The Free Application for Federal Student Aid, an online application for all federal Title IV student aid programs including Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, Federal Perkins Loans, Federal Direct Stafford Subsidized Loans, Federal Direct Stafford Unsubsidized Loans and Federal Work-Study. The FAFSA gathers the information required to determine need and eligibility according to the Federal Methodology.
See expected family contribution (EFC)
A federal law that protects the privacy of student education records, including financial information. This law applies to all students who are at least 18 years old, and to schools that receive funds under an applicable program of the U.S. Department of Education.
A federal loan that combines several types of federal student loans into one loan with one monthly payment. Consolidation is not offered through MIT but directly by the federal government by contacting the Federal Direct Loan Consolidation Center.
This program is also referred to as the William D. Ford Federal Direct Loan Program. Eligible students and parents borrow directly from the U.S. Department of Education at participating schools. MIT participates in this program. Direct loans consist of Federal Direct Stafford Subsidized Loans, Federal Direct Stafford Unsubsidized Loans, Federal Direct PLUS Loans and Federal Direct Consolidation Loans. MIT awards these loans, but students and parents repay them directly to the federal government.
A low-interest federal loan a parent can obtain for their dependent undergraduate children. MIT offers these loans through the Federal Direct Loan Program. PLUS loans are awarded by MIT but repaid to the federal government.
A low-interest loan awarded to undergraduate, graduate and professional students who demonstrate financial need according to the Federal Methodology. The loan is subsidized, meaning the interest is paid by the federal government during enrollment and other eligible periods. MIT offers these loans through the Federal Direct Loan Program. Direct Subsidized Loans are awarded by MIT but repaid to the federal government.
A low-interest loan awarded to undergraduates, graduate and professional students who do not demonstrate financial need according to the Federal Methodology. The loan is unsubsidized and the student can either pay the interest as it accrues or defer payment, in which case the interest capitalizes. MIT offers these loans through the Federal Direct Loan Program. Direct unsubsidized loans are awarded by MIT but repaid to the federal government.
Education loans provided by private lenders and guaranteed by the federal government. MIT does not participate in FFEL, but offers federal student and parent loans through the Federal Direct Loan Program.
The system used to determine a student’s eligibility for federal student financial assistance programs, including Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, Federal Perkins Loans, Federal Direct Stafford Subsidized Loans, Federal Direct Stafford Unsubsidized Loans and Federal Work-Study. The FM formulas take into account income, some assets, expenses, the number of members in the household, the number in college, and other factors reported on the FAFSA.
Money provided by the federal government that does not need to be repaid. Pell Grants are awarded to undergraduates who have significant demonstrated financial need according to the Federal Methodology.
A low-interest federal loan for undergraduate, graduate and professional students with the greatest financial need as demonstrated by the Federal Methodology. Perkins Loans are awarded by, and repaid to, MIT.
Money provided by the federal government that does not need to be repaid. FSEOGs are awarded to undergraduates with significant demonstrated financial need, and Pell Grant recipients get top priority.
Money available to undergraduate, graduate and professional students to help them pay for education expenses through part-time employment. Federal Work-Study (also called Work-Study or FWS) encourages community service and work related to a student’s course of study wherever possible. Students must demonstrate financial need according to the Federal Methodology.
The FICO, or Fair Isaac Corporation, score ranges from 300 to 800 with 850 being the best. A score less than 650 is considered subprime. An increase of just 30 to 50 points in a credit score is often enough to get a borrower better loan terms. See also credit score.
A combination of aid to help finance college expenses. The package generally consists of funds from a variety of sources and can include grants or scholarships, student loans and work opportunities.
A notation on your student record resulting from a student account balance from a prior term, a past-due MIT loan, unpaid Institute charges or a returned check. A financial hold can prevent you from registering or receiving your diploma, and may also cause MIT student services to be revoked.
The difference between the price of attending a particular college or university and the family contribution. Financial need is calculated using formulas, including the Federal Methodology and the 568 Consensus Approach.
See interest rate
A temporary suspension or reduction in monthly loan payments granted to borrowers who are willing but unable to make loan payments due to certain types of financial hardships.
