Table of Contents

A Message from the Director of Financial Aid ......................................................... 2 The Role of the Financial Aid Office...................................................................... 3 Contact Information ........................................................................................... 3 Introduction ..................................................................................................... 4 Student Responsibility ........................................................................................ 4 Understanding Your Financial Aid Award Letter ...................................................... 4 Types of Financial Assistance .............................................................................. 5 Estimated Cost of Attendance ............................................................................ 10 Satisfactory Academic Progress ......................................................................... 10 Qualifying Degree Requirement ......................................................................... 11 Appealing Your Financial Aid Award .................................................................... 11 Loan Application and Disbursement .................................................................... 12 When Can I Expect My Funds to Disburse? .......................................................... 13 Reapplying for Financial Aid .............................................................................. 13 Sample Stafford Loan Repayment Schedule ......................................................... 14 Glossary ......................................................................................................... 15

A Message from the Director of Financial Aid

Dear Students, Parents, and Families: Welcome! The New England Conservatory recognizes that furthering ones education is both a personal and a financial decision. Pursuing a college degree entails a great deal of responsibility, and both prospective and currently-enrolled students require a commitment and sensitivity to their personal and financial needs. The NEC Financial Aid Office makes every effort to assist qualified students in finding the financial resources necessary to meet their educational costs. In order to help you understand the terms and conditions of your awards, as well as the financial aid process, my office has produced this financial aid award guide for your reference. This guide covers topics such as the types of financial aid available, appealing your awards, when your financial aid funds will disburse, and what you can expect to repay on federal student loans that you may choose to borrow. Accompanying this guide is your Financial Aid Award Letter; please read both the letter and guide carefully. Do not hesitate to contact us for assistance. We welcome student questions and look forward to working with you over the course of your academic program at New England Conservatory. Sincerely, Lauren Urbanek Director of Financial Aid

Financing Your NEC Education

The Role of the Financial Aid Office
The Financial Aid Office at NEC offers assistance to current and prospective students regarding education financing. The Financial Aid staff is committed to providing students with the information necessary to make informed decisions about financing programs at NEC. The Financial Aid Office awards financial aid to eligible applicants and transmits this aid to the NEC Business Office. Financial Aid Office staff work with students and parents to resolve balances owed on student accounts; authorize refunds (where applicable); and administer NECs student employment program in cooperation with the Payroll Office.

Office Hours
The Financial Aid Office is located in room 103 of the St. Botolph Building. Office hours are Monday through Friday from 9:00 AM to 5:00 PM (and to 12:30 PM on most Fridays in the summer). Evening hours are available by appointment only.

Contact Information
New England Conservatory of Music Financial Aid Office 290 Huntington Avenue Boston, Massachusetts 02115 Telephone: 617-585-1110 Fax: 617-585-1115 finaid@necmusic.edu necmusic.edu/financial-aid

Staff
Lauren Urbanek, Director of Financial Aid finaid@necmusic.edu 617-585-1110 Betsy Kam, Assistant Director of Financial Aid betsy.kam@necmusic.edu 617-585-1111 Lauren Flaherty, Assistant Director of Financial Aid lauren.flaherty@necmusic.edu 617-585-1114

Introduction
Purpose
This guide is provided as an accompaniment to your Financial Aid Award Letter. Upon signing your award letter, you are not only agreeing to the award values indicated but also certifying to the NEC Financial Aid Office that you have read and understood the information in this guide. We publish the Financing Your NEC Education guide to help students become familiar with NECs Financial Aid policies and procedures. In addition, this guide should assist you in planning for the financing of your education at NEC.

Student Responsibility
The Financial Aid Office is committed to making its services easily accessible to all students. We understand that the financial aid process can sometimes be confusing and that students may require our guidance. It is important for students to understand their level of responsibility when dealing with the financing of an NEC education. The primary mode of communication from the Financial Aid Office is in written form. It is each students responsibility to read and act upon any correspondence mailed or emailed to him or her. Should any information seem unclear, please email finaid@necmusic.edu or call the Financial Aid Office at 617-585-1110 for clarification. During the summer months, we will typically use your email or permanent mailing address for correspondence. While classes are in session, depending on the nature of the communication, information will be sent via email or mailed to your local address. It is the students responsibility to notify NEC of any changes to mailing or email addresses. All NEC students must check their necmusic.edu email addresses regularly.

