Loan Discount
A discount is a reduction in the interest rates and/or fees paid on a
loan. Federal law sets the maximum interest rates and fees charged on
Stafford, PLUS and Consolidation loans. Nothing prevents lenders from
offering lower interest rates and fees. Many lenders offer a variety
of convoluted loan discounts, sometimes called borrower benefits, in
order to attract potential borrowers. Loan discounts may be contingent
on specific borrower behavior, such as repaying the loan through
direct debit from the borrower's bank account (ACH) or making a number
of consecutive payments on time.
Loan Forgiveness
See Forgiveness.
Loan Interviews
Students with educational loans are required to meet with a financial aid administrator before they receive their first loan disbursement and again before they graduate or otherwise leave school. During these counseling sessions, called entrance and exit interviews, the FAA reviews the repayment terms of the loan and the repayment schedule with the student.
Return to top
Master's Degree
One of several degrees granted by graduate schools.
Matriculate
A student matriculates in college when he or she enrolls in college for the first time. A student who just started the freshman year in high school will matriculate in four years. A newborn baby will matriculate in approximately 17 years.
Maturity Date
The date when a loan comes due and must be repaid in full.
Merit-based
Financial aid that is merit-based depends on your academic, artistic or athletic merit or some other criteria, and does not depend on the existence of financial need. Merit-based awards use your grades, test scores, hobbies and special talents to determine your eligibility for scholarships.
Mortgage
A mortgage is a legal agreement to conditionally convey a security
interest in property as collateral for repaying a loan. The property
is pledged as collateral on the loan. It is used in connection with a
loan of funds for purchasing a piece of property which uses that
property as security for the loan. The lender has a lien on the
property and will receive the property if the borrower fails to repay
the loan.
Multiple Data Entry Processor (MDE)
A company that processes the FAFSA forms submitted by students. The College
Scholarship Service (CSS) and PHEAA are both MDE Processors.
Return to top
National Health Corps Scholarship (NHSC)
Scholarship program administered by the US Department of Health
and Human Services (HHS). It is available to medical students studying allopathic and osteopathic medicine and to dental school students studying dentistry.
National Merit Scholarship Qualifying Test (NMSQT)
See PSAT.
National Service Trust
President Clinton's national community service program. If you participate in this program before attending school, the funds may be used to pay your educational expenses. If you participate after graduating, the funds may be used to repay your federal student loans. Eligible types of community service include education, human services, the environment and public safety.
Need
The difference between the COA and the EFC is the student's financial need -- the gap between the cost of attending the school and the student's resources. The financial aid package is based on the amount of financial need. The process of determining a student's need is known as need analysis.
|
Cost of Attendance (COA) |
| - |
Expected Family Contribution (EFC) |
| ----------------------------------------- |
| = |
Financial Need |
Need Analysis
The process of determining a student's financial need by analyzing the financial information provided by the student and his or her parents (and spouse, if any) on a financial aid form. The student must submit a need analysis form to apply for need-based aid. Need analysis forms include the Free Application for Federal Student Aid (FAFSA) and the Financial Aid PROFILE.
Need-Based
Financial aid that is need-based depends on your financial situation. Most government sources of financial aid are need-based.
Need-Blind
Under need-blind admissions, the school decides whether to make an offer of admission to a student without considering the student's financial situation. Most schools use a need-blind admissions process. A few schools will use financial need to decide whether to include marginal students in the wait list.
Need-Sensitive
Under need-sensitive admissions, the school does take the student's financial situation into account when deciding whether to admit him or her. Some schools use need-sensitive admissions when deciding to accept a borderline student or to pull a student off of the waiting list.
Net Cost
Net cost is the difference between the cost of attendance and the need-based financial aid package. It is generally similar to the Expected Family Contribution (EFC) except when the college practices gapping. It does not vary much from college to college. See Out-of-Pocket Cost for a related definition. Generally, families should evaluate college financial aid award letters using out-of-pocket cost, not net cost.
Net Income
This is income after taxes, deductions and allowances have been subtracted.
New Borrower
See First-Time Borrower.
