Storm.

Pre-Accredited School: A public or private nonprofit school that is progressing towards accreditation within a reasonable period of time, as certified by an accrediting agency. The status must be recognized by the Department of Education for purposes of Title IV program eligibility. See also Accrediting Agency.

Preclaims Assistance: The help provided to a lender by the guarantor in order to prevent a delinquent loan from defaulting. See also Lender's Request for Assistance (LRA).

Preclaims Request Period: The period during which a lender must submit a request for preclaims assistance from a guarantor. This period begins 10 days prior and ends 10 days after the date established by the guarantor.

Pre-hearing Conference: Contact by any method, including telephone, between the parties for the purpose of settling or narrowing a dispute related to Limitation, Suspension, and Termination proceedings.

Prepayment: A payment received when the borrower is not required to make either principal or interest payments; when a borrower is required to make interest payments, but previously authorized the lender to capitalize accruing interest; or when the borrower makes a payment that is greater than the amount of the borrower's regular installment or the amount due.

Principal Balance: The outstanding amount of the loan, on which the lender charges interest. As the loan is repaid, a portion of each payment is used to satisfy interest that has accrued, and the remainder of the payment is used to reduce the outstanding principal balance.

Professional Judgment: The flexibility given to a Financial Aid Administrator (FAA) under the Higher Education Act to make adjustments to student eligibility for federal aid on a case-by-case basis.

Professional Student: See Graduate or Professional Student

Program Participation Agreement: An agreement that a school and the Department of Education must sign, permitting participation in one or more of the Title IV student financial assistance programs. This agreement also states that the initial and continued eligibility to participate in the Title IV Student Financial Assistance Programs is conditional upon compliance with the provisions of applicable laws and program regulations. The agreement includes a school's participation in the following federal programs: Federal Pell, Federal Supplemental Educational Opportunity Grant, Federal Work-Study, Federal Family Education Loans, and Direct Loans.

Program Review: A comprehensive review of a lender's, school's, or servicer's administrative procedures for handling Federal Stafford, PLUS, SLS, and Consolidation loans. The review is conducted to ensure that those procedures are in compliance with federal regulations and with the guarantor' policies and procedures.

Promissory Note: A legally binding agreement the borrower signs to obtain a loan under the FFELP, in which the borrower promises to repay the loan, with interest, in periodic installments. The agreement also includes information about any grace period, deferment, or cancellation provisions and the student's rights and responsibilities with respect to the loan.

Proration: A reduction of the standard annual loan limit for an undergraduate student. Proration of the loan amount is required if the student's program or the remainder of the student's program is less than a full academic year in length.

Proportional Proration: Proration based on a straight percentage of the credits the student plans to take and the number of credits in the school's academic year.

Pro Rata Refund: The method by which a school must determine the amount it must refund to a first-year student who withdraws before completing at least 60% of the program in which the student was enrolled.

Reauthorization: Refers to the legislative process-generally carried out every 5 years in the case of the Higher Education Act-whereby Congress reviews and either renews, terminates, or amends existing programs. The most recent reauthorization of the Act, as amended, was in 1998.

Recall (of a claim): A lender request that the guarantor return a default claim that has already been filed before claim reimbursement because the claim no longer qualifies for default.

Recognized Equivalent of a High School Diploma: A General Education Development (GED) Certificate or a state certificate received by a student after the student has passed a state-authorized examination that the state recognizes as the equivalent of a high school diploma.

Record: With respect to recordkeeping requirements for lenders and schools, official information or data relating to a borrower's loan account or file that can be used as evidence.

Refund: The difference between the amount the borrower paid toward institutional charges (including financial aid and/or cash paid) and the amount the school can retain under the appropriate refund policy. This "unearned" amount of institutional charges must be returned to student financial aid (SFA) programs on behalf of a student who received SFA funds and who has ceased attending school.

Regulation B: The section of the Equal Credit Opportunity Act (12 CFR 202) that prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, or age.

Rehabilitation (of a defaulted loan): A process by which a borrower may bring a FFELP loan out of default by adhering to specified repayment requirements.

Reinstatement (of borrower Title IV eligibility): A process by which a borrower with a defaulted FFELP loan may regain eligibility for Title IV aid by adhering to strict repayment requirements.

