Definitions of terms you might come across while you're applying for or receiving US financial aid.

Accrued interest

If you choose not to make interest payments while in university, in your grace period, or during an authorised period of deferment, the interest will accumulate and be added to your principal amount at repayment.

Financial Aid Offer

This is an official letter issued by Wellington University International on behalf of Victoria University of Wellington. It lists the loan amounts, and types of aid (e.g., subsidised and unsubsidised) in your financial aid package for the relevant award year. The award letter also includes the terms and conditions of your financial aid package.

Award year

The enrolment period during which you attend university, and for which your aid has been awarded.


The process by which interest is added to the principal loan amount if you choose not to make interest payments while in university or in forbearance. This process increases the amount that must be repaid.

Cost of attendance

The cost of attendance (COA) is made up of estimated expenses including tuition and levies, insurance, course-related costs, books, travel and transportation, and living costs for the award period. The COA is determined by the University, using US Federal Student Aid guidelines.

Cohort default rate

This rate calculates the number of US students who have studied at Victoria University of Wellington out of the total who enter repayment and default before the end of the second fiscal year following the fiscal year in which students entered repayment.


The failure of a borrower to make repayments when due or to meet other terms of the Promissory Note or other written agreement(s) with the loan servicer under circumstances where the US Department of Education has reasonably concluded that the borrower no longer intended to honour the borrower’s obligation to repay a loan, provided that this failure persists for the most recent consecutive 270-day period or the most recent 330-day period.

A period during which repaying loan principal is suspended as a result of the borrower meeting one or more of a number of situations or categories established by US law. The borrower does not pay interest on subsidised loans during deferment; interest continues to accumulate during deferment of an unsubsidised loan.

The status of a loan when payment is late. Delinquency may be reported to a credit bureau after 30 days.

Direct graduate PLUS loan (grad PLUS)

Graduate students may borrow this loan on their own behalf, to cover the difference between COA and all other awarded aid, after applying for other Stafford aid.

This loan type does go through a federal credit check process. This review looks for bad credit only. You do not have to meet other financial standards as with other private alternative loans.

Direct PLUS loan (parent)

The PLUS loan is a federal loan and is available to the parents of dependent undergraduate students. It features low interest rates that change annually and long-term repayment options. While parents of all income levels are eligible, a credit-worthiness evaluation is done by the federal loan servicer.

Parents may borrow up to the cost of attendance minus any other aid received by the student in an award year.

Direct Loan (subsidised)

A loan type that provides federally subsidised, low-interest loans to students in undergraduate, graduate, or professional programmes. Subsidised loans are awarded on the basis of financial need.

Direct Loan (unsubsidised)

A loan type that provides low-interest loans to students in undergraduate, graduate, or professional programmes. Unsubsidised loans are not awarded on the basis of financial need.


The payment of loan funds to Victoria University of Wellington from the US Department of Education. Disbursement is usually made in two or more instalments during the award year.

Expected financial assistance

The Expected Financial Assistance (EFA) is the amount of all other awards, scholarships, sponsorships, and so on that a student (or the parents on behalf of the student) may be in receipt of. This amount is included in the COA calculations.

Expected family contribution

The Expected Family Contribution (EFC) is the amount that a student and family (if required) are expected to contribute toward the COA. This amount is based on the student’s or the family’s income and assets reported on the Student Aid Report.

Financial need

The difference between the student’s COA and the EFC plus the student’s EFA.


The process by which a repayment schedule can be restructured under certain conditions. The amount of the monthly payment may be temporarily reduced or suspended, or months may be added to the repayment term. You must contact your loan servicer directly to receive forbearance.

Free Application for Federal Student Aid

The Free Application for Federal Student Aid (FAFSA) is the application that a student must file to apply for financial aid. It is printed and distributed free of charge by the US Department of Education.

Grace period

A feature of US federal loans that gives you six months after you leave university or drop below half-time status before you must start making monthly payments on your loans.

Master Promissory Note

The Master Promissory Note (MPN) is a legally binding document between the borrower and the lender that obligates him or her to repay the loan according to its terms.

Origination fee

A fee charged by the US Department of Education and deducted from the loan funds prior to disbursement. The fee is used to offset administrative costs.


The amount borrowed. This is the amount to which interest is charged.

Student Aid Report

The Student Aid Report (SAR) is sent directly to a student from the US Department of Education’s Central Processing System (CPS) and summarises information submitted on their FAFSA. It also provides figures used in financial-need calculations, including the student’s EFC.

Satisfactory Academic Progress

Satisfactory Academic Progress (SAP) is the achievement of required Grade Point Average (GPA) within the defined timeframes, to ensure continued access to US financial aid.


A servicer is a company contracted by a lender to handle administrative aspects of the loan such as collection of payments, correspondence with borrowers, address changes, loan status updates and more. It is important to know the name of your servicer since quite often all communication regarding your loan will be with the servicer.

William D. Ford Federal Direct Loan program

On 30 March, President Obama signed the Health Care and Education Reconciliation Act of 2010, which introduced significant changes to the federal student loan program.

With effect from 1 July 2010, Federal Family Education Loan Program (FFELP) was terminated and students commencing their study at Victoria University of Wellington can only access loans through the William D. Ford Federal Direct Loan Program.