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Financial Terms Glossary

Finance & Financial aid terms can be an alphabet soup of acronyms like FAFSA, SAR, SAP and EFC and technical terminology. It is almost like speaking a foreign language. This glossary defines the terms and acronyms that are most frequently used in basic finance or student financial aid.

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D.O.

Doctor of Osteopathic Medicine

D.V.M.

Doctor of Veterinary Medicine

Data Release Number

The Data Release Number (DRN) is a four-digit number listed in the upper right hand corner of an online Student Aid Report (SAR) and in the lower left hand corner of a paper SAR. Providing the DRN to a college will allow the college to access the FAFSA data. The DRN can also be provided to the Federal Student Aid Information Center (FSAIC); a toll-free hotline, available at 1-800-4-FED-AID (1-800-433-3243), for information about federal student aid - to allow them to correct errors in the FAFSA or add schools to the FAFSA.

DCL

Dear Colleague Letter

DD-214

Also known as a Certificate of Release or Discharge from Active Duty, a DD-214 is a document issued by the U.S. Department of Defense to members of the U.S. Armed Forces upon the servicemember’s retirement or discharge from active-duty service.

DDB

Death, Disability and Bankruptcy

Dear Colleague Letter

A Dear Colleague Letter is a form of subregulatory guidance provided by the U.S. Department of Education to colleges, lenders, states and guarantee agencies.

Death Discharge

A borrower’s federal student loans are discharged (cancelled) if the borrower dies. Federal Parent PLUS loans may also be discharged upon the death of the student on whose behalf the parent borrowed. Some private student loans offer a death discharge.

Debit Card

A debit card allows the cardholder to make purchases by immediately transferring money from the cardholder’s bank account to the vendor. Debit cards may also be used to withdraw money from an ATM (automatic teller machine). Debit cards may bear the logo of a major credit card, such as Visa, MasterCard, Discover or American Express, and can be used at any merchant who accepts those credit cards.

Debt-Service-to-Discretionary-Income Ratio

The debt-service-to-discretionary-income ratio is the ratio of the borrower’s total monthly loan payments to the borrower’s discretionary income.

Debt-Service-to-Income Ratio

The debt-service-to-income ratio is the ratio of a borrower’s total monthly loan payments to the borrower’s gross monthly income.

Debt-to-Income Ratio

The debt-to-income ratio is the ratio of a borrower’s total debt to the borrower’s annual income. Borrowers with a debt-to-income ratio of 2:1 or more will struggle to repay their debts and may be forced to extend the repayment term on their loans or adopt an austere lifestyle.

Default

When a loan payment is more than a specified number of days late, the loan is considered to be in default. The loan’s promissory note may provide for more aggressive collection activities and penalties when a loan is in default. A private student loan is considered to be in default when it is more than 120 days delinquent. A federal education loan is considered to be in default when it is more than 360 days late.

Default Fee

A default fee, commonly called a guarantee fee, is charged to insure a loan against default. It covers part of the cost to the lender when borrowers default on their loans.

Default Rate

A default rate is a measure of a loan portfolio’s financial health. It may be expressed as a percentage of borrowers, loans or dollars that are in a default status. Examples include the cohort default rate and the charge-off or write-off rate.

Default Resolution Group

The Default Resolution Group at the U.S. Department of Education helps defaulted federal education loan borrowers rehabilitate their loans and get out of default.

Deferment

A deferment is a temporary suspension of the obligation to repay a debt, such as an in-school deferment or economic hardship deferment. The federal government pays the interest on subsidized loans during periods of authorized deferment but not during a forbearance.

Deferral

A student who applied for early admission may have consideration of his or her application deferred to the regular admission pool.

Deferred Acceptance

After a student is admitted to a college, the student may ask the college for permission to defer the student’s acceptance for a year. Students often use this gap year for study abroad.

Delinquency

A delinquency is a failure to make a payment on time. On-time payment is usually defined as a payment received by the due date, although some lenders provide a grace period during which late payments are still considered to be on time. For example, a late fee will be charged in the direct loan program if a borrower fails to make a required payment within 30 days of the due date. In the FFEL program, the grace period is 15 days. Delinquencies are often measured in terms of the number of days that have passed since the payment due date (e.g., a 30-day delinquency, a 60-day delinquency and a 90-day delinquency). A serious delinquency is more than 90 days delinquent. If a private student loan is more than 120 days delinquent or a federal education loan is more than 360 days delinquent, the loans are considered to be in default.

Demonstrated Financial Need

Demonstrated financial need is the difference between the cost of attendance (COA) and the expected family contribution (EFC).

Dependency Override

A dependency override changes a student’s status from dependent to independent. College financial aid administrators may perform a dependency override on a case-by-case basis when justified by documented unusual circumstances.

Dependency Status

A student’s dependency status is either dependent or independent. A dependent student must include parental information on financial aid application forms. Independent students do not report parental information on their financial aid application forms.

Dependent Student

A dependent student is a student who does not qualify as an independent student. Dependent students must report parental income and asset information on the FAFSA.

Depreciation

Depreciation occurs when the value of an asset is reduced over the useful life of the asset.