Reinstatement (of institutional eligibility): Formal permission by the guarantor for a school, lender, or servicer whose eligibility to participate in the guarantor's programs has been terminated to resume participation after meeting specific conditions.

Release of Proceeds: Delivery of loan proceeds by the school to the borrower. Release of proceeds is not disbursement of proceeds by the lender. See Disbursement

Repayment Period: The period during which interest accrues on the borrower's loan and principal payments are required. For FFELP loans, the repayment period excludes any period of authorized deferment or forbearance; however, interest will continue to accrue during these periods for unsubsidized Stafford, SLS, and PLUS loans.

Repayment Schedule: The legal addendum to the Promissory Note stating the terms of loan repayment and fulfilling disclosure requirements. The Repayment Schedule is a plan that indicates the total principal and interest due, an installment amount, and the number of installments required to pay the loan in full. The Repayment Schedule also contains the interest rate for the loan(s) included on the schedule, the due date of the first and subsequent installments, and the frequency of installments.

Repayment Start Date: The date the repayment period begins. For Stafford loans, repayment begins on the day following the last day of the grace period. For PLUS and SLS loans, repayment begins on the date the loan is fully disbursed.

Repurchase (of a claim): The lender's purchase back from the guarantor of a defaulted loan for which the lender has already been reimbursed by the guarantor.

Return of Title IV Funds: The federally mandated process by which a school calculates the amount of federal funds to be returned for a Title IV aid recipient who withdraws or who ceases attendance during a payment period or period of enrollment. See also Refund

Rolling Delinquency: A delinquency that occurs whenever the delinquent status of a loan is increased or reduced but not completely eliminated as result of a payment, the reversal of a payment, a deferment or forbearance, or the receipt of a new out-of-school date.

Rule of 78s: A procedure for calculating the outstanding principal balance of a loan that is prohibited for loans made to a borrower who entered repayment on or after June 26, 1987. Seventy-eight is the sum of the digits from one to twelve (the number of months in a one-year installment contract).

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SAP:See Satisfactory Academic Progress

SAR: See Student Aid Report

SAY: See Scheduled Academic Year

Satisfactory Academic Progress (SAP): The level of academic progress required of a student by the Higher Education Act in order to receive Title IV aid, including Federal Stafford, PLUS, or SLS loans. Each school must establish a standard for evaluating a student's efforts to achieve an educational goal within a given period of time. In making this evaluation, the school must establish the normal time frame for completion of the course of study in which the student is enrolled, and a method, such as grades or work projects completed, to measure the quality of the student's performance. Students who exceed one and a half times the normal time required to complete their academic program are not eligible for additional Title IV assistance for that period that is in excess of 150% of the academic period normally required.

Satisfactory Repayment Arrangement: A specified number of consecutive, on-time, voluntary, reasonable and affordable full monthly payments made by a borrower to the holder of any loan or loans in default. The borrower may make three such payments to become eligible to consolidate a defaulted loan. The borrower must make six such payments to regain eligibility for Title IV financial aid programs, and may regain eligibility under reinstatement provisions only once. The borrower must make 12 such payments to rehabilitate a defaulted loan.

Scheduled Academic Year (SAY): The "fixed" academic period, as advertised in a school's printed materials, that generally begins and ends at the same time each year according to an established schedule. The SAY is the academic period to which the statutory definition of an Academic Year must be applied. Non-term-based institutions may not use an SAY. The summer term may be treated as an add-on at the beginning (leader) or end (trailer) of the SAY. For further discussion, See "Principles to Determine the Frequency for Annual Loan Limits" in the appendix to chapter 10 of The Federal Student Financial Aid Handbook.

School: A term in this manual that is used interchangeably with "Institution."

School as Lender: A school, other than a correspondence school, that has been approved as a lender under the FFELP and has entered into a contract of guarantee with the Department of Education or a similar agreement with a guarantor.

Secondary Market: An entity that purchases education loans from eligible lenders in order to increase the amount of funds available for education loans. The secondary market obtains funds from investors and uses those funds to purchase existing education loans from lenders. The lenders then use the proceeds of those sales to make new education loans.

