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Adjustable rate mortgage (ARM)
An adjustable rate mortgage is a long-term loan you
use to finance a real estate purchase, typically a
home. The interest rate on an ARM is adjusted, or
changed, during its term.
Annual percentage rate (APR)
What credit costs you each year, expressed as a
percentage of the loan amount.
Assets are everything you own that has any
monetary value, plus any money you are owed.
The award letter is sent by the Office of Financial Aid
and provides information on the types and amounts
of aid offered as well as specific program
information, student responsibilities and the
conditions that govern the award.
The Hope College Award Year includes the fall and
spring semesters and the subsequent summer
sessions.
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Bankruptcy means being insolvent, or unable to pay
your debts. In that case, you can file a bankruptcy
petition to seek a legal resolution.
A beneficiary is the person or organization who
receives assets that are held in your name in a
retirement plan, or are paid on your behalf by an
insurance company, after your death.
Bonds are debt securities issued by corporations and
governments.
A budget is a written record of income and expenses
during a specific time frame, typically a year.
Capital is money that is used to generate income or
make an investment.
When you sell an asset at a higher price than you
paid for it.
When you sell a capital asset for less than you paid
for it.
Capitalization of Interest
Capitalizing interest means adding unpaid,
accumulated interest to the principal balance of your
loan. Capitalization increases the total cost of your
loan. If you choose to let your interest be capitalized,
you repay more money in total than if you pay the
interest while you are in school. Whichever option
you choose, you are responsible for paying the full
amount of all interest on the loan.
Car insurance covers theft of and damage to your car
or damage that your car causes, plus liability
protection in case you are sued as a result of an
accident.
Money coming into your accounts and the money
you are spending over a specific period.
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Cash value is the amount that an account is worth at
any given time.
Central Processing System (CPS)
The federal contractor that processes your FAFSA
data. The CPS performs database matches and
calculates your official Expected Family Contribution
(EFC), sends you your electronic Student Aid Report
(SAR), and electronically transmits your FAFSA data
(your ISIR record) to Hope College.
Checking account
Checking accounts are transaction accounts that
allow you to authorize the transfer of money to
another person or organization either by writing a
check that includes the words "Pay to the order of"
or by making an electronic transfer.
Expenses paid to finalize a transaction over and
above the cost of property/real estate.
Assets with monetary value used to
guarantee a loan.
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Collection Agency
A business organization that accepts from schools
and lenders those loan accounts that have become
delinquent or are in default and attempts to collect
on these accounts.
Commuter Student
The definition of a commuter student at Hope
College is a student who is enrolled in on-campus
coursework but is not living in on-campus housing.
Compound interest
When the interest you earn on an investment is
added to form the new base on which future interest
accumulates.
Consumer price index (CPI)
The consumer price index (CPI) is compiled monthly
by the US Bureau of Labor Statistics and is a gauge of
inflation that measures changes in the prices of basic
goods and services.
Cost of Attendance
Your cost of attendance includes tuition, activity fee,
room/board charges, and allowances for
books/supplies, transportation, and other
miscellaneous expenses.
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Cost-of-living adjustment (COLA)
A wage or benefit increase that is designed to help
you keep pace with increased living costs that result
from inflation.
A credit rating is an independent evaluation of the
credit risk, or likelihood of default, posed by an
issuer of debt or by a specific debt issue.
Credit risk is the possibility that the issuer of a debt
security will default, or fail to meet its obligation to
make interest payments and repay principal to
investors.
Your credit score is a number, calculated based on
information in your credit report, that lenders use to
assess the credit risk you pose and the interest rate
they will offer you if they agree to lend you money.
A card that allows you to make point-of-sale
purchases by swiping the card through the same
type of machine you use to make credit card
purchases.
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A debt is an obligation to repay an
amount you owe.
Debt-to-equity ratio (D/E)
An indication of the extent to which the company is
leveraged, or financed by credit. Calculated by
dividing total long-term debt by total assets minus
total debt.
When a borrower responsible for repaying a loan or
making an interest payment fails to meet that
obligation on time.
A period of time during which students are not
required to make loan payments, such as while
enrolled at least half-time (six hours or more).
Federal Direct Unsubsidized Loans do have interest
accruing during periods of deferment (see
Unsubsidized below).
Dependent Student
A student who does not qualify as a
self-supporting/independent student by federal
definition and whose parental income and asset
information is used in calculating the Expected
Family Contribution/EFC (see independent
student).
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The process by which your financial aid funds are
applied to your account as credits to offset your
billing charges. Typically, one-half of your financial
aid award is credited to your fall semester charges
and the other half is credited to your spring semester
charges.
