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A
Academic scholarship[skip to next word]

A grant of financial aid awarded to a student to help pay for his or her education on the merits of academic performance.

Accrued interest[skip to next word]

Interest that has accumulated on a loan but that has not yet been paid.

A contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years.

APR (annual percentage rate)[skip to next word]

The APR (annual percentage rate) is the cost of credit expressed as a yearly rate. The APR is a measure of the total cost of credit, including interest, loan discount, origination fees, transaction charges, and premiums for credit-guarantee insurance; it is not an interest rate. The APR relates the amount and timing of value received by the borrower to the amount and timing of payments made by the borrower. The APR is designed to take into account all relevant factors and to provide a uniform measure for comparing the costs of similar credit transactions.

Athletic scholarship[skip to next word]

A grant of financial aid awarded to a student to help pay for his or her education on the merits of athletic performance.

ATM (automated teller machine)[skip to next word]

An ATM (automated teller machine) is a device activated by a debit or credit card. Generally, the cardholder must enter a code to perform transactions. An ATM can dispense cash, accept deposits, transfer funds between accounts and allow account inquiries, depending on the ATM application used.

A card used in an ATM (automated teller machine) to access a credit or debit account to complete banking inquiries and fund transfers between accounts.

B

The status of being legally declared unable to pay your debts as they become due. Federal bankruptcy laws allow a person or organization to liquidate assets in order to pay a reduced amount to their creditors. They also allow the rehabilitation of the debtor by requiring creditors to accept reduced payments from future earnings of the debtor. Student loans are generally non-dischargeable in bankruptcy. A declaration of bankruptcy will remain on a person's credit report from 7 to 10 years. Declaring bankruptcy is typically considered a last resort for addressing debt issues.

Billing cycle[skip to next word]

The length of time between billing statements.

C
Capitalization[skip to next word]

The addition of unpaid interest to the principal balance of a loan. When the interest is not paid as it accrues during periods of in-school status, the grace period, deferment, or forbearance, your lender may capitalize the interest. This increases the outstanding principal amount due on the loan and may cause your monthly payment amount to increase. Interest is then charged on that higher principal balance, increasing the overall cost of the loan.

A service provided to credit card holders to have the ability to access cash against their available credit on his or her card.

CCCS (Consumer Credit Counseling Service)[skip to next word]

The CCCS is a nonprofit organization that has helped thousands of people get out of debt. CCCS counselors can advise you on how to develop a budget you can live with and can be invaluable in helping you negotiate repayment plans with your creditors. This service is confidential. To reach the CCCS, call 1.800.355.2227.

Sometimes called a smart card, a chip card contains an electronic chip that allows the card to function in multiple ways: as a credit card, debit card, frequent buyer or rewards program card, ID card or any combination of these card types. Many college ID cards are chip cards.

COA (cost of attendance)[skip to next word]

The total amount it will cost you to go to school determined by the school using rules established by law. COA includes tuition, fees, meals, housing costs, books, supplies, transportation and personal expenses.

Co-branded card[skip to next word]

A credit card sponsored by both the issuing bank and a retail organization such as a department store or an airline. Cardholders may benefit through account enhancements that provide benefits such as discounts or free merchandise from the sponsoring merchant.

The person who agrees to take responsibility for making sure the loan is repaid. Co-signers must be able to demonstrate the ability to repay the loan if the borrower fails to pay it. Sometimes called a co-applicant, joint applicant or co-borrower.

Unlike a charge card, a credit card allows you to carry over, or revolve, portions of your balance from month to month. However, even if you have a grace period on certain types of transactions, you will be assessed interest charges if you do not pay your balance in full. To protect your credit rating, always pay at least the minimum amount due by the payment due date.

The most you can charge on your credit card account, including or taking into account fees and interest charges. When you receive a new credit card, you're usually issued a set credit line. Under some circumstances, your card issuer may increase or decrease your credit line.