Separation Date: The date the student ceases to be enrolled on at least a half-time basis at an eligible school.

Servicer (or Third-Party Servicer): An entity that enters into a contract with a program participant to administer any aspect of its participation in a Title IV program.

Shortage Area: See Teacher Shortage Area

Skip Tracing: Diligent efforts to locate a borrower's telephone number or address when such information is unknown. See also Normal Commercial Skip Tracing.

SLS: Supplemental Loan for Students. This loan program ended in 1992.

Social Security Number (SSN): The 9-digit number assigned to the borrower by the Social Security Administration. The SSN is used as an identifier for tracking the borrower's loan account(s), skip tracing, and reporting to the Department of Education. A borrower must have an SSN in order to apply for a FFELP loan.

Special Allowance: A percentage of the daily average unpaid principal balance, paid to a lender by the Department of Education on an eligible Stafford, PLUS, SLS, or Federal Consolidation loan. Special allowance payments act as an incentive for lenders to make education loans by, in effect, making up the difference between the interest rate charged to a FFELP borrower and market interest rates. The special allowance rate is set by statutory formula.

Special Occurrence: An event-such as the lender's receipt of a borrower's correct address and/or correct telephone number-that affects the lender's due diligence requirements but does not change the payment due date of the loan.

SSN: See Social Security Number.

Standard Repayment Schedule: A repayment schedule under which the borrower pays the same amount for each installment payment throughout the entire repayment period or pays an amount that is adjusted to reflect annual changes in the loan's variable interest rate. The Standard Repayment Schedule cannot exceed 10 years, excluding in-school, grace, deferment, or forbearance periods.

State: A state of the Union, the District of Columbia, the Commonwealth of Puerto Rico, American Samoa, Guam, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Commonwealth of the Northern Mariana Islands.

State Lender: In any state, a single state agency or private not-for-profit agency designated by the state that has been approved as a lender and that has entered into a contract of guarantee with the Department of Education or a similar agreement with a guarantor.

Statement of Educational Purpose: The borrower's signed statement that any Title IV aid received will be used only for education-related expenses at the school at which the student is enrolled or accepted for enrollment.

Statutory Interest Rate: The maximum annual interest rate (under the Higher Education Act) that a lender may charge on a loan.

Student Aid Report (SAR): The student's need analysis report, which is generated by the Department of Education's central processing system or MDE processor. The SAR summarizes information that the student reported on the FAFSA. An electronic version sent to the school is called an ISIR (Institutional Student Information Record).

Subrogation: A transfer in the ownership of a defaulted FFELP loan from a guarantor to the Department of Education. Loans to be subrogated must meet criteria established by the Department of Education. Subrogation criteria may be revised annually by the Department.

Subsidized Loan: A loan eligible for interest benefits paid by the federal government. The federal government pays the interest that accrues on subsidized loans during the student's in-school, grace, authorized deferment, and (if applicable) post-deferment grace periods, if the loan meets certain eligibility requirements.

Suspension: Suspension of the eligibility of a school, lender, or servicer to participate in a guarantor's programs for a specified period of time until specified requirements are met.

T-Bill: See Treasury Bill

Teacher Shortage Area: A federally designated geographic area, grade level, or academic, instructional, subject matter, or discipline that has been classified as a shortage area as defined by the Department of Education.

Teach-Out Program: A program of study offered by a school that is substantially similar to a borrower's program of study at a school that closed and ceased to provide educational services during the borrower's loan period.

Term-Based School: A school that uses standard academic terms, such as semesters, trimesters, or quarters.

Termination: Withdrawal of the eligibility of a school, lender, or servicer to participate in the guarantor's programs.

Third-Party Servicer: In the case of a lender or guarantor, a state or private for-profit or nonprofit organization or an individual that enters into a contract with the lender or guarantor to administer any aspect of the lender's or guarantor's FFELP as required by statutory or regulatory provisions related to part B of Title IV of the Higher Education Act. In the case of a school, a state or private for-profit or nonprofit organization or an individual that enters into a contract with the school to administer any aspect of the school's participation in any Title IV program.

Three-Times Rule: The federal requirement that no single installment of a graduated or income-sensitive repayment schedule may be more than three times greater than any other installment.