DHS

U.S. Department of Homeland Security

Diploma Mill

A diploma mill is an unaccredited institution that, for a fee, awards bogus diplomas and degrees.

Direct Loan

A direct loan is made under the William D. Ford Federal Direct Loan Program, where funds for federal education loans come from the U.S. Treasury through the U.S. Department of Education. The Direct Loan program started with the 1992-1993 academic year.

Disability

A borrower with a medically-determinable physical or mental impairment that prevents the borrower from engaging in substantial gainful activity is considered to have a total and permanent disability if the disability is expected to result in death, has lasted for a continuous period of at least 60 months or is expected to last for a continuous period of at least 60 months. Veterans who have been determined by the federal Veterans Administration (VA) to be unemployable because of a service-related disability may also be considered to have a total and permanent disability. Borrowers with a total and permanent disability may have their federal education loans discharged.

Disbursement

Disbursement is the payment of student aid funds. After student aid funds are applied to institutional charges such as tuition, fees, room and board, any remaining funds are refunded to the student to pay for other college costs, such as books, supplies, transportation and miscellaneous / personal expenses.

Discharge

Discharge is the cancellation of a debt, usually because of the borrower’s inability to repay the debt. Examples include the death discharge and the total and permanent disability discharge.

Discounted Sticker Price

Grants and other gift aid are effectively a discount on the sticker price of a college education.

Discretionary Income

Discretionary income is the amount by which the borrower’s adjusted gross income (AGI) exceeds a minimal standard of living, such as the amount by which the borrower’s AGI exceeds 150 percent of the poverty line.

Dishonorable Discharge

A veteran who has been discharged with a character of service other than “Dishonorable” is considered to be an independent student on the FAFSA.

Dislocated Worker

A dislocated worker is an employee who has been laid off or received a layoff notice from his or her job because of a permanent closure of, or substantial layoff at, a plant, facility, or enterprise, or who is employed at a facility where the employer has announced that the facility will close within 180 days, or who is receiving unemployment benefits due to being laid off and is unlikely to return to a previous occupation, or who is self-employed but is unemployed due to economic conditions or a natural disaster, or who is a displaced homemaker. Note that employees who voluntarily quit their jobs are not considered to be dislocated workers.

Displaced Homemaker

A displaced homemaker is someone who previously provided unpaid servicers to the family, such as a stay-at-home parent, who was supported by income from another family member but is no longer supported by that income, who is unemployed or underemployed, and who is having trouble finding or upgrading employment.

Displacement

Award displacement occurs when receipt of one form of financial aid, such as a private scholarship, leads to a reduction in other forms of financial aid, especially grants and scholarships. For example, federal and state statutes and regulations, as well as institutional policies and practices, may require revisions to a student’s need-based financial aid package when the student receives a private scholarship. Institutional policies concerning award displacement are often described in a formal outside scholarship policy. When a private scholarship replaces loans, the net price decreases and the student derives a financial benefit from winning the scholarship. When a private scholarship replaces grants, the net price remains unchanged.

Disposable Pay

The part of a borrower’s compensation that remains after subtracting any amounts required by law to be withheld.

Distribution

A distribution is the withdrawal of money from an account. Distributions from retirement plan accounts may include taxable and untaxed income.

Dividend

A dividend is a periodic payment from a company to its shareholders.

Divorce

A divorce is the permanent legal ending of a marriage.

DL

Direct Loans

DNW

Discretionary Net Worth

DOB

Date of Birth

Doctorate

A doctorate is an advanced graduate degree, such as a Ph.D. or Ed.D.

Documentation

Documentation is a record of information or evidence.

DOE

U.S. Department of Energy, not the U.S. Department of Education

Dollar-Cost Averaging

Dollar-cost averaging is an effective investment strategy that invests a fixed dollar amount at regular intervals. When the cost of an investment is high, fewer shares are purchased. When the cost of an investment is low, more shares are purchased. This follows a strategy of “buy low, sell high.”

DOMA

Defense of Marriage Act

Dormitory

A dormitory or dorm is a residence hall at a college or university that provides bedrooms for a large number of students. Individual bedrooms may be shared by one, two or three roommates. Bathrooms and dining facilities may be communal.

Double Deposit

A double deposit occurs when a student accepts offers of admission at two or more colleges, paying the deposit at each.

DRN

Data Release Number, a 4-digit number

DRT

IRS Data Retrieval Tool

Drug Conviction

A student who has been convicted of the sale or possession of illegal drugs while receiving federal student aid may have his or her eligibility for federal student aid suspended for one or two years or for an indefinite period.

Dual Enrollment

Dual enrollment programs allow high school students to take college courses and simultaneously earn credit toward a high school diploma and a college degree or certificate. Students who are enrolled in a dual enrollment program are not eligible for federal student aid because they are still enrolled in high school.

Due Date

The due date is the date an installment payment is due. If a payment has not been received by the due date, it is considered to be late.

Due Diligence

Due diligence is a set of steps that a lender must take in servicing a loan, such as a required number of attempts to contact a delinquent borrower.