You may forfeit all or a portion of your financial aid if you do not follow all instructions or respond to requests from the Financial Aid Office. New England Conservatory is not responsible for losses that occur due to negligence on your part.

Understanding Your Financial Aid Award Letter

The Award Letter
Your NEC Financial Aid Award letter reflects the financial assistance that we are able to offer you for the 2012-2013 academic year. Your award package may include a variety of funding from several sources, including scholarships, grants, loans, and part-time student employment from NEC or the federal and/or state government. To accept your awards, you must sign, date, and return one copy of the letter to the NEC Financial Aid Office. Cross out any awards that you wish to decline. If you would like to accept less than an amount offered, cross out the original amount and write in the amount that you wish to accept. Retain a copy of the award letter for your records.

Financial Aid award acceptance must be done in writing only ; verbal acceptances will not be processed. Please respond even if you wish to decline your awards.

Eligibility
The NEC Financial Aid Office awards need-based federal financial aid according to Title IV Federal Student Aid regulations. The Financial Aid Office uses the Free Application for Federal Student Aid (FAFSA) as a tool to determine each students eligibility for financial aid. All U.S. citizens and permanent residents must file the FAFSA in order to be considered for federal and state financial assistance, as well as for any kind of institutional funding (including merit-based awards). All students seeking any type of financial aid must file the NEC Application for Financial Aid and Scholarships annually.

NEC Funding
In addition to administering Federal Student Aid programs, the Financial Aid Office administers limited funds from the Conservatory itself. Eligibility for this funding is determined based on a students talent/merit, with strong consideration given to those with financial need. U.S. citizens and permanent residents must file the FAFSA in order to be considered for any kind of institutional funding, including merit-based awards. All students seeking any type of financial aid must also file the NEC Application for Financial Aid and Scholarships annually. NEC funds are limited; not all applicants will receive financial assistance from the Conservatory.

Verification
The U.S. Department of Education selects approximately one-third of all federal aid applications for review in a process called Verification. (Your FAFSA submission confirmation will indicate if you have been selected.) If you are selected, the Financial Aid Office will request documentation from you that will typically include signed copies of 2011 federal income tax returns for both the student and parent (if applicable), copies of all 2011 W2 information for both the student and parent (if applicable), and the completion of a Verification Worksheet. Students who are admitted into a new program will be offered financial aid funds before the Verification process has been completed. All financial aid award offers are considered tentative until Verification has been completed. Returning students will not receive a renewal financial aid package until Verification has been completed. All students selected for Verification will not have any financial aid funds disbursed until Verification is complete.

Types of Financial Assistance

Federal Pell Grant
The Federal Pell Grant is a need-based federal grant that does not have to be repaid. Eligibility is based on a students Expected Family Contribution (EFC), which is calculated when the students Free Application for Federal Student Aid (FAFSA) is processed. Pell Grants are only awarded to undergraduate students who have not yet

earned a bachelors degree. To be considered for this grant, students must complete the FAFSA and NEC Application for Financial Aid and Scholarships annually.

Federal Supplemental Educational Opportunity Grant

SEOG is a need-based federal grant that does not have to be repaid. Recipients are selected in accordance with federal regulations, which require SEOG to be awarded to students with exceptional financial need, typically Federal Pell Grant recipients. To be considered for this grant, students must complete the FAFSA and NEC Application for Financial Aid and Scholarships annually.

State Grants
State grants are issued by the state in which the student permanently resides. An estimate of the grant may appear on the students award letter. However, the state agency will notify the student of actual award amounts, at which time adjustments to the students award letter may need to be made. State Grants do not typically need to be repaid. To be considered for a state grant, students must complete the FAFSA annually no later than the state deadlines posted on www.fafsa.ed.gov/deadlines.htm.

NEC Merit Award

The NEC Merit Award is awarded to full-time students based on their merit/talent. These awards are decided upon by the Financial Aid Committee and will not exceed 50% of the students tuition. Not all students will receive an NEC Merit Award, as Conservatory funds are extremely limited. NEC Merit Awards do not need to be repaid. To be considered for this award, students who are U.S. citizens or permanent residents must complete the FAFSA and NEC Application for Financial Aid and Scholarships annually. International students must complete the NEC Application for Financial Aid and Scholarships annually.