A document explaining how a financial product or
offering works. It also details the terms to which you
must agree in order to buy it or use it, and, in some
cases, the risks you assume in making such a
purchase.
An amount of the total cost of a property that you
pay in cash as part of a real estate transaction.
Electronic Promissory Note
A Federal Direct Loan or Federal Perkins Loan
Promissory Note that a borrower signs electronically
on the Web (in lieu of a paper document). A PIN
(Personal Identification Number) is required and
serves as the borrower's electronic signature.
Electronic Signature
Student borrowers can electronically sign both their
Federal Direct Loan and Federal Perkins Loan
promissory notes online using provided PINs that
serve as their electronic signature.
An emergency fund is designed to provide financial
back-up for unexpected expenses or for a period
when you aren't working and need income.
eSAR (electronic Student Aid
Report)
A summary of the information that the applicant put
on the FAFSA. The CPS electronically provides a link
to the eSAR to each federal aid applicant that has
provided an email address on the form. If the
applicant did not provide an email address, the CPS
will send a paper version.
Expected Family Contribution
(EFC)
The amount a student and his/her family are
expected to contribute toward the student's cost of
attendance as calculated by the congressionally
mandated formula known as the Federal
Methodology. This EFC is derived from the data you
submit on the FAFSA.
The dollar value of a bond or note, the amount the
issuer has borrowed, usually the amount you pay to
buy the bond at the time it is issued, and the amount
you are repaid at maturity, provided the issuer
doesn't default.
Free Application for Federal Student Aid. To apply
for federal student financial aid, and to apply for
many state student aid programs, students must
complete a Free Application for Federal Student Aid
(FAFSA). The information you provide on your
FAFSA determines if you are eligible for financial aid.
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Fair market value
The price you would have to pay to buy a particular
asset or service on the open market.
The Federal Educational Rights and
Privacy Act.
Based on the information in your credit report, is
calculated weighing the amount of debt you carry
relative to your available credit, the timeliness of
your payments, the type of debt you carry, and a
great many other factors to assign you a credit score
between 300 and 850.
The total dollar amount you pay to borrow that
includes the interest that's charged plus any fees for
arranging the credit, if they apply.
Financial Aid Package
An offer of financial aid made to a student that is
comprised of a combination of different forms of
financial aid (scholarships, grants, loans,
employment).
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The difference between the school's cost of
attendance (COA) and the family's ability to pay (or
EFC). Can be expressed using the following formula,
COA minus EFC = Financial Need.
A document that describes your current financial
status, your financial goals and when you want to
achieve them, and strategies to meet those goals.
Fixed-rate mortgage
loan
A long-term loan that you use to finance a real estate
purchase, typically a home.
Permitting the temporary halting of loan
repayments, allowing an extension of time for
making loan payments, or accepting smaller loan
payments than were previously scheduled.
When your lender repossesses your home because
you have defaulted on your mortgage loan or home
equity line of credit by failing to pay interest and
repay the principal you owe on time.
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Fulltime Enrollment
Enrolling for 12 or more credit
hours in a given semester.
Normally refers to scholarships and grants that are
non-repayable forms of financial aid. Some of these
awards have grade point renewal criteria while
others do not.
The number of days between the date a card issuer
sends your billing statement and the date your
payment is due. By law, it must be at least 21 days.
The grace period on a student loan allows you to
defer repayment so that the first installment isn't
due until six or nine months after you graduate or
are no longer enrolled at least half time. The timing
depends on the type of loan. There's also a grace
period in which to pay an insurance policy premium
before the policy is canceled. It may be as long as one
month after the due date.
A type of financial aid that does not have to be
repaid; usually awarded on the basis of financial
need.
Gross domestic product (GDP)
The total value of all the goods and services
produced within a country's borders is described as
its gross domestic product.
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Identity theft is the unauthorized use of your
personal information, such as your name, address,
Social Security number, or credit account
information.
Independent/Self-Supporting
Student
A student who meets the definition of an
independent student does not have to report any
parental information on the FAFSA. Instead, need is
based solely on his/her income and asset
information.
Individual retirement account (IRA)
Individual retirement accounts are a type of
individual retirement arrangements (IRAs) that
provide tax advantages as you save for retirement.
A persistent increase in prices, often triggered when
demand for goods is greater than the available
supply or when unemployment is low and workers
can command higher salaries.
Institutional Student Information
Record (ISIR)
The electronic format of a student's FAFSA
information from CPS (see above) used by a school to
determine the student's eligibility for financial
assistance.
