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1040 Form, 1040A Form, 1040EZ Form
The Federal Income Tax Return. Every person who has received income during
the previous year must file a form 1040 with the IRS by April 15.
Form used by businesses to report income paid to a non-employee. Banks
use this form to report interest income.
A popular type of retirement fund. It is legal to borrow money from your
401(k) to help pay for your children's education.
The period during which school is in session, consisting of at least 30
weeks of instructional time. The school year typically runs from mid August/early
September through early/mid May at most colleges and universities.
Appeals for Reconsideration
The financial aid administrator (Director), using professional judgment,
can adjust one or more of the data elements used to calculate the Expected
Family Contribution (EFC). The Adjustment must be based on a student’s
individual circumstances and must be documented in the student’s
file. Methodist University uses professional judgment in cases of divorce
or separation, death, loss of a job, excessive medical expenses and granting
independent status to an otherwise dependent student (by the federal government’s
An official document issued by a school's Office of Financial Aid that
lists all of the financial aid awarded to the student. This letter provides
details on the school’s analysis of your financial need and the
breakdown of your financial aid package according to amount, source and
type of aid. The student MUST sign the award letter, accepting the aid
offered, and sends it back to the Office of Financial Aid.
The academic year for which financial aid is requested (or received).
The award year typically runs fall semester through spring semester with
the summer term(s) being optional.
The University office that is responsible for the billing and collection
of University charges and the disbursement of federal financial aid.
Financial aid programs are administered by the University. The federal
government provides the university with a fixed annual allocation, which
is awarded by the financial aid administrator to deserving students. Such
programs include the Federal Perkins Loan, Federal Supplemental Education
Opportunity Grant and Federal Work-Study. Note: There is no guarantee
that every eligible student will receive financial aid through these programs,
because the awards are made from a fixed pool of money.
Cost of Attendance (COA)
(Also known as the cost of education or "budget") The total
amount it should cost the student to go to school, including tuition and
fees, room and board, allowances for books and supplies, transportation,
and personal and incidental expenses. Loan fees, if applicable, may also
be included in the COA. Schools establish different standard budget amounts
for students living on-campus or off-campus.
An evaluation of the likelihood of a borrower to default on a loan. Credit
bureaus and credit reporting agencies provide this information to banks
and businesses to help them decide whether to issue a loan or extend credit.
Your credit rating may include your payment history, a list of current
and past credit accounts and their balances, employment and personal information
and a history of past credit problems.
People who make all their payments on time are considered good credit
risks. People who are frequently delinquent in making their payments are
considered bad credit risks. Defaulting on a loan can hurt your credit
If a student's parents are divorced or separated, the custodial parent
is the one with whom the student lived the most during the past 12 months
and/or is providing more than 50% support for that physical year. The
student's need analysis is based on financial information supplied by
the custodial parent.
A loan is in default when the borrower fails to pay several regular installments
on time (i.e., payments overdue by 270 days) or otherwise fails to meet
the terms and conditions of the loan. If you default on a loan, the university,
the holder of the loan, the state government and the federal government
can take legal action to recover the money, including garnishing your
wages and withholding income tax refunds. Defaulting on a government loan
will make you ineligible for future federal financial aid, unless a satisfactory
repayment schedule is arranged, and can affect your credit rating.
Occurs when a borrower is allowed to postpone repaying the loan. If you
have a subsidized loan, the federal government pays the interest charges
during the deferment period. If you have an unsubsidized loan, you are
responsible for the interest that accrues during the deferment period.
You can still postpone paying the interest charges by capitalizing the
interest, which increases the size of the loan. Most federal loan programs
allow students to defer their loans while they are in school at least
half time. If you don't qualify for a deferment, you may be able to get
a forbearance. You can't get a deferment if your loan is in default.
If the borrower fails to make a payment on time, the borrower is considered
delinquent and late fees may be charged. If the borrower misses several
payments, the loan goes into default.
This cost includes the cost of tuition, room, board (meal plan), and various
Electronic Funds Transfer (EFT)
Used by some schools and lenders to wire funds for Stafford and PLUS loans
directly to participating schools without requiring an intermediate check
for the student to endorse. The money is transferred electronically instead
of using paper, and hence is available to the student sooner.
