Let’s talk about creating a financial plan for culinary school. At first, the financial aid process might seem slightly intimidating, with myriad financial aid terms to digest. What’s the real difference between a “Direct PLUS Loan,” and a “Direct Subsidized Loan”? How does an income-based repayment plan really work…in simple terms?
To grasp the essential information you need to know, we’ve compiled a glossary so you can easily make sense of it all. Keep reading to understand the top financial aid terms that may help you plan for your future!
A-E
Academic Year
An academic year is considered one full school year, completed at the same school. In the case of a “year-round” program, nine months is typically one complete academic year.
Aid for Military Family Service
For veterans, future military personnel, and active duty, the federal government and certain nonprofit organizations may offer funding benefits for college.
Capitalization
This is the addition of unpaid accrued interest to the outstanding balance of a loan, which could increase your monthly payment.
Cost of Attendance
The overall cost of attendance to attend school can usually include tuition, room, board, educational supplies, loan fees, and sometimes, other additional expenses.
Default
When you fail to repay most federal loans as outlined in the terms of your promissory note, a loan will go into default. This usually transpires if you haven’t made a loan payment in 270 days, which could lead to legal ramifications.
Deferment
Under special circumstances, loans may enter a deferment period, which is a temporary postponement. Usually, interest will not accrue on certain subsidized loans.
Direct Consolidation Loan
This type of loan replaces one or more existing federal education loans with one single loan—requiring one monthly payment.
Direct PLUS Loan
Usually two categories qualify for a Direct PLUS Loan: parents of dependent undergraduate students and graduate or professional students.
Direct Subsidized Loan
With a Direct Subsidized Loan, students are not responsible for paying interest while in school, grace, or deferment periods, and interest won’t accumulate while the student is in school either. This type of loan usually allows the borrower a “deferred grace period,” of six months after the last date of attendance or if a student falls below half time.
Direct Unsubsidized Loan
With a Direct Unsubsidized Loan, the borrower must pay interest, which does accumulate while the student is in school, regardless of the status. This type of loan also allows the borrower a “deferred grace period,” of six months after the last date of attendance or if a student falls below half time.
Discretionary Income
Discretionary income may determine the borrower’s eligibility for specific repayment plans and/or loan rehabilitation. This type of calculation examines the borrower’s annual income, plus a percentage of the poverty guidelines for the borrower’s family size and state of residence.
Eligible Program
This type of organized instruction or study usually leads to an academic, professional, vocational certificate, or other recognized education credential.
Endorser
If a Direct PLUS Loan borrower suddenly becomes unable to make payments on a loan, the endorser or loan co-signer is someone who agrees to pay the loan.
F-L
Federal Pell Grant Program
This is the largest federal grant program, specifically for undergraduates from low-income households. Usually, it doesn’t need to be repaid, unless a student withdraws and owes a refund.
Federal Student Aid
This type of student aid is a culmination of grants, loans, and work-study programs designed to help students pay for college or career school from the government.
Federal Supplemental Educational Opportunity Grant
This opportunity grant is available for undergraduate students who demonstrate a financial need—usually ranging from $100 to $4,000. This usually doesn’t need to be repaid.
Federal Work-Study (FWS) Program
The FWS program offers part-time jobs for undergraduate and graduate students who demonstrate financial need. This type of program is facilitated through your school’s financial aid office, which can help you secure a qualified opportunity. This is typically completed through a school, nonprofit organization, or private company.
Forbearance
Forbearance is a period of time that allows you to temporarily reduce monthly payments or stop them entirely. While this period might be necessary under certain circumstances, interest does continue to accrue during forbearance periods.
Graduated Repayment Plan
This specific plan begins with lower monthly payments that increase every two years (usually with your earned income). Generally, you have 10 years to pay everything off or, up to 30 years, if you apply for a consolidated loan. If you are unable to repay in that time frame, you may contact the Department of Education to discuss possible solutions.
Grant
A grant is a monetary gift for those obtaining a higher education and is usually based on financial need. Usually, it doesn’t need to be repaid, unless you withdraw from a program early.
Interest
Interest is an expense charged from borrowing money and is usually paid to a lender. Usually, this is a percentage of the unpaid principal loan.
Lender
A lender is an organization that allows students to borrow funds—such as a school, credit union, or bank.
Loan Discharge
Under loan discharge, borrowers no longer need to repay a loan under certain circumstances such as death, disability, fraud, bankruptcy, and identity theft.
Loan Forgiveness
Under loan forgiveness, a student loan may be fully or partially forgiven for a specific amount of years at a qualified job.
M-Q
Master Promissory Note (MPN)
A Master Promissory Note is a master legal document that defines the terms of your loan. It entails the borrower’s rights and repayment obligations.
Merit-Based
Merit-based scholarships or funds are usually awarded based on a student’s grades or skill set.
PLUS Credit Counseling
PLUS credit counseling offers 1:1 guidance to graduate/professional students and parents—specifically around taking on student loan debt and borrowing a PLUS loan.
Principal
Principal is the amount of money borrowed or that’s remaining on a loan, on which interest is paid.
Public Service Loan Forgiveness Program
After you’ve made 120 qualifying monthly payments under a qualified repayment plan, The PSLF Program forgives the remaining balance on your Direct Loans. You must be working full-time for a qualifying employer.
R-Z
Rehabilitated Loan
This is one method to get your student loan out of default mode. You must contact your loan holder to begin this process.
Revised Pay As You Earn (REPAYE) Program
This type of repayment plan usually involves monthly payments that equate to 10% of your discretionary income.
Satisfactory Academic Progress
Each school usually instills a “tracking process” to ensure students will graduate in their respective programs “on time.” On top of this, usually students are required to maintain a certain level of academic progress to remain eligible for federal student aid.
Scholarships
Scholarships are academic-based gifts that support students who are pursuing an undergraduate degree and don’t need to be repaid. These types of rewards usually span a variety of categories, including merit, academic, need, and diversity.
Student Loan Debt Burden
This is usually a specific percentage of a borrower’s monthly income that is allocated toward student loan payments.
Total and Permanent Disability (TPD) Discharge
This type of discharge relieves borrowers from repaying federal student loan(s) and/or completing the Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation.
Unsubsidized Loan
This type of loan offers students a low, fixed interest rate and various repayment options, which are not based on financial need.
Get a Financial Aid Plan in Place
Ready to take the next step toward your culinary career goals, but need to get a financial aid plan in place? Contact us today and allow our team to help guide your financial decisions when it comes to culinary school!
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- How Financial Aid Works: FAQs About Funding for Culinary School
*Consider your situation and resources to determine what is affordable and on budget, for you.