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Insufficient funds
When one does not have enough money available in
a checking account to cover the checks you've
written or electronic debits you've authorized.
What you pay to borrow money using a loan, credit
card, or line of credit.
A legal agreement that provides for the use of
something -- typically real estate or equipment -- in
exchange for payment. A lease is usually legally
binding, which means you are held to its terms until
it expires. If you break a lease, you could be held
liable in court.
The amounts you owe to creditors, or the people and
organizations that lend you money. Typical liabilities
include your mortgage, car and educational loans,
and credit card debt.
An abbreviation for the London Inter-Bank Offered
Rate, an interest rate set daily in London. This is the
financial index to which many adjustable rate loans
are tied when they have short-term adjustment
periods.
A contract you sign with an insurance company,
obligating it to pay a death benefit of a certain value
to the beneficiaries you name.
A revolving credit arrangement you establish with a
lender. The lender sets the credit limit, which is the
most you can borrow under the arrangement.
A form of financial assistance that requires
repayment, generally after the student graduates or
ceases to be enrolled at least half-time (six hours or
more).
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Loan Cancellation
Forgiveness from repaying a portion of a specified
student loan based on the student entering an
identified profession or volunteer organization or
because of other qualifying circumstances.
Master Promissory Note/Direct
Loans
This document acts as a student's promise to repay
Federal Direct subsidized and unsubsidized loans.
The master note feature allows the student to sign
only once for her/his first loan proceeds, and
continues to bind the student to repay all future
amounts borrowed under the program. Master
Promissory Notes are made available online and can
be electronically signed using a PIN.
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Master Promissory Note/PLUS
Loan
A document with a promise to repay that parents
must sign the first time they borrow for each child
under the Federal Direct PLUS loan program.
Parents submit an application to the college and, if
approved by the Department of Education, the
Master Promissory Note is made available online and
can be electronically signed using a PIN.
Matching contribution
Money your employer adds to your retirement
savings account, such as a 401(k).
A continual buying and selling of short-term liquid
investments including treasury bills, certificates of
deposit (CDs), commercial paper, and other debt
issued by corporations and governments.
A temporary right to the real estate that you are
buying with a loan to lender who has given you the
loan. The property serves as collateral, or security,
that you will repay what you borrowed plus interest.
A professionally managed investment product that
sells shares to investors and pools the capital it
raises to purchase investments typically buys a
diversified portfolio of stock, bonds, or money
market securities, or a combination of stock and
bonds, depending on the investment objectives of
the fund.
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National Student Loan Data System
(NSLDS)
A U.S. Department of Education web database that
allows students to access their federal grant and loan
information with use of a PIN (see below).
A congressionally mandated formula that analyzes
students' and their parents' household and financial
information reported on the FAFSA, to determine a
family's estimated ability to contribute to the cost of
education. Schools use the resulting EFC (see above)
to determine aid eligibility based on the cost of
attendance.
The amount of money a corporation has earned after
subtracting all of the expenses of producing its goods
or services from the income or revenue it has
realized from sales of those goods or services.
The value of the assets you own (including cash,
securities, personal property, real estate, and
retirement accounts) minus your liabilities (what you
owe in loans and other obligations).
A debt security that promises to pay interest during
the term that the issuer has use of the money, and to
repay the principal on or before the maturity date.
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On-Campus Student
Hope College's definition of an "on-campus" student
is one who lives in the college residence
halls/cottages/apartments.
The right to buy or sell a specific financial instrument
at a specific price, called the strike price, during a
preset period of time.
Origination fee
An amount, usually calculated as a percentage of a
mortgage loan or home equity loan, which a lender
charges for processing your application.
Outside Scholarship
A form of financial assistance from a source other
than the traditional federal, state and institutional
student assistance programs (e.g, from a church, a
foundation, etc.), that usually does not have to be
repaid. Outside scholarships must be considered
when calculating a student's eligibility for
need-based aid.
Occurs when a student receives financial assistance
in excess of demonstrated need, requiring a
reduction or repayment of some aid funds.
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Part-time Enrollment
Enrollment level less than 12 credits during a
semester or term.
A student's or parent's Personal Identification
Number from the U.S. Department of Education that
allows the student to access her/his student aid
application and federal assistance information on the
Internet.
When one owns more than one security. A portfolio
is built by buying additional stock, bonds, annuities,
mutual funds, or other investments.
Preferred stock
An equity investment issued by a corporation to
trade in the secondary market. It's listed separately
from common stock issued by the same corporation
and trades at a different price.
Sometimes described as pretax dollars, is your gross
income before income taxes are withheld.