In financial aid context, funds given by a donor to MIT to support the Institute’s educational mission, including but not limited to MIT scholarships.
A loan repayment plan with lower payments at first, increasing about every two years.
A form of financial aid that does not need to be repaid and that is ordinarily awarded on the basis of financial need. Sometimes used interchangeably with the term scholarship, though scholarships are generally awarded on the basis of merit.
A payment-free period that follows the student’s graduation, withdrawal, or in some instances dropping below half-time enrollment status. Grace periods vary by loan program, but typically are six to nine months. If the loan is subsidized, ordinarily no interest accrues during the grace period. But if the loan is unsubsidized, interest continues to accrue.
At schools that measure academic progress in credit hours and semesters, trimesters or quarters, half-time is at least six semester hours or quarter hours per term for an undergraduate program.
An Internal Revenue Service (IRS) education tax credit. Detailed information can be found on this IRS web site.
A loan repayment plan with the monthly payment adjusted each year based on the borrower’s (and spouse’s) annual income. Most loan programs do not have an income contingent repayment; although it is an option for students borrowing under the Federal Direct Loan Program.
A service offered by the College Board that allows families applying for financial aid to submit documents such as federal tax returns and W2 forms to the College Board so they can be scanned and displayed online for participating colleges and universities. Families of prospective MIT students who submit the CSS Financial Aid PROFILE form receive IDOC information that lists their remaining financial aid application requirements.
Formula used by many colleges, universities, graduate and professional schools, and private scholarship programs to determine an applicant’s need and eligibility for private, nonfederal student aid funds. While similar to the Federal Methodology, the IM has some notable differences that both increase and decrease family contributions. The 568 Consensus Approach, which MIT uses to award undergraduate financial aid, uses the IM as a base for its calculations.
A charge for a loan, usually a percentage of the amount loaned.
The rate at which interest is charged. A fixed interest rate is a constant rate of the amount borrowed; a interest variable rate is subject to change, anywhere from monthly to annually. It is normally tied to an index such as the U.S. prime rate, which is the interest rate banks charge to large corporations for short-term loans; U.S. treasury bills; or the London Interbank Offering Rate, or LIBOR.
The amount of the loan fee that's refunded in anticipation of a certain condition (ordinarly, timely repayment). For loans with an interest rebate, the loan fee is deducted from the loan proceeds and then the interest rebate is added back. To keep the up-front interest rebate, a borrower must meet the condition or will lose the rebate, in which case it's added back to the principal balance on the borrower's loan account. The terms and conditions of the up-front interest rebate are contained in the disclosure statement.
A charge assessed to someone who fails to pay an amount owed by a specific date. Students may be charged late fees for failure to pay the minimum amount due on their student account by the deadline, or for failing to make a timely student loan repayment.
An institution such as a bank, a savings and loan association, a credit union, a state agency or a higher education institution such as MIT that lends money.
LIBOR is an acronym for the London InterBank Offered Rate, and is also known as Eurodollar deposits. It is the average interest rate paid on deposits of U.S. dollars in the London market. It is the interest rate at which lenders can borrow money from other banks. As such, it measures the cost of capital for a bank. Private student loans typically are based on either a 1-month or 3-month average of the LIBOR index.
A term used at MIT to refer to registering for fewer than 32 units.
Financial aid that is borrowed and must be repaid. An education loan is money borrowed to pay education expenses.
A mandatory counseling session, either in person or on line, to ensure that students borrowing for the first time at a school understand their student loan rights and responsibilities. For Federal Direct Loans visit StudentLoans.gov to complete loan entrance counseling andsign a master promissory note. For Federal Perkins Loans visit iPROMise to complete loan counseling and sign a master promissory note.
A mandatory in-person exit interview with SFS loan counselors to ensure that student borrowers who are graduating or leaving a school understand the exact amounts of the loans they borrowed and the terms and conditions for the repayment of these loans. At that session, they will be given documents including the MIT Loan Exit Counseling Guide.
A fee payable by the borrower. Ordinarily loan fees are deducted proportionately from each loan disbursement.