Nursing Student Loan (NSL)
A low interest loan administered by the US Department of Health and Human Services (HHS) and available to students enrolled in nursing programs.
Return to top
Originate
A lender is said to originate or make a loan when
the loan is disbursed to or on behalf of the borrower.
Origination Fee
Fee paid to the bank to compensate them for the cost of administering the loan. The origination fees are charged as the loan is disbursed, and typically run to 3% of the amount disbursed. A portion of this fee is paid to federal government to offset the administrative costs of the loan.
Out-of-Pocket Cost
Out-of-Pocket cost is the difference between the cost of attendance and just the grants and scholarships and other gift aid in the need-based financial aid package. It reflects the bottom line cost to the family, the amount the family will need to pay out of current and future resources, such as savings, income and loans. See Net Cost for a related definition. While net cost does not vary by much from college to college, out-of-pocket cost can vary significantly, based on how much of need is met with grants instead of loans. Some of the elite non-profit colleges that have adopted no loans financial aid policies have lower out-of-pocket costs than many public colleges. Generally, families should evaluate college financial aid award letters using out-of-pocket cost, not net cost.
Outside Resource
Aid or benefits available because a student is in school and is counted after need is determined. Outside scholarships, prepaid tuition plans and VA educational benefits are examples of outside resources.
Outside Scholarship
A scholarship that comes from sources other than the school and the federal or state government.
Out-of-State Student
A student who has not met the legal residency requirements for the state, and is often charged a higher tuition rate at public colleges and universities in the state.
Overawards
A student who receives federal support may not receive awards totaling more than $400 in excess of his or her financial need.
Return to top
Packaging
The process of assembling a financial aid package.
Parent Contribution (PC)
An estimate of the portion of your educational expenses that the federal government
believes your parents can afford. It is based on their income, the number of parents earning income, assets, family size, the number of family members currently attending a university and other relevant factors. Students who qualify as independent are not expected to have a parent contribution.
Parent Loans for Undergraduate Students (PLUS)
Federal loans available to parents of dependent undergraduate students to help finance the child's education. Parents may borrow up to the full cost of their children's education, less the amount of any other financial aid received. PLUS Loans may be used to pay the EFC. There is a minimal credit check required for the PLUS loan, so a good credit history is required. Check with your local bank to see if they participate in the PLUS loan program. If your application for a PLUS loan is turned down, your child may be eligible to borrow additional money under the Unsubsidized Stafford Loan program.
Payoff Amount
The payoff amount is the amount required to pay
off a loan in full. It typically includes the outstanding principal
plus any accrued but unpaid interest, as well as any unpaid late fees
and collection charges.
Pell Grant
A federal grant that provides funds of up to $5,550 (2010-11) based on the student's financial need.
Perkins Loan
Formerly the National Direct Student Loan Program, the Perkins Loan allows students to borrow up to $3,000/year (5 year max) for undergraduate school and $5,000/year for graduate school (6 year max). The Perkins Loan has one of the lowest interest rates and is awarded by the financial aid administrator to students with exceptional financial need. The student must have applied for a Pell Grant to be eligible. The interest on the Perkins Loan is subsidized while the student is in school.
PhD
One of several degrees granted by graduate schools.
PLAN
A test taken in the fall of the sophomore year in high school as practice for the ACT.
Poverty Line
The poverty guidelines,
often referred to as the poverty line, are published annually by the
Department of Health and Human Services (HHS). They represent a
simplification of the
poverty thresholds
published annually by the US Census Bureau. The poverty line is more
often used in federal student aid, such as the
income-based repayment and
income-contingent repayment plans, as well as the
economic hardship deferment.
Prepaid Tuition Plan
A college savings plan that is guaranteed to rise in value at the same rate as college tuition. For example, if a family purchases shares that are worth half a year's tuition at a state college, they will always be worth half a year's tuition, even 10 years later when tuition rates will have doubled.
Prepayment
Prepayment is paying off all or part of a loan before it is due.
Prepayment Penalty
A prepayment penalty is a fee charged for early payoff of a loan. No
federal or private education loans charge prepayment penalties.