Credit rating[skip to next word]

A numeric expression of creditworthiness based upon an individual's present financial condition and past credit history.

Credit report[skip to next word]

The record of your credit history, which includes information such as whether you pay your bills on time and how much debt you have. Your report is compiled by credit reporting agencies and released to lenders and others.

Credit reporting agencies[skip to next word]

Credit reporting agencies collect and report vital facts about your financial habits, for example whether or not you pay your bills on time. These facts are then compiled into a credit report that can be accessed by potential creditors, employers, and others. The 3 major credit reporting agencies are:

Equifax: www.equifax.com, 1.800.685.1111

TransUnion: www.transunion.com, 1.800.888.4213

Experian: www.experian.com, 1.888.397.3742

A number that rates the quality of an individual's credit. Credit reporting agencies calculate this number, often with the assistance of computer systems. The number helps predict the relative likelihood that a person will repay a credit obligation, such as a mortgage loan. In general, the higher your credit score, the more likely you are to be approved for and to pay a lower interest rate on a loan.

CSS/Financial Aid PROFILE®[skip to next word]

A supplemental financial aid form, processed by The College Board, which is used by some colleges, universities and scholarship programs to determine eligibility for non-federal financial aid.

D

With your checking account, you can request a Bank of America debit card. Use it to make purchases at merchants worldwide, make deposits to your account at deposit ATMs, and withdraw cash at ATMs wherever you are. This enhanced ATM card deducts money from your designated deposit account when you use it to make a purchase or get cash.

Failure to repay a loan according to the agreed terms and conditions.

Defer payment[skip to next word]

A contract option where the initial payment from the customer (usually due within 45 days of the contract date) is financed on the contract, thus allowing up to 180 days before the customer is obligated to send the first payment to the bank.

Failure to make payments on time; late fees may be charged.

Demonstrated need[skip to next word]

The difference between the calculated EFC (expected family contribution) and the cost of college attendance is called demonstrated need. This is calculated each year and is based on an assessment of all financial data required by a given college as a student or family applies for financial aid for an academic year. Schools will be able to tell students what portion of demonstrated need they are able to meet in any given year.

Dependent student[skip to next word]

A student who does not meet the criteria for an independent student or is claimed on the parents' income tax return.

Direct deposit[skip to next word]

The process by which a customer's regularly received payment is deposited automatically into his or her checking or savings account, for example Social Security payments.

Payment of loan proceeds by the lender.

E
Educational IRA[skip to next word]

A custodial account or trust, usually maintained by a bank or financial organization, exclusively for the purpose of paying the qualified higher-education expenses of the designated beneficiary.

Education tax credit[skip to next word]

A tax credit that can reduce the total tax burden of an individual or a business on a dollar-for-dollar basis.

EFC (expected family contribution)[skip to next word]

The amount a student's family is expected to be able to contribute toward college costs, based on a federal formula. To calculate EFC, the government assesses the detailed financial information indicated on the FAFSA.

Endorsed card[skip to next word]

A credit card endorsed by a group such as a college, sports team, professional organization or special interest group and offered to their alumni, fans or members. Typically, use of the credit card gives financial benefit to the endorsing organization.

Equal Credit Opportunity Act[skip to next word]

Implemented by Federal Reserve Regulation B, this federal law protects your rights against being denied credit because of sex, race, color, age, national origin or religion. It also guarantees your right to have credit in your given name or your married name, the right to know why your credit application is rejected and the right to have someone other than your husband or wife co-sign for you.

F
FAFSA (Free Application for Federal Student Aid)[skip to next word]

Application that students must complete to qualify for federal aid. This application must be resubmitted each year the student wishes to obtain financial aid.

A tool provided by the federal government that helps students and their families to learn about the financial aid process and get an early estimate of their eligibility for federal student aid. Access the FAFSA4caster

Fair Credit Billing Act[skip to next word]

A federal law that protects many important credit rights including your right to dispute billing errors, unauthorized use of your account and charges for unsatisfactory goods and services.

