Glossary

Award Letter - This official document is issued by the Financial Aid Office. It lists all of the amounts, sources, and types of aid in your financial aid package. The Award Letter also includes the terms and conditions of your financial aid.

Cost of Attendance (COA) - These expenses include tuition, room and board, books and supplies, fees, and the student's living costs while attending school. The COA is determined by the school, using federal guidelines.

Default - When a borrower fails to abide by the terms of a loan by not making payments for a specified period of time.

Deferment - The option to postpone repayment for a period of time, under certain conditions, with permission from the lender.

Delinquency - The status of a loan when payment is late. Delinquency may be reported to a credit bureau after 30 days.

Disbursement - The lender's payment of loan funds to the school. Payment is made by electronic funds transfer (EFT). Disbursement is usually made in two or more installments during the year.

Expected Family Contribution - The amount that a student and family (if required) are expected to contribute toward the Cost of Attendance (COA). This amount is based on the family's income and assets.

Grace Period - A feature of Federal Stafford loans that gives you six months after you leave school or drop below half-time status before you must start making monthly payments on your loan.

Origination Fee - A fee charged by the federal government and deducted from the loan funds prior to disbursement. The fee is used to offset administrative costs.

The Players in the FFELP Federal Loans Process

The Federal Government plays a key role in education lending throughout the Federal Family Education Loan Program (FFELP). These loans are made by lenders. The federal government guarantees the loan in case of default. See also Guarantee Agency.

The Financial Aid Office at Embry-Riddle Aeronautical University works with you to determine eligibility based on federal guidelines for different types of financial aid such as scholarships, grants, work-study, loans, and more.

The Electronic Loan Processor is selected by the Financial Aid Office to process all Federal loans on behalf of the University and its students.

A Guarantee Agency verifies your eligibility for a particular federal loan program and provides the insurance for those loans.

A Lender actually provides the funds. The lender may be a bank or other financial institution.

A Servicer is a company contracted by a lender to handle administrative aspects of the loan such as collection of payments, correspondence with borrowers, address changes, loan status updates, and more.