Primary Care Loan (PCL)
A low interest loan administered by the US Department of Health and Human Services (HHS). It is available to medical school students pursuing medicine, osteopathy, dentistry, veterinary medicine, optometry and podiatry. Undergraduate pharmacology students are also eligible. To be eligible for this loan, you must commit to working in the field of primary care. It was formerly known as the Health Professions Student Loan (HPSL).
Prime
Prime borrowers have good to excellent credit histories,
typically with a FICO score of 650 or more.
Prime Lending Rate
The Prime Lending Rate is the interest rate
offered by lenders to their best credit customers.
Principal
The principal or loan balance is the amount of money borrowed or
remaining unpaid on a loan. Interest is charged as a percentage of the
principal. Insurance and origination fees will be deducted from this
amount before disbursement.
Private Loans
Education loan programs established by private lenders to supplement the student and parent education loan programs available from federal and state governments.
Professional Degree
A degree in a field like law, education, medicine, pharmacy or dentistry.
Professional Judgment (PJ)
For need-based federal aid programs, the financial aid administrator can adjust the EFC, adjust the COA, or change the dependency status (with documentation) when extenuating circumstances exist. For example, if a parent becomes unemployed, disabled or deceased, the FAA can decide to use estimated income information for the award year instead of the actual income figures from the base year. This delegation of authority from the federal government to the financial aid administrator is called Professional Judgment (PJ).
Professional Student
A student pursuing advanced study in law or medicine.
Promissory Note
A promissory note (or 'note') is a binding legal document that must be
signed by the student borrower before loan funds are disbursed by the
lender. The promissory note states the terms and conditions of the
loan, including repayment schedule (e.g., level monthly payments for a
term of 10 years), interest rate, fees (e.g., origination fees,
guarantee fees, late fees, collection charges), deferments, forbearances
and cancellations. It represents an agreement by the borrower to repay
the debt according to the specified terms and conditions. The student
should keep this document until the loan has been repaid.
Preliminary Scholastic Assessment Test (PSAT/NMSQT)
The PSAT is taken during the junior year as practice for the SAT. Scores on the PSAT are used to select semi-finalists for the National Merit Scholarship program.
Return to top
Reaching School
A school that the student would love to attend, but which isn't "guaranteed" to admit you. Every student should apply to at least one reaching school. (See also Safety School.)
Renewable Scholarships
A scholarship that is awarded for more than one year. Usually the student must maintain certain academic standards to be eligible for subsequent years of the award. Some renewable scholarships will require the student to reapply for the scholarship each year; others will just require a report on the student's progress to a degree.
Repayment Schedule
The repayment schedule discloses the monthly payment, interest rate, total repayment obligation, payment due dates and the term of the loan.
Repayment Term
The term of a loan is the period during which the borrower is required to make payments on his or her loans. When the payments are made monthly, the term is usually given as a number of payments or years.
Repossession
Repossession occurs when a lender takes physical
control of the collateral for a loan. It can also refer to taking
possession of an item that was rented or leased. The term is most often
used in connection with automobiles. It is similar in concept to a
foreclosure, but the focus is on recovering goods sold on credit or an
installment contract.
Research Assistantship (RA)
A form of financial aid awarded to graduate students to help support their education. Research assistantships usually provide the graduate student with a waiver of all or part of tuition, plus a small stipend for living expenses. As the name implies, an RA is required to perform research duties. Sometimes these duties are strongly tied to the student's eventual thesis topic.
Reset
A variable interest rate is said to 'reset' when it
changes. When the interest rate resets the variable interest rate
formula is used with the current index rates to set a new interest
rate until the next reset.
Return
Return is the opportunity for potential gains on an investment.
Risk
Risk is exposure to potential loss on an investment.
Return to top
Safety School
A school that will almost certainly admit the student. The college admissions process is not predictable. Even "sure admits" are sometimes rejected. Some students are admitted to all the schools to which they apply; others are rejected by all the schools. To protect yourself against the latter scenario, you should apply to at least one safety school. (See also Reaching School.)