NEC Scholarship
NEC Scholarship Awards are awarded to full-time students based on talent/merit and financial need. These awards are determined based on the students NEC audition, as well as the results of his or her processed FAFSA and NEC Application for Financial Aid and Scholarships . To be considered for this award, students who are U.S. citizens or permanent residents must complete the FAFSA and NEC Application for Financial Aid and Scholarships annually. International students must complete the NEC Application for Financial Aid and Scholarships annually.

From the Top Scholarship

Students who performed on the From the Top! Program and have been admitted to NEC are guaranteed scholarship funds of at least $7,500. This funding is included as part of the students overall scholarship from the Conservatory and will appear on the students award letter as NEC Scholarship, NEC Merit Award, or a combination of the two funds. There is not a separate fund awarded to From the Top Scholars. The total amount awarded is NEC funding includes the From the Top award.

Federal Perkins Loan

The Federal Perkins loan is a low-interest (5.0% fixed) federal loan program for students with exceptional financial need. Recipients are required to sign a separate Perkins loan promissory before loan funds can be disbursed.

Federal Direct Stafford Loan

The Direct Stafford loan is a low-interest federal loan that is made to the student ; the student is responsible for repayment. There are two types of Stafford loans: subsidized and unsubsidized. Beginning in July 2012, s ubsidized Stafford loans are available only to undergraduate students who demonstrate financial need. The federal government pays the interest on subsidized Stafford loans while the student remains enrolled at least half-time. If a student does not demonstrate financial need, he or she will typically qualify for an unsubsidized loan. Unsubsidized Stafford loans accrue interest while the student is in school; the student may pay the interest periodically while in school or capitalize it and repay it along with the principal. Loan repayment begins six months after the student ceases to be enrolled at least half-time.

Interest Rates
For 2012-2013, the interest rate for all types of Stafford loans for graduate and undergraduate students will be fixed at 6.8%.

Application
To apply for a Direct Stafford loan, all borrowers must complete a Direct Stafford loan Master Promissory Note (MPN). An MPN is a legal document in which you promise to repay the loan, plus any accrued interest and fees, to the lender. The MPN also explains the terms and conditions of the loan. Typically, once your MPN has been submitted and accepted by the lender, you will not have to complete a new MPN to obtain future Direct Stafford loans. To sign your Direct Stafford loan MPN, visit www.studentloans.gov. All Direct Stafford loan borrowers must complete Entrance Counseling before loan funds can be sent to the school. To complete Entrance Counseling, visit www.studentloans.gov.

Loan Limits
Annual Stafford loan limits are based on the students year in school, which is determined based on the number of credits he or she has successfully completed. The federal government deducts 1.50% in fees from the gross loan amount before forwarding the balance to NEC. The government limits the amount of a students total Stafford loan funding that can be subsidized, as shown in the chart below.

Stafford Loan Limits

Year in School First Year Undergraduate Second Year Undergraduate Third/Fourth Year Undergraduate Graduate Maximum Annual Loan Limit* $5,500 $6,500 $7,500 $20,500 Maximum Amount of Annual Loan Limit That Can Be Subsidized $3,500 $4,500 $5,500 $8,500

*Independent undergraduate students are also eligible to borrow funds through the unsubsidized Stafford loan program. These loan amounts are capped at $4,000 for first-year and sophomore students and $5,000 for juniors and seniors. Independent students financial aid award letters will reflect these additional amounts. Students whose parents have been denied a PLUS loan may be eligible for additional unsubsidized Stafford loan funds; please contact us to determine if you qualify.

Federal Direct PLUS Loan

The Direct PLUS loan is a credit-based federal education loan available to graduate students and to the parents of dependent, undergraduate students to help pay for the students educational costs. Borrowers with no adverse credit history may apply for up to the cost of education (for one academic year at a time), less any other financial aid.

Interest Rates
The interest rate for Direct PLUS loans is fixed at 7.9%; interest begins to accrue on the date of the loan's first disbursement. Loan funds are disbursed directly to NEC. The federal government deducts 4.0% in fees from the gross loan amount before forwarding the balance to NEC.

