|Glossary of college financing terms
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4. Custodial accounts -- Generally set up by parents as irrevocable gifts to a child in which the custodian manages the funds until the child turns 18, when the account is turned over to the child.
5. Deferment -- The postponement of loan repayment, often allowed by the lender during the duration of a student's education and for certain post-college programs such as the Peace Corps.
6. Direct loan -- The William D. Ford Federal Direct Loan program. A loan-based financial-aid program similar to the Federal Family Education Loan Program. Terms and conditions are the same as the FFEL program, but the government funds these loans rather than private lenders.
7. Education Bond Program -- Allows owners of series EE and series I bonds to exclude federal income tax when the bonds are used to pay for qualified higher-education expenses.
Estimated financial contribution (EFC) --
The amount the student and his or her family (if applicable)
are expected to contribute to the overall cost of
college. This number is determined by filling out
the Free Application for Federal Student Aid (FAFSA).
9. Federal Family Education Loans (FFEL) -- Similar to the Direct Loan program, this group of loans includes Stafford loans and PLUS loans. They are funded primarily by banks and credit unions.
10. Federal methodology (FM) -- The formula used to determine a family's estimated financial contribution (EFC) to college.
11. Financial aid administrator (FAA) -- An employee at a college or university who works with families during the financial aid process.
12. Free Application for Federal Student Aid (FAFSA) -- This form (and its annual renewals) must be filled out to qualify for federal and state financial aid.
13. GI Bill -- Provides up to 36 months of education benefits for college, business, technical, correspondence or vocational courses for those who have been honorably discharged from the armed forces.
Grants -- Financial aid awards that students
do not have to repay. Common grants include Pell grants,
SEOG and merit-based grants.
15. Hope credit -- One of two major education tax credits, it provides up to $1,500 tax credit per eligible student (or their parents) to pay for qualified education expenses. (See lifetime learning credit.)
|-- Posted: Sept. 17, 2007