Sallie Mae
(Formerly known as SLMA or the Student Loan Marketing Association) The nation's largest secondary market and holds approximately one third of all educational loans.
Satisfactory Academic Progress (SAP)
A student must make this in order to continue receiving federal aid. If a student fails to maintain an academic standing consistent with the school's SAP policy, they are unlikely to meet the school's graduation requirements.
Scholarship
A form of financial aid given to undergraduate students to help pay for their education. Most scholarships are restricted to paying all or part of tuition expenses, though some scholarships also cover room and board. Scholarships are a form of gift aid and do not have to be repaid. Many scholarships are restricted to students in specific courses of study or with academic, athletic or artistic talent.
Scholarship Search Service
A service that charges a fee to compare the student's profile against a database of scholarship programs. Few students who use a scholarship search service actually win a scholarship.
There are several high quality scholarship search services available
on the web for free.
Scholastic Assessment Test (SAT)
One of the two national standardized college entrance examinations used in the US. The other is the ACT. The SAT (previously known as the Scholastic Aptitude Test) is administered by the Educational Testing Service (ETS). Most universities require either the ACT or the SAT as part of an application for admission.
Secondary Market
An organization that buys loans from lenders, thereby providing the lender with the capital to issue new loans. Selling loans is a common practice among lenders, so the bank you make your payments to may change during the life of the loan. The terms and conditions of your loan do not change when it is sold to another holder. Sallie Mae is the nation's largest secondary market and holds approximately one third of all educational loans.
Secured Loan
A secured loan is a loan backed by collateral. If the borrower fails
to repay the loan as per the agreement, the lender may take ownership
of the collateral and sell it to repay the loan. Auto loans and home
mortgages are examples of secured loans. Educational loans are
generally not secured.
Selective Service
Registration for the military draft. Male students who are US citizens and have reached the age of 18 and were born after December 31, 1959 must be registered with Selective Service to be eligible for federal financial aid. If the student did not register and is past the age of doing so (18-25), and the school determines that the failure to register was knowing and willful, the student is ineligible for all federal student financial aid programs. The school's decision as to whether the failure to register was willful is not subject to appeal. Students needing help resolving problems concerning their Selective Service registration should call 1-847-688-6888.
Self Help Aid
Financial aid in the form of loans and student employment. If every financial aid package is required to include a minimum amount of self-help aid before any gift aid is granted, that level is known as the self-help level. For example, the self-help level will be $8,150 at MIT in 1995-96 (The Tech, March 7, 1995, Vol. 115, No. 9, Page 1). MIT has one of the highest self-help levels of private colleges and universities, with an average self-help level of around $5,500 at the more expensive schools.
Service Academy
The US Air Force Academy, US Coast Guard Academy, US Merchant Marine Academy, US Military Academy and US Naval Academy. Admissions is highly selective, as students must be nominated by their Congressional Representative in order to apply.
Servicer
A servicer is a business that collects payments on a loan and performs
other administrative tasks associated with maintaining a loan
portfolio. Loan servicers disburse loans funds, monitor loans while
the borrowers are in school, update borrower contact information, send
out bills and statements, collect payments, process deferments and
forbearances, respond to borrower inquiries and ensure that the loans
are administered in compliance with federal regulations and guarantee
agency requirements.
Servicers are usually paid either on a unit cost basis
(i.e., a fixed fee per borrower per month) or on a percentage of loan
volume basis (i.e., one-twelfth of 0.50% or 0.90% of the average loan
volume per month).
Simple Interest
Interest that is paid only on the principal balance of the loan and not on any accrued interest. Most federal student loan programs offer simple interest. Note, however, that capitalizing the interest on an unsubsidized Stafford loan is a form of compounded interest.
Simplified Needs Test
If the parents have an adjusted gross income of less than $50,000 and every family member was eligible to file an IRS Form 1040A or 1040EZ (or wasn't required to file a Federal income tax return), the Federal Methodology ignores assets when computing the EFC. If you filed a 1040 but weren't required to do so, you may be eligible for the simplified needs test. Details on the eligibility requirements appear on the Simplified Needs Test Chart. (Please note that starting in 2004, the AGI threshold for IRS
Form 1040A and IRS Form 1040EZ changed from $50,000 to
$100,000. Nevertheless, a threshold of $50,000 is still used for the
simplified needs test.)