Application
To apply for a Direct PLUS loan for the first time, you must complete a Direct PLUS loan Master Promissory Note (MPN). An MPN is a legal document in which you promise to repay the loan, plus interest and fees, to the lender. The MPN also explains the terms and conditions of the loan. Typically, once your MPN has been submitted and accepted by the lender, you will not have to complete a new MPN to obtain future PLUS loans. Borrowers should complete the Direct PLUS loan MPN online at www.studentloans.gov. Upon application, the Department of Education will check your credit history; to be eligible for a PLUS loan, you must not have an adverse credit history.

Disbursement
For students enrolled for a full year, the Direct PLUS loan funds will be sent to NEC in two equal disbursements (typically, one at the start of each semester). NEC will first credit loan funds to the students NEC account to pay for billable charges (tuition, fees, room, board, etc.). If the loan disbursement amount exceeds your charges, NEC will refund you the remaining balance of the disbursement.

Repayment
After disbursement, PLUS loan borrowers may contact their loan servicer to arrange repayment immediately (based on a standard 10 year repayment plan), or pay interest only, or defer repayment until the student is no longer enrolled at least half time.

Private/Alternative Loan Programs

A variety of private/alternative loan options are available to undergraduate and graduate students and/or their families. Alternative loans are offered by private lenders and are usually credit-based. Borrowers should only use private loans as supplemental funding after having exhausted all other sources of financial aid. The NEC Financial Aid Offices web page offers a list of private loan companies that have made loans to NEC students in the past. Students are welcome to borrow from other lenders programs as well. When researching your loan options, it is advisable to take into consideration the loans interest rates as well as any origination, disbursement, and repayment fees. We are happy to answer questions or provide information as you work to identify the program(s) that best suit your familys needs.

Tuition Management Systems (TMS)

TMS is a private company not affiliated with NEC, that contracts with the Conservatory in order to offer students and families a monthly payment plan for paying direct educational costs (tuition, room, board, fees). This is not a loan program. There is a $90 enrollment fee to participate. For more information on TMS, visit www.afford.com, call the NEC Business Office at 617-585-1221, or call TMS at 888-216-4258.

Student Employment
The Federal Work-Study Program (FWS) provides part-time employment opportunities within New England Conservatory to eligible students to help pay for incidental expenses during the year. In order to be eligible for a FWS award, a student must demonstrate financial need, as determined by his or her FAFSA results. Students who are ineligible for the Federal Work-Study program may be employed on campus under the Student Aid program. Student employment funds are not directly credited to the students term bill account. Rather, these funds must be earned; earnings will be paid directly to the student in the form of a bi-weekly paycheck. All students interested in participating in student employment programs must conduct their own job search. Additional information about student employment, including the job search process, is available online at necmusic.edu/financial-aid (see Student Employment page).

Estimated Cost of Attendance (COA)

Each year, the New England Conservatory establishes student expense budgets based on the average cost of attendance for most students. The tuition and fees that we use are based each students program and expected enrollment status. Room and board estimates are based on the cost of living in a Residence Hall double room. Other costs associated with attendance, including books and supplies, transportation, and personal expenses are based on historical averages.

2012-2013 Cost of Attendance (Budget)

BM, Undergraduate Diploma, GD, MM, AD, and DMA Programs Tuition Student Services/Technology Fee Heath Insurance 1 Room & Board Books & Supplies2 Local Transportation2 Personal Expenses 2 Total
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Graduate Diploma Program $34,700 $455 $2,113 $12,350 $700 $420 $2,200 $52,938

$38,000 $455 $2,113 $12,350 $700 $420 $2,200 $56,238

2012-2013 health insurance costs, which were not available at the time of this printing, are estimated based on actual 2011-2012 costs. Massachusetts law requires all students enrolled in Massachusetts colleges to have appropriate health insurance coverage. If you have appropriate health insurance coverage, you may receive a credit for this charge by filing a waiver with the NEC Business Office. 2 Books and supplies, local transportation, and personal expenses are not directly billed on the students tuition bill.

Adjustments to Estimated Cost of Attendance

The NEC Financial Aid Office urges students to manage their money wisely, taking care not to borrow more than is needed to cover educational costs. However, we recognize that occasional adjustments may need to be made to a students estimated Cost of Attendance. Any student who wishes to make adjustments to his or her overall estimated Cost of Attendance must contact the Financial Aid Office for assistance. Students requesting COA increases may be asked to submit documentation of their costs (e.g. utility bills and/or lease agreement for COA increases based on housing costs).