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Price-to-earnings ratio (P/E)
The relationship between a company's share price
and its earnings. It is calculated by dividing the
current price per share by the earnings per share.
Prime Interest Rate
A financial index to which many adjustable rate loans
are tied when they have short-term adjustment
periods.
An amount of money you invest, the face amount of a
bond, or the balance you owe on a debt, distinct from
the finance charges you pay to borrow.
Also called net income or earnings, is the money a
business has left after it pays its operating expenses,
taxes, and other current bills.
Promissory Note/Perkins Loan
Students who borrow under the Federal Perkins
Loan program are required to sign a promissory note
documenting their loan along with their promise to
repay upon graduation or less than half-time
enrollment (less than six hours). Student borrowers
are able to secure a PIN number via the Web and to
sign their notes electronically.
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Income you collect on an investment expressed as a
percentage of the investment's purchase price.
Repayment Schedule
A calculated list of monthly loan payments over a
certain period of time based on the student's total
amount borrowed and the interest rate in effect at
the time of repayment.
The profit or loss you have on your investments,
including income and change in value.
The possibility one will lose money if an investment
you make provides a disappointing return. All
investments carry a certain level of risk, since
investment return is not guaranteed.
An individual retirement arrangement (IRA) to
which you make after-tax contributions and
withdraw earnings tax free any time after you turn 59
1/2, provided your account has been open at least
five years.
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Satisfactory Academic Progress
Federally required minimal standards of academic
progression toward a degree that student aid
applicants must meet to remain eligible for financial
aid funds.
Savings account
A deposit account in a bank or credit union that pays
interest on your balance -- though some institutions
require that you have at least a minimum amount in
the account to qualify for earnings.
A form of student assistance based on academic
achievement or some other form of talent or
accomplishment. Scholarships usually do not have to
be repaid.
Self-Help Assistance
Loans and work-study funds.
A plan that can help you manage your money more
effectively, live within your income limits, reduce
your reliance on consumer credit, and save for the
things you want.
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Student Aid Report
(SAR)
A paper summary of the information provided on the
FAFSA that the CPS sends to federal aid applicants.
(Applicants that give an email address on the FAFSA
receive an eSAR instead, see above). The SAR
includes an acknowledgement letter and a section
that may be used to make corrections if necessary.
Corrections can also be made electronically at
www.fafsa.ed.gov using the federal PIN.
Subsidized Loan
A student loan based on demonstrated financial
need on which no interest is charged while the
student maintains at least half-time enrollment (six
hours or more.)
Supplemental
Application
A form that schools may require in addition to the
FAFSA. Click on the links below to obtain the Hope
College's Supplemental Application for Financial Aid
(SAF) and related information.
A policy that provides a guaranteed death benefit for
a set period of time, such as five, ten, or 20 years,
provided you continue to pay the premiums as they
are due.
Time value of money
Money's potential to grow in value over time. Money
that's available in the present may be considered
more valuable than the same amount in the future.
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A legal entity through which a trustee holds title to
assets on behalf of a beneficiary or beneficiaries. The
trustee has a fiduciary obligation to manage the
assets in the best interests of the beneficiary and
distribute those assets according to the instructions
provided in the trust document, or agreement, that
established the trust.
Describes when an asset has lost value. You are
underwater if you owe more on a loan secured by a
home or other real estate than the current market
value of the property.
University Accounting Service
(UAS)
Hope College's servicing agent for the Federal
Perkins Loan program. UAS administers the
electronic promissory note process for Perkins Loan
borrowers at Hope College and services Perkins
Loans made to Hope students throughout the entire
repayment period.
Unsubsidized Loan
A loan that students may receive in addition to
need-based financial assistance where interest
charges accumulate while the student is enrolled.
The student may choose to make interest and
principle payments, interest payments only, or have
interest accumulate and be "capitalized" (see above)
while enrolled at least half-time (six hours or more).
US Treasury bill (T-bill)
The shortest-term government debt securities. They
are issued with a maturity date of 4, 13, 26, or 52
weeks. The par value is $100, which is also the
minimum purchase.
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US Treasury bond
A long-term government debt securities with 30-year
terms. These bonds are considered among the
world's the most secure investments since they are
backed by the full faith and credit of the US
government
A federally required quality control measure to
ensure the accuracy of data reported on the FAFSA.
Students with applications selected by the CPS (see
above) for verification must submit household and
financial information to the Office of Financial Aid as
requested.
Yield is the rate of return on an investment
expressed as a percent usually calculated by dividing
the amount you receive annually in dividends or
interest by the amount you spent to buy the
investment.