Special Allowance Payments (SAP)
Special allowance payments
were originally established to ensure that education lenders received
a market rate of return on federal education loans. Whenever the
borrower interest rate on the federal education loans fell below
market rates, the US Department of Education would make special
allowance payments to the lenders based on the difference between the
interest rates. In effect, the lenders would receive the higher of the
two interest rates. The Higher Education Reconciliation Act of 2005,
however, severed the connection between borrower interest rates and
the SAP interest rates so that the lenders would only receive the
SAP interest rates regardless of the interest rate paid by the
borrowers. If the interest paid by the borrowers exceeded the SAP, the
lender would rebate the difference to the US Department of
Education. If the interest paid by the borrowers was less than the
SAP, the US Department of Education would pay the difference to the
lenders.
Stafford Loans
Federal loans that come in two forms, subsidized and unsubsidized. Subsidized loans are based on need; unsubsidized loans aren't. The interest on the subsidized Stafford Loan is paid by the federal government while the student is in school and during the 6 month grace period. The Subsidized Stafford Loan was formerly known as the Guaranteed Student Loan (GSL). The Unsubsidized Stafford Loan may be used to pay the EFC.
Undergraduates may borrow up to $31,000 ($5,500 during the freshman
year, $6,500 during the sophomore year and $7,500 during the third,
fourth and fifth years) no more than $23,000 of which may be
subsidized ($3,500 during the freshman year, $4,500 during the
sophomore year and $5,500 during the third, fourth and fifth years)
and graduate students up to $65,500 including any undergraduate
Stafford loans ($20,500 per year, no more than $8,500 of which may be
subsidized). The difference between the subsidized
loan amount and the unsubsidized limit may be borrowed by the student as an
unsubsidized loan.
Higher unsubsidized Stafford loan limits are available to independent
students, dependent students whose parents were unable to obtain a
PLUS Loan and graduate/professional students. Undergraduates may
borrow up to $57,500 ($9,500 during the freshman year, $10,500 during
the sophomore year and $12,500 during each subsequent year) and
graduate students up to $138,500 including any undergraduate Stafford
loans ($20,500 per year). These limits are for subsidized and
unsubsidized loans combined. The amounts of any subsidized loans are
still subject to the lower limits for dependent students.
Certain medical school students may borrow an aggregate amount of $224,000.
State Student Incentive Grants (SSIG)
A state-run financial aid program for state residents. The states receive matching funds from the Federal government to help them fund the program.
Statement of Educational Purpose
A legal document in which the student agrees to use the financial aid for educational expenses only. The student must sign this document before receiving federal need-based aid.
Student Accounts Office
See Bursar's Office.
Student Aid
See Financial Aid.
Student Aid Report (SAR)
Report that summarizes the information included in the FAFSA and must be provided to your school's FAO. The SAR will also indicate the amount of Pell Grant eligibility, if any, and the Expected Family Contribution (EFC). You should receive a copy of your SAR four to six weeks after you file your FAFSA. Review your SAR and correct any errors on part 2 of the SAR. Keep a photocopy of the SAR for your records. To request a duplicate copy of your SAR, call 1-319-337-5665.
Student Contribution
The amount of money the federal government expects the student to contribute to his
or her education and is included as part of the EFC. The SC depends on the student's income and assets, but can vary from school to school. Usually a student is expected to contribute about 20% of his or her savings and approximately one-half of his summer earnings above $3,000.
Student Financial Aid
See Financial Aid.
Student Loan Marketing Association (SLMA)
SLMA is the old name for Sallie Mae.
Subprime
The word subprime refers to borrowers with an
inferior or marginal credit history, typically with a credit score of
less than 650. Such borrowers are at higher risk of default and are typically
charged higher interest rates and fees.