Satisfactory Academic Progress

To qualify for continued financial assistance, students are expected to make satisfactory academic progress, which NEC defines as the successful completion of at least 67% of all credit hours attempted over the course of the semester, as well as any promotional evaluation. Additionally, undergraduates must maintain a minimum cumulative GPA of

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2.0; graduate students must maintain a minimum cumulative GPA of 3.0. Please refer to the Academic Catalog for NECs full Satisfactory Academic Progress policy.

Academic Review Committee

Each semester, the Conservatorys Academic Review Committee, which is composed of faculty and staff, reviews student records and decides on appropriate action, including probation and/or suspension. If the student fails to meet these criteria, he or she may be placed on Academic Probation. For more information, refer to the Academic Catalog .

Academic Probation & Suspension

A student who has remained on academic probation for two consecutive semesters will not be eligible to receive financial aid in subsequent semesters until he or she is returned to good academic standing. When the student has regained good academic standing, he or she will be returned to an eligible status for financial aid.

Examples: Jane Doe is placed on academic probation for the Fall 2011 semester. She remains on probation for the Spring 2012 semester.
If Jane is suspended for the 2012-2013 academic year, she will be ineligible for financial aid during her suspension. She will also be ineligible to receive financial aid during the first semester that she returns to NEC. She must return to good academic standing before she can become eligible to receive financial aid in future semesters. If Jane enrolls for Fall 2012, she will not be eligible to receive financial aid during that semester. She must be returned to good academic standing before she can become eligible to receive financial aid in future semesters.

Qualifying Degree Requirement

All students enrolling in NEC programs must provide proof of a qualifying degree by providing the Office of Admission with a final high school or college transcript with the degree posted (e.g. proof of receipt of a high school diploma or equivalent for applicants to our undergraduate programs). Students who fail to provide this documentation are not eligible for the disbursement of any financial assistance, including NEC funding. The Financial Aid Office will cancel financial aid awards for students who fail to provide a qualifying degree by the end of their first semester.

Appealing Your Financial Aid Award

All appeals for additional financial assistance must be made in writing and include supporting documentation. All appeals should also include a dollar amount requested. If approved, increases typically range from $1,000 to $5,000. Appeals are reviewed continually; responses will typically be emailed or mailed to the student within 10 business days.

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New Student Appeals

New students may appeal their financial aid package by submitting a letter to the Financial Aid Office describing their situation. Appeals that document a change in the students financial situation, or that disclose information not previously provided to the Financial Aid Office, must be detailed in the NEC Financial Aid Appeal Form . This form is available for download at necmusic.edu/financial-aid (see Forms page) or upon request from Financial Aid.

Returning Student Appeals

Returning students may file appeals as part of the financial aid renewal process by completing the special circumstances section within the NEC Application for Financial Aid and Scholarships . Returning students who wish to appeal only for additional merit/talent-based aid do not need to provide additional financial information. Students/families whose appeals are based on significant changes to their financial situation must complete the NEC Financial Aid Appeal Form . This form is available for download at necmusic.edu/financial-aid (see Forms page) or upon request from the Financial Aid Office. Faculty letters and recommendations are not necessary for appeals. The Financial Aid Office will consult with faculty, as needed.

Loan Application and Disbursement

Stafford Loan Application Process
NEC participates in the William D. Ford Federal Direct student loan program. To complete the application for a Stafford loan for 2012-2013, students must take the following steps:
1.

Sign a new Federal Direct Stafford Loan Master Promissory Note online at www.studentloans.gov. (After logging in, select Complete Master Promissory Note.) You will need to provide the names and addresses of two references (typically, a parent and another adult living at a different address). If you would like to borrow less than the loan amount(s) offered to you in your financial aid award letter, please notify the Financial Aid Office in writing. Complete Entrance Counseling online at www.studentloans.gov. (After logging in, select Complete Entrance Counseling.) The Counseling session takes approximately 30 minutes and will be followed by a short quiz.

2.

You will be required to use your Department of Education issued PIN (which you used to file the FAFSA) in both steps. You may request a PIN online at www.pin.ed.gov. The Direct Loan servicer will notify the Financial Aid office electronically when your MPN and Entrance Counseling are completed. After both steps have been completed and your financial aid file is otherwise complete, the net amount of his or her loan will be credited to the students account with the NEC Business Office.