Federal default fee[skip to next word]

Fee deducted from the loan proceeds and paid to the guaranty agency to cover the loan if the borrower defaults.

The FFEL (Federal Family Education Loan) program[skip to next word]

This is the largest source of federal aid. Stafford, PLUS and Graduate PLUS loans are part of the FFEL program. The advantage of federal aid is that the government pays the interest on certain types of loans while the student is in school. Students don't have to make payments until they graduate, leave school or drop below half-time status.

Federal student aid[skip to next word]

Need-based financial aid provided by the federal government, such as grants, loans and work-study programs.

Financial aid[skip to next word]

Financial assistance intended to aid students in paying for education. This assistance may come in a variety of forms such as grants, scholarships, work-study and loan programs and may be provided by the federal government or by the student's college or university. Financial aid is available for qualifying students for a variety of qualifying schools, including community college programs and online programs.

A period during which your monthly loan payments are temporarily suspended or reduced. You may qualify for forbearance if you are willing but unable to make loan payments due to certain types of financial hardships. During forbearance, principal payments are postponed but interest continues to accrue. Accrued unpaid interest will be added to the principal balance (capitalized) of your loan(s) at the end of the forbearance period, increasing the total amount you owe.

G

Also called unmet need. When a college or university does not, or cannot, make up the difference between the EFC (expected family contribution) and the cost of attendance, the college has gapped the student. In other words, the college has offered the student less than the demonstrated need in his or her award package.

For student loans, the grace period is the set time period after borrowers graduate, leave school or drop below half-time enrollment during which the borrower doesn't need to make payments of principal or interest on certain loans. For a credit card, the grace period is the period of time that the issuer does not charge interest on certain types of transactions. Many credit cards have a grace period on purchases but not on balance transfers or cash advances.

A type of need-based financial aid that a student does not have to repay.

A guarantor is someone who pledges that a loan or other type of debt will be paid. Usually, a guarantor agrees to pay another person's debt should that person fail to do so. For example, if a parent co-signs a loan for a child, the parent could be considered a guarantor: If the child defaults on his or her debt, the parent would be held liable for the remainder of the loan.

Guaranty agencies[skip to next word]

State agencies or private nonprofit institutions that insure student loans for lenders and help administer the FFEL program for the U.S. Department of Education.

I

Property passing at the owner's death to the heir or those entitled to receive the property.

A fee charged for borrowing money. Also refers to money that a financial institution may pay individuals for keeping their money in an account there (such as an interest-bearing savings account).

Introductory APR[skip to next word]

A temporary low interest rate, expressed as an annual percentage rate, offered by credit providers to introduce you to their services. It will usually expire after a certain amount of time and may often be terminated based on your behavior, such as if you make a late payment. Be sure to check the details of the offer closely for any limitations on an introductory APR.

Institutional financial aid[skip to next word]

Financial aid awarded to students by a college or university rather than the federal government. Most schools will require the student fill out the FAFSA, CSS/Financial Aid PROFILE® and/or the school's own institutional aid application in order to be eligible for institutional aid.

Property or possessions acquired for future financial return or benefit.

L

Items which create, or could create, a monetary cost to their bearer, for example: debt service on mortgage debt, auto loans, consumer finance company debt, bank debt, or credit card debt.

LIBOR (London interbank offered rates)[skip to next word]

Fixed interest rates set daily by 5 major London banks. LIBOR may be used by some banks instead of the prime rate to set APRs.

M
Maintenance fees[skip to next word]

A charge made by a financial institution for keeping an account, a charge made to a deposit account if the minimum balance is not met or a recurring charge applied to deposit products to pay for their maintenance.

Major scholarships[skip to next word]

A grant of financial aid offered to students who are pursuing a particular degree, major, credential or certificate.

MPN (master promissory note)[skip to next word]

Legally binding contract between the borrower and lender that is valid for 10 years. Use of the MPN may eliminate the need to complete a new promissory note every year a loan is needed.