Subsidized Loan
With a subsidized loan, such as the Perkins Loan or the Subsidized Stafford Loan, the government pays the interest on the loan while the student is in school, during the six-month grace period and during any deferment periods. Subsidized loans are awarded based on financial need and may not be used to finance the family contribution. See Stafford Loans for information about subsidized Stafford Loans. See also Unsubsidized Loan.
Supplemental Education Opportunity Grant
Federal grant program for undergraduate students with exceptional need. SEOG grants are awarded by the school's financial aid office, and provide up to $4,000 per year. To qualify, a student must also be a recipient of a Pell Grant.
Supplemental Loan for Students
Federal loans for financially independent students. This program was eliminated in 1994 with the creation of the unsubsidized Stafford Loan program.
Return to top
Teaching Assistantship (TA)
A form of financial aid awarded to graduate students to help support their education. Teaching assistantships usually provide the graduate student with a waiver of all or part of tuition, plus a small stipend for living expenses. As the name implies, a TA is required to perform teaching-related duties.
Term
The number of years (or months) during which the loan is to be repaid.
Title IV Loans
Title IV of the Higher Education Act of 1965 created several education loan programs which are collectively referred to as the Federal Family Education Loan Program (FFELP). These loans, also called Title IV Loans, are the Federal Stafford Loans (Subsidized and Unsubsidized), Federal PLUS Loans and Federal Consolidation Loans.
Title IV School Code
When you fill out the FAFSA you need to supply the Title IV Code for each school to which you are applying. This code is a six-character identifier that begins with one of the following letters: O, G, B, or E. The Financial Aid Information Page provides a searchable database of Title IV School Codes.
Test Of English As A Foreign Language (TOEFL)
Most colleges and universities require international students to take the TOEFL as part of their application for admission. The TOEFL evaluates a student's ability to communicate in and understand English.
Return to top
Undergraduate Student
A student who is enrolled in an Associate's Degree or Bachelor's degree program.
Unearned Income
Interest income, dividend income and capital gains.
Unmet Need
In an ideal world, the FAO would be able to provide each student with the full difference between their ability to pay and the cost of education. Due to budget constraints the FAO may provide the student with less than the student's need (as determined by the FAO). This gap is known as the unmet need.
Unsecured Loan
A loan not backed by collateral, representing a greater risk to the lender. The lender may require a co-signer on the loan to reduce their risk. If you default on the loan, the co-signer will be held responsible for repayment. Most educational loans are unsecured loans. In the case of federal student loans, the federal government guarantees repayment of the loans. Other examples of unsecured loans include credit card charges and personal lines of credit.
Unsubsidized Loan
A loan for which the government does not pay the interest. The borrower is responsible for the interest on an unsubsidized loan from the date the loan is disbursed, even while the student is still in school. Students may avoid paying the interest while they are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need and may be used to finance the family contribution. See Stafford Loans for information about unsubsidized Stafford Loans. See also Subsidized Loan.
Untaxed Income
Contributions to IRAs, Keoghs, tax-sheltered annuities and 401k plans, as well as worker's compensation and welfare benefits.
US Department of Education (ED or USED)
Government agency that administers several federal student financial aid programs, including the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loans, the Federal Stafford Loans and the Federal PLUS Loans.
US Department of Health and Human Services (HHS)
Government agency that administers several health education loan programs, including the HEAL, HPSL and NSL loan programs.
Return to top
Variable Rate
A variable rate is an interest rate that resets
periodically, such as monthly, quarterly or annually. Variable rates
are often defined as the sum of a variable rate index, such as the
LIBOR index or the Prime Lending Rate, and a fixed rate margin. The
margins are often determined based on the borrower's credit score,
where credit scores are grouped into a small set of 5 or 6 tiers and
each tier is associated with a different interest rate and fees.
Verification
Verification is a review process in which the FAO determines the accuracy of the information provided on the student's financial aid application. During the verification process the student and parent will be required to submit documentation for the amounts listed (or not listed) on the financial aid application. Such documentation may include signed copies of the most recent Federal and State income tax returns for you, your spouse (if any) and your parents, proof of citizenship, proof of registration with Selective Service, and copies of Social Security benefit statements and W2 and 1099 forms, among other things.