Someone who is not a US citizen but is nevertheless eligible for Federal
student aid. Eligible non-citizens include US permanent residents who
are holders of valid green cards, US nationals, holders of form I-94 who
have been granted refugee or asylum status and certain other non-citizens.
Non-citizens who hold a student visa or an exchange visitor visa are not
eligible for Federal student aid.
To release a child from the control of a parent or guardian. Declaring
a child to be legally emancipated is not sufficient to release the parents
or legal guardians from being responsible for providing for the child's
education. If this were the case, then every parent would "divorce"
their children before sending them to college. The criteria for a child
to be found independent are much stricter.
An indication of whether you are a full-time or part-time student. Generally
you must be enrolled at least half-time (and in some cases full-time)
to qualify for financial aid.
Expected Family Contribution (EFC)
The EFC is a five digit number listed in the top right hand corner of
the student’s Student Aid Report (see below). This is the actual
dollar figure the Federal government estimates a family could contribute
to the student’s education. Colleges use this number to determine
need-based financial aid.
Federal Family Education Loan Program (FFELP)
Includes the Federal Stafford Loan (Subsidized and Unsubsidized), the
Federal Perkins Loan and the Parent Loan for Undergraduate Students (PLUS).
The funds for these loans are provided by private lenders, such as banks,
credit unions and savings & loan associations. These loans are guaranteed
against default by the federal government.
The need analysis formula used to determine the EFC. The Federal Methodology
takes family size, the number of family members in college, taxable and
nontaxable income and assets into account. Unlike most Institutional Methodologies,
however, the Federal Methodology does not consider the net value of the
The organization that processes the information submitted on the Free
Application for Federal Student Aid (FAFSA) and uses it to compute eligibility
for federal student aid. There are two different federal processors serving
specific geographic regions.
Federal Work-Study (WS)
Program providing undergraduate and graduate students with part-time employment
during the school year. The federal government pays a portion of the student's
salary, making it cheaper for departments and businesses to hire the student.
For this reason, work-study students often find it easier to get a part-time
job. Eligibility for WS is based on need. Money earned from a WS job is
not counted as income for the subsequent year's need analysis process.
Financial Aid Estimator
Form provided to all Methodist University students accepted prior to December
15 which is used to estimate financial aid awards for the following academic
Financial Aid Package
The complete collection of grants, scholarships, loans and work-study
employment from all sources (federal, state, institutional and private)
offered to a student to enable them to attend the college or university.
Note that unsubsidized Stafford loans and PLUS loans are not considered
part of the financial aid package, since these financing options are available
to the family to help them meet the EFC.
This is determined by subtracting the EFC from the cost of attendance.
Free Application for Federal Student
Form used to apply for Pell Grants and all other need-based aid. As the
name suggests, no fee is charged to file a FAFSA. The FAFSA can be completed
either by paper form or on line at www.fafsa.ed.gov.
A short time period after graduation during which the borrower is not
required to begin repaying his or her student loans. The grace period
may also kick in if the borrower leaves school for a reason other than
graduation or drops below half-time enrollment. Depending on the type
of loan, you will have a grace period of six months (Stafford Loans) or
nine months (Perkins Loans) before you must start making payments on your
student loans. The PLUS Loans do not have a grace period.
Grade Point Average (GPA)
An average of a student's grades, converted to a 4.0 scale (4.0 is an
A, 3.0 is a B, and 2.0 is a C).
Free money awarded to a student.
Agency or Guarantor State agencies responsible for approving student loans
and insuring them against default. Guarantee agencies also oversee the
student loan process and enforce federal and state rules regarding student
A small percentage of the loan that is paid to the guarantee agency to
insure the loan against default. The insurance fee is usually 1% of the
loan amount (and by law cannot exceed 3% of the loan amount).
Most financial aid programs require that the student be enrolled at least
half-time (6 hours undergraduate and 3 hours graduate) in classes required
for your eligible program. Some programs require the student to be enrolled
Institutional Student Information Record
The ISIR is the electronic result of the FAFSA.
Once the processing center receives the FAFSA, they process it and electronically
send it to the college. Methodist University receives an ISIR for every
student that has listed Methodist University on their FAFSA. Once the
ISIR is received and the student has been accepted from the Office of
Admissions, the Office of Financial Aid will make any adjustments or corrections
that are needed. If everything is accurate, the student can be awarded
a financial aid package.