Minimum payment[skip to next word]

The minimum amount a credit card holder is required to pay each billing period, based on that month's balance at the time of billing.

N
Need-based scholarship[skip to next word]

A grant of financial aid awarded to a student based on demonstrated financial need. These scholarships typically fall into 3 categories: private, service and institutional.

Non-variable APR[skip to next word]

Unlike a variable APR (annual percentage rate), this type of APR does not automatically fluctuate based on changes in an index such as the prime rate or LIBOR. A non-variable or fixed APR does not mean that the rate is guaranteed not to change, though. Refer to your account terms for information on your issuer's ability to change the APR on your account.

O
Origination fee[skip to next word]

Charge deducted from the loan proceeds and paid to the federal government or lender to partially offset the cost of the loan.

Overdraft fees[skip to next word]

The dollar amount charged for overdrafts during the previous month or statement period.

Overdraft protection[skip to next word]

A product feature that provides protection against overdrafts by linking a credit card, line of credit or a savings account to one or more checking or Money Market Savings accounts. If the checking or Money Market account is overdrawn, the linked account covers the fund deficit; transfers are usually made in certain dollar increments and charged to the credited account when the funds are transferred. Refer to the terms of your account for details.

P
PLUS Loan (Parent Loan for Undergraduate Students)[skip to next word]

A low-interest student loan for parents of dependent undergraduate students. A version of the PLUS loan is also available for graduate students.

Prepaid tuition[skip to next word]

College savings plans that are guaranteed to increase in value at the same rate as college tuition.

Previous balance[skip to next word]

How much you owed your card issuer at the end of your last billing period.

The interest rate that banks charge their best customers when lending them money. The U.S. Prime Rate, as published daily by The Wall Street Journal, is based on a survey of the prime rates of the 10 largest banks in the United States. The U.S. Prime Rate is used by some financial institutions to calculate variable interest rates for credit cards. Changes in the U.S. Prime Rate influence changes in other rates, including mortgage interest rates.

The amount of money borrowed or remaining unpaid on a loan.

Private loans are typically offered by private lenders like banks and are used by families when there is still a gap between the cost of attendance and what the government allows you to borrow.

S
SAR (student aid report)[skip to next word]

A report that summarizes the information included in the FAFSA. The SAR is the notification of the student's expected family contribution (EFC) and eligibility for other types of federal financial aid.

Often viewed as a good first credit card or a way to reestablish your credit rating, this kind of card is secured by money you deposit in a designated savings account. For instance, if you deposit $500, your credit card limit will generally be for that amount. If for some reason you cannot pay your credit card bills, your credit card issuer will be paid from the savings account.

Servicing agency[skip to next word]

An organization that administers loans for lenders and secondary markets. A servicing agency issues monthly statements, handles billing and collects payments. If your lender transfers administrative tasks to a servicing agency, you'll receive your payment schedule from, and make your payments to, that agency.

See: Chip card.

State 529 plan[skip to next word]

A tax-advantaged investment vehicle designed to encourage saving for the future higher education expenses of a designated beneficiary.

Subsidized interest[skip to next word]

Interest paid on certain types of federal student loans by the federal government while the student is in college or during grace and deferment periods.

T
Transaction fees[skip to next word]

Fees charged when you make certain types of transactions. Transaction fees are typically assessed on balance transfers, cash advances and cash-like transactions such as money orders, wire transfers and casino gaming chips.

A legal title to property held by one party for the benefit of another.

Truth in Lending Act[skip to next word]

Implemented by Federal Reserve Regulation Z, this federal law protects you by making sure lenders tell you about the costs, terms and conditions at the time they offer you a loan or credit card.

U
Unsubsidized interest[skip to next word]

Interest paid by the borrower on certain types of loans beginning on the date the loan is disbursed.

V

An APR (annual percentage rate) that changes periodically and is usually tied to a published rate such as LIBOR or the U.S. Prime Rate.

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