Financial aid applications are randomly selected by the Federal processor for verification, with most schools verifying at least 1/3 of all applications. If there is an asterisk next to the EFC figure on your Student Aid Report (SAR), your SAR has been selected for verification. Schools may select additional students for verification if they suspect fraud. Some schools undergo 100% verification.
If any discrepancies are uncovered during verification, the financial aid office may require additional information to clear up the discrepancies. Such discrepancies may cause your final financial aid package to be different from the initial package described on the award letter you received from the school.
If you refuse to submit the required documentation, your financial aid package will be cancelled and no aid awarded.
Veteran
For Federal financial aid purposes such as determining dependency status, a veteran is a former member of the US Armed Forces (Army, Navy, Air Force, Marines or Coast Guard) who served on active duty and was discharged other than dishonorably (i.e., received an honorable or medical discharge). You are a veteran even if you serve just one day on active duty - not active duty for training - before receiving your DD-214 and formal discharge papers. (Note that in order for a veteran to be eligible for VA educational benefits, they must have served for more than 180 consecutive days on active duty before receiving an honorable discharge. There are exceptions for participation in Desert Storm/Desert
Shield and other military campaigns.)
ROTC students, members of the National Guard, and most reservists are not considered veterans.
Since the 1995-96 academic year, a person who was discharged other than dishonorably from one of the military service academies (the U.S. Military Academy at West Point, the Naval Academy at Annapolis, the Air Force Academy at Colorado Springs or the Coast Guard Academy at New London) is considered a veteran for financial aid purposes. Cadets
and midshipmen who are still enrolled in one of the military service academies, however, are not considered veterans. According to the US Department of Education's Action Letter #6 (February 1996), "a student who enrolls in a service academy, but who withdraws before graduating, is considered a veteran for purposes of determining dependency status".
Having a DD-214 does not necessarily mean that you are a veteran for financial aid purposes. As noted above, you must have served on active duty and received an honorable discharge.
Return to top
W2 Form
The form listing an employee's wages and tax withheld. Employers are required by the IRS to issue a W2 form for each employee before February 28.
Ward of the Court
A ward of the court is someone under the protection of the
courts. The ward of the court may have a guardian appointed
by the court. The legal guardian is not personally liable
for the ward's expenses and is not liable to third parties
for the ward's debts.
Although a ward of the court can have a legal guardian,
having a legal guardian does not automatically make the
child a ward of the court. A legal guardian can be appointed
by parental consent through a power of attorney. A legal
guardian must have been appointed by the court for the
child to be a ward of the court. When a guardian is appointed
by the court, the parent no longer has the authority to
revoke the guardianship.
Often a minor becomes a ward of the court when the court
determines that the child will be subject to abuse or
neglect if they remain with the parent or if both of the
student's biological or adoptive parents are deceased.
Note that a child does not automatically become a ward of
the court upon being incarcerated. The key issue is whether
the court assumed custody of the child because it found that
the parents are unable to properly care for the child.
Likewise, emancipation does not make a student a
ward of the court. Neither incarceration nor emancipation
of the student is sufficient on its own to make the student
independent.
The key issue for financial aid purposes is that when a
child becomes a ward of the court, no parent or other person
is financially responsible for the child. Legal guardians
and foster parents are not financially responsible for a
ward of the court. Adoptive parents, on the other hand, are
financially responsible for the child.
If the student is declared a ward of the court before
the end of the award year, the student is considered to
be an independent student for the award year and the
student's status would need to be updated.
The school financial aid administrator should ask for a
copy of the court order that declared the child a ward
of the court. If there is any confusion as to whether the
child is a ward of the court or not, the financial aid
administrator should ask for a letter from the judge
clarifying whether the child is a ward of the court.
Note that a child can be a ward of the court and still have
contact with his or her biological parents or even still be
living with the parents (albeit under court supervision).
The biological parents, however, are no longer empowered to
make any decisions on behalf of the child.
Work Study
See Federal Work-Study.
Return to top
