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Financial Aid Terms

Aggregate Federal Direct Loan Limits: The maximum amount allowed at the undergraduate and graduate degree levels for federal loans.

  • Undergraduate (dependent students) - $31,000 (no more than $23,000 can be subsidized)
  • Undergraduate (independent students & dependent students whose parents are declined PLUS loans) - $57,500 (no more than $23,000 can be subsidized)
  • Graduate - $138,500 (includes undergraduate Federal Direct loan amounts; no more than $65,500 can be subsidized)

Alternative Education Loan: This type of private loan is through a lending institution and is not part of a federal government program. They are more expensive than federal government guaranteed loans and should only be used when all other options have been exhausted.

Capitalized: This term refers to the addition of unpaid interest that accumulated during an in-school, grace, or deferment period to the principal balance. Capitalized interest will increase the principal balance.

Deadlines: Deadlines are to be watched carefully. There are deadlines for submitting your Free Application for Federal Student Aid (FAFSA), paying deposits, bills, etc.

Deferment: The deferment period is a period of delayed payments such as when a student is in-school and if there is financial hardship after graduation.

Disbursement: The process of sending the loan proceeds to the school’s Student Accounts Office.

Electronic Funds Transfer (EFT): The process of disbursement that sends the loan proceeds electronically to the school’s Student Accounts Office.

Federal Direct Parent PLUS Loan: This loan is for dependent undergraduate students.  A parent can apply for the loan on behalf of the dependent child to help cover educational expenses not covered by other financial aid. The loan is based on the parent borrower’s credit.  If the Parent PLUS application is denied based on credit, then the student has additional Federal Direct loan options. The current interest rate is 7.9% fixed. The PLUS loan amount can be up to the cost of attendance minus other financial aid.

Federal Direct Graduate PLUS Loan: This loan is for graduate students to help cover educational expenses not covered by other financial aid. The loan is based on the student’s credit.  The current interest rate is 7.9% fixed. The PLUS loan amount can be up to the cost of attendance minus other financial aid.

Federal Direct Loan Program: This federal loan is in the student’s name and guaranteed by the U.S. Department of Education in cases of default. The loan is not based on credit. The annual limits vary by college grade level. More detailed information is available at

Fees: Amount charged by the federal government and guarantee agencies on Federal Direct Loans. Two types of fees are charged on these loans: the Origination fee, which can be as high as 3%, and the Guarantee or insurance fee, which can be as high as 1%.

Financial Need: This need is the difference between the cost of attendance (COA) and expected family contribution (EFC) as determined by the federal government using data collected on the FAFSA.

Forbearance: The student loan payment may be postponed or reduced if the borrower is willing but temporarily unable to meet the repayment obligations. The borrower can also request forbearance if the debt burden (in federal student loans only) is equal to or greater than 20% of gross income.

Grace Period: The payment-free period that follows the student’s graduation, withdrawal, or dropping below half-time enrollment status. With Federal Direct loans, there is a 6-month grace period.

Half-Time: To be considered half-time at Thomas University, a student must be enrolled in 6 credit hours.

In-School: The period when a student is enrolled on at least a half-time basis. No payments are required; however, interest does accumulate for unsubsidized borrowers.

Interest: The cost paid by the government (for subsidized borrowers during subsidized periods) or by the borrower during the time the loan is outstanding.

Interest Rate: The rate at which interest is calculated. For example, the 2012-2013 interest rate for subsidized and unsubsidized Federal Direct loans is 6.8% fixed.

Loan Consolidation: The federal loan program that allows a borrower to combine all their federal loans and refinance them, possibly over a longer term (up to 30 years) based on amounts borrowed.

Repayment Period: The period of time where principal and interest payments are required.

Satisfactory Academic Progress: The term used by schools to determine if a student is meeting the minimum requirements for enrollment, which is based on grade point average and the number of credit hours successfully completed.

Subsidized Federal Direct Loan: The type of loan for students who have demonstrated financial need (as determined by information from the FAFSA) to have their interest paid by the government during subsidized periods (include enrollment of at least half time, grace period, deferment).

Term of Loan: The number of years that a loan is in the repayment period.

Unsubsidized Federal Direct Loan: The non-need-based loan that requires the student borrower to be responsible for the interest during the in-school, grace and deferment periods. Eligibility for this loan is not based on income.

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