Three-Year Rule: The statutory provision that a school loses its eligibility to participate in the FFELP if its cohort default rates exceed acceptable statutory levels for the three most recent consecutive fiscal years. The current acceptable level is a cohort default rate of less than 25%.

Title IV: A section of the Higher Education Act of 1965, as amended, that authorizes federal loan, work, and grant education financial assistance programs.

Totally and Permanently Disabled: The condition of an individual who is unable to work and earn money or attend school due to an injury or illness that is expected to continue indefinitely or result in death.

Trailer, Summer Term: A summer term that comes at the end of a school's Scheduled Academic Year.

Treasury Bill (T-bill): A note or bill issued by the U.S. Treasury as legal tender for all debts.

Unconsummated Loan: Loan proceeds that the school returned to the lender prior to the borrower's having cashed the check, if an individual check, or the school having applied the proceeds to the student's account, if included in a master check or EFT transmission. This includes checks that may have been released by the school but remain uncashed by the 120th day following disbursement and EFT and master check transactions that have not been completed by the 120th day following disbursement.

Undergraduate Student: A student who is enrolled at a school in a course of study, at or below the baccalaureate level, that usually does not exceed four academic years, or is up to five academic years in length and is designed to lead to a first degree.

Undue Hardship (Adversary) Petition: A motion to have a loan discharged under a Chapter 7 or 11 bankruptcy case on the grounds of undue hardship. (In most cases, a Chapter 7 or 11 bankruptcy claim is paid only if the loan has been in repayment for more than seven years.)

Unsubsidized Loan: A non-need-based loan such as an unsubsidized Federal Stafford loan or a Federal PLUS loan. The borrower is responsible for paying the interest on an unsubsidized loan during in-school, grace, and deferment periods, in addition to repayment periods.

U.S. Citizen or National: The term "citizen" includes all native or naturalized persons who owe allegiance to the United States and are entitled to protection by it. The U.S. includes the fifty states, the District of Columbia, Guam, Northern Mariana Islands, Puerto Rico, and the Virgin Islands. The term "national" includes all U.S. citizens and citizens of American Samoa and Swain's Island.

U.S. Department of Education (DOE or ED): See Department of Education

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Variable Interest Rate: An interest rate that changes, usually annually, according to prescribed methods.

Variable Interest Rate Conversion: The conversion of a fixed interest rate to a annually variable interest rate, which carries a federally mandated cap.

Verbal Request: A request that is made orally, as opposed to in writing.

Verification: A school's procedure for checking the accuracy of information reported by the student on the FAFSA. Verification may include requesting a copy of the tax returns filed by the student and, if applicable, the student's parents.

Voluntary Flexible Agreement: The 1998 reauthorization of the Higher Education Act authorized DOE to negotiate modifications to its relationship with up to six guaranty agencies. These modifications were termed voluntary flexible agreements, and they were intended to update and advance the regulations placed on FFEL Program guaranty agencies.

Week: A consecutive seven-day period in which: for an educational program using a semester, trimester, or quarter system or an educational program using clock hours, at least one day of regularly scheduled instruction, examinations, or preparation for examinations occurs for an educational program using credit hours but not using a semester, trimester, or quarter system, at least 12 hours of regularly scheduled instruction, examinations, or preparation for examinations occur.

Weighted Average Cohort Rate: For a school that has former students entering repayment in a fiscal year on both FFELP and FDLP loans, the Department of Education calculates a weighted average cohort rate.

Weighted Average Interest Rate: The method for calculating the interest rate for a Consolidation Loan.

Windfall Profits: Rebate of excess interest for Stafford loans first disbursed before July 1, 1992, or first disbursed to a new borrower on or after July 23, 1992, and before October 1, 1992, as required by the Technical Amendments of 1993. If a loan's fixed interest rate exceeds the current average of bond equivalent rates of 91-day Treasury bills plus a factor (3.25% or 3.10%) for a particular quarter, the lender must calculate an adjustment to excess interest and rebate the difference to the borrower's account based on a federally proscribed formula.

Withdrawal Date: The date the student withdraws, as determined by the school.

Write-Off: A loan amount for which there has been a total cessation of collection activity.