Funds awarded to students that must be repaid usually after graduation
from college or dropping below 6 semester hours for a period of 6 months.
A Loan application must be completed to receive the funds. You can apply
online for either Stafford
Plus Loans, or Alternative
Loan Entrance Counseling
A form that must be completed on line at www.studentloans.gov
by all first-time Federal Stafford (Direct) Loan borrowers before funds
will be disbursed.
Loan Exit Counseling
A form that must be completed on line at www.studentloans.gov
by all Federal Stafford (Direct) Loan borrowers if they fall below half
time status, leave MU, or before graduation.
Loan Request Form
A form used by the Office of Financial Aid and completed by the student
and/or parent to initiate the loan process for the current academic year.
Get request forms for either Stafford
Loans or PLUS
Monthly Payment Plan
Families may choose to make ten (10) monthly interest-free payments from
June 1-March 1 rather than the standard one (1) payment per semester.
There is a $60 enrollment fee for this payment option. Visit Payment Plans
for more information.
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
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
Financial aid that is need-based depends on your financial situation.
Most government sources of financial aid are need-based.
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 4% of the amount disbursed. A portion of this fee is
paid to federal government to offset the administrative costs of the loan.
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.
A scholarship that comes from sources other than the school and the federal
or state government.
A student who receives federal support may not receive awards totaling
excess of his or her financial need. Should a student receive additional
aid after having been awarded, the Staffords loans and/ or other aid may
be reduced to bring the student’s total package equal to the COA.
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
If your application for a PLUS loan is turned down, your child may be
eligible to borrow additional money under the Unsubsidized Stafford Loan
A federal grant that provides funds based on the student's financial need.
Professional Judgment may be used by the Director of Financial Aid for
extenuating or “special circumstances” a family has either
at the time the FAFSA
is being completed or after. Extenuating circumstances may be, but are
not limited to, the loss of a job, the death of a parent or spouse, a
divorce or separation, loss of child support or social security. You may
complete the on-line form for professional judgment or contact the Office
of Financial Aid to have a form mailed to you. You must submit the complete
federal tax return “signed” for the year in question with
all W-2/1099 forms with the special circumstance worksheet to the Office
of Financial Aid. Upon receipt of all forms, the Director may ask for
additional documentation. Once all documentation is received, the Director
may or may not use professional judgment based upon the circumstances.
It is the student’s/parents’ responsibility to contact the
Office of Financial Aid, usually within two weeks after submission of
all paperwork, as to whether the professional judgment was granted or
The 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, interest
rate, deferment policy and cancellations. The student should keep this
document until the loan has been repaid.
Satisfactory Academic Progress (SAP)
A student must make this status 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. A detailed description of SAP guidelines is provided at:
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.
Selective Service System
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 System 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 System registration
should call 1-847-688-6888.
An organization 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, 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.
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
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.
Undergraduates may borrow up to $23,000 ($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 ($8,500 Subsidized and $12,000 Unsubsidized per year).
These limits are for subsidized and unsubsidized loans combined. The difference
between the subsidized loan amount and the limit may be borrowed by the
student as an unsubsidized loan.
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 (SC)
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 35% of his or her savings
and approximately one-half of his summer earnings above $1,750.
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.
Supplemental Education Opportunity Grant
Federal grant program for undergraduate students with exceptional need.
FSEOG grants are awarded by the school's Office of Financial Aid. To qualify,
a student must also be a recipient of a Federal Pell Grant.
Title IV is grant or loan money from the government. All Title IV money,
with the exception of the PLUS loan, is need-based and awarded from the
results of the FAFSA.
The Pell Grant, SEOG, Stafford and PLUS Loans, Perkins Loan, and Work
Study Program are all sources of Title IV money.
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
A federal loan for which the government does not pay the interest. The
borrower is responsible for the interest on an unsubsidized federal 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 Federal Subsidized
The processing center randomly selects at least one-third of all applicants
applying for federal aid for a process called Verification. If selected,
the Office of Financial Aid will request additional information, such
as copies of signed Federal Income Tax Returns, 1099 forms, W-2 forms
and a Verification Worksheet to be completed by the student and/or parent(s).
If not selected by the government, the Office of Financial Aid has the
right to select students for verification.