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Loan Disbursements
Federal Student Aid regulations mandate that all students cannot have their federal aid disbursed onto their student accounts until the first day of classes. Students are expected to plan accordingly. Students who borrow loan funds to cover living expenses will not receive refunds until three business days from the date that loans are posted onto their student account. Therefore, for planning purposes, students should not plan on getting a refund check until approximately the second week of classes.

When Can I Expect my Funds to Disburse?

If the student (and parent, where applicable) have completed all required paperwork to ensure a complete financial aid file (i.e. signed and returned award letter, completed all required promissory notes and entrance counseling) the student can refer to the chart below to determine approximately when funds will be posted to their account with the NEC Business Office. For students enrolled for both fall and spring semesters, all federal, state, and institutional funding must be disbursed in two equal disbursements, typically at the start of each semester.

Estimated Disbursement Schedule

Fund Type Federal Stafford loan Anticipated Disbursement Dates First day of classes for both fall and spring terms, pending the students completion of all required paperwork. First day of classes for both fall and spring terms, pending the students (and, where applicable, the parents) completion of all required paperwork. Note: PLUS loans that are borrowed by a parent on behalf of a student and are disbursed by check must have both the parent and student signature in order to be processed. Refunds created by such loans will be made payable to both the student and the parent. First day of classes for both fall and spring terms, pending the students completion of all required paperwork. First day of classes for both fall and spring terms, pending the students completion of all required paperwork. First day of classes for both fall and spring terms, pending the students completion of all required paperwork. Varies; anticipated by October for fall term and February for spring term.

Federal PLUS loan

Federal Perkins loan Federal grants NEC funding State funding (grants and loans) Work-Study Private loans

Not disbursed. Paid directly to the student through campus payroll system. Varies; largely depends on when student submits loan application and certification forms.

Reapplying for Financial Aid

All financial aid recipients, including those receiving only NEC funds, must reapply for financial aid annually. Financial Aid applications for returning students are usually available in December for aid to be awarded in the next academic year.

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Normally, financial aid awards will remain the same dollar amount for each student from year to year. However, changes in income, degree program, household size, family members college enrollment, credit-load, etc. may affect a students financial aid. To be eligible for renewal, students must meet NECs academic standards, be registered, and reapply for financial aid on time with minimal changes to his/her financial situation.

Please note: Returning students who began their academic program prior to Fall 2012 will be subject to the renewal policy that was in place as of their enrollment date.
Students who are returning from inactive status are included in the renewal policy, provided they have notified the Dean of Students of their return, have completed the financial aid process on time. Students returning from suspension, or who have been on academic probation for two consecutive semesters, are not eligible for financial aid until they return to good academic standing. Current NEC students who are applying to another degree program (e.g. Bachelors students who reapply for graduate programs) are subject to the deadlines and policies set for new students. Financial Aid decisions will be made in accordance with the applicants strengths and financial need relative to the pool of new applicants. This policy includes current Masters students applying for a second Masters degree in another major.

Important Deadlines:
February 1, 2013: 2013-2014 NEC Application for Financial Aid due from returning students February 1, 2013: 2013-2014 FAFSA due from both new and returning students

Stafford Loan Repayment Schedule

The table below outlines a sample repayment schedule for Federal Stafford loan borrowing. The examples outlined here are based on a fixed interest rate of 6.8%, a standard 10-year repayment term, and a $50 minimum monthly payment. Typically, manageable student loan payments can range from 5%-15% of income.

Sample Stafford Loan Repayment Schedule

Loan Amount $2,500 $5,000 $10,000 $12,500 $15,000 $20,000 $35,000 $50,000 Minimum Monthly Payment $50 $58 $115 $144 $173 $230 $403 $50,000 Years in Repayment 4.9 10 10 10 10 10 10 10 Total Interest Paid $447 $1,904 $3,809 $4,762 $5,714 $7,619 $13,334 $575 Total Amount Paid $2,947 $6,904 $13,809 $17262 $20,714 $27,619 $48,334 $69,048