The organization that currently owns a loan and to which the borrower owes repayment. Many banks sell their loans, so the initial lender and the current loan holder could be different. Neither the U.S. Department of Education nor MIT sell their loans, so if you borrow from either of those sources, your lender and your loan holder are the same
The process whereby the borrower(s) sign a promissory note to accept the terms and conditions of a loan.
The sum of money borrowed.
Special repayment features offered at the discretion of the lender. Some education loan programs have loan repayment options either to make payment more convenient and less expensive and/or to reward timely payment.
The agency employed by a lender to service student loans. Servicing can include billing, collecting and posting payments, processing requests for deferement, forbearance and cancellation, and responding to general borrower inquiries. For example, Campus Partners is the loan servicer for loans made by MIT, including Federal Perkins Loans and MIT Technology Loans.
The Massachusetts Employee’s Withholding Exemption Certificate, which that allows employees to exempt themselves from having Massachusetts state tax withheld from their paychecks based on certain criteria.
A nonprofit state organization that serves all students and families attending participating colleges and universities, including MIT, by offering undergraduate and graduate/professional loan and savings programs.
A legal document which a borrower signs that contains a feature allowing the borrower to sign just once to receive multiple loans in different academic years under the same program. The MPN includes the conditions under which money is borrowed, including the interest rate as well as deferment and cancellation conditions.
Financial aid that is awarded based on a student’s academic, athletic or artistic merit, or some other criteria, and does not depend on financial need. Merit-based awards may take into account a student’s grades, test scores, special talents or extracurricular activities. MIT does not offer merit-based aid to undergraduates.
Reserve Office Training Corps (ROTC) scholarships available from the U.S. Army, U.S. Navy and U.S. Air Force for students who are attending participating colleges and universities, including MIT. These scholarships often cover tuition, fees, books and supplies, and pay a subsistence allowance.
A low-interest financing plan offered by MIT allowing students and their authorized payers to pay the balance due on the student account in regular monthly installments.
The electronic method by which MIT notifies students and any authorized payers each month of any amounts owing on the student account and allows optional electronic payments.
A private loan from Citibank designed exclusively for students in the Sloan MBA, Sloan Fellows, and Leaders for Manufacturing programs. The student is the borrower and no co-signer is required.
A grant directly from MIT that's sometimes part of the financial aid package. MIT scholarships come from a variety of sources including endowment funds, gifts from alumni/ae and friends, and general tuition revenues.
A low-interest loan for undergraduates. Tech Loans require a creditworthy co-signer and are awarded by, and repaid to, MIT.
The process that determines a student’s financial need by analyzing the biographical and financial information provided by the student and his or her parents (or spouse, if applicable) on a financial aid application and accompanying documents, such as tax returns. MIT uses the 568 Consensus Approach for awarding all funds, with the exception of federal funds which are awarded using the Federal Methodology.
Financial aid that is awarded based solely on a student’s financial circumstances. Need-based aid can be awarded as grant or scholarship, student loans or work opportunities.
An admissions policy that excludes any consideration of a student’s financial circumstances, including the amount of financial aid for which he or she might qualify. MIT adheres to need-blind admissions for undergraduate students, whether they are U.S. citizens or international students.
A situation that can occur in loan repayment if the fixed repayment amount is less than the interest accruing each month. When there is negative amortization, the unpaid interest is added to the balance, or capitalized. Negative amortization typically occurs on loans that are on an income-contingent repayment plan, such as that offered under the Federal Direct Loan Program. Loans come out of negative amortization when the fixed repayment amount is raised above the amount of interest accruing each month.
The amount of the fee charged on a loan minus any up-front interest rebate. The Federal Direct Stafford Subsidized Loan, the Federal Direct Stafford Unsubsidized Loan and the Federal Direct PLUS Loan have a net fee.
A term used in connection with separated and divorced paretns to refer to the parent who does not have custody of the child, meaning the child does not live with this parent.
A check by the U.S Department of Education with the National Student Loan Database System (NSDLS) to resolve any discrepancies in a student’s personal record, such as name or Social Security number.
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