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Glossary
Accrued Interest: Interest that builds gradually on a loan. Each day, or after some other specified period of time has passed, interest is calculated on the unpaid principal balance and becomes accrued interest. Capitalized Interest: Accrued interest that is added to a borrowers outstanding principal. Subsequent interest accrues on the new total principal balance. Cost of Attendance (COA): Generally, this includes the tuition and fees normally assessed a student, together with the institutions estimate of the cost of room & board, books & supplies, a computer, and miscellaneous personal expenses. In addition, student loan fees, dependent care, and reasonable costs for a study abroad program may be included, when appropriate. Also referred to as cost of education or budget. Default: The failure of a borrower to make installment payments when due, or to meet other terms of the promissory note or agreements with a lender, under circumstances where the U.S. Department of Education or the loan guarantor reasonably concludes that the borrower no longer intends to honor his or her obligation to repay a loan, provided that this failure persists for the most recent period of 270 consecutive days. Deferment: A period of time during repayment in which the borrower, upon meeting certain conditions, is not required to make payments of loan principal. Dependent Student: A student who does not qualify as an independent student and whose parental income and asset information is used in calculating the EFC. Disbursement: The transfer of loan proceeds by individual check, master check, or electronic funds transfer (EFT) by a lender to a borrower or a school. Expected Family Contribution (EFC): The amount a student and his or her family is expected to pay toward the students cost of attendance, as calculated by a Congressionally-mandated formula known as Federal Methodology. The EFC is used to determine a students eligibility for need-based student financial assistance programs. Financial Aid: General term that describes any source of student assistance outside the student or the students family. Funds awarded to a student to help meet postsecondary educational expenses. These funds are generally awarded on the basis of financial need and include scholarships, grants, loans, and employment. Financial Aid Package: A financial aid award to a student comprised of a combination of forms of financial aid (loans, grants/scholarships, and employment). Financial Need: The difference between a colleges cost of attendance and the familys ability to pay (i.e. EFC). Ability to pay is represented by the EFC for federal need-based aid and for many state and institutional programs. Forbearance: A period of time during which the borrower is permitted to temporarily cease making payments or reduce the amount of the payments. The borrower is liable for the interest that accrues on the loan during this period. Free Application for Federal Student Aid (FAFSA): The financial aid application completed by the student (and the students parents, if applicable), that collects

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household and financial information. The FAFSA is the foundation document for all federal need analysis computations and database matches performed for a student. Grace Period: The period of time that begins when a borrower ceases to be enrolled at least half-time and ends when the repayment begins. During this period, loan principal need not be paid and interest does not generally accrue on subsidized loans. Independent Student: A student who meets one or more of the following criteria: will be 24 years of age by December 31 of the award year; is a graduate or professional student; is married; is an orphan, in foster care, or a ward of the court, at any time when the student was 13 years of age or older; is an emancipated minor or is in legal guardianship, as determined by the court; is an unaccompanied youth who is homeless or who is at risk of homelessness and is self-supporting, as verified during the school year; is a veteran or is serving on active duty in the U.S. Armed Forces for purposes other than training; or has legal dependents other than a spouse. Interest: The cost of borrowing money. Interest Rate: The percentage of a sum of money charged to the borrower for its use. Fixed interest rates do not change for the life of the loan. Insurance Fee: Also known as the Guarantee Fee, this is a fee charged to a borrower for a federal student loan. The originating lender deducts the fee from the loan and remits it to the guarantee agency. Merit-based Aid: Financial aid awarded because of a students achievement/talent in a particular area, such as academics, music, etc. Need-based Aid: Student assistance awarded because a students financial circumstances would not permit him/her to afford the cost of a college education. Principal (of a loan): The actual amount borrowed. Promissory Note: A legally-binding agreement which the borrower signs to obtain a loan, in which the borrower agrees to repay the loan, with interest, in periodic installments. Includes information about any grace period, deferment, or cancellation provisions and the students rights and responsibilities with respect to the loan. Repayment Period: The period during which payments of principal and interest are required. Follows any applicable in-school or grace period and excludes any period of authorized deferment or forbearance. Servicer: Private companies that many postsecondary institutions, lenders, guaranty agencies, and secondary markets contract with to handle student loan processing. Subsidy: The money the federal government uses to help underwrite student aid programs; primarily refers to government payments to lenders of the in-school interest on Federal Stafford Loans.

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