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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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R2T4

Return of Title IV Funds

RA

Research Assistantship

Reach School

A reach school is a college or university where the student’s academic performance falls short of the academic performance of the school’s typical freshman class. A student is unlikely to be admitted to a reach school.

Reaffirmation

A reaffirmation is a legal agreement by a borrower that acknowledges the validity of a repayment obligation.

Reauthorization

Some federal legislation expires and must be periodically reauthorized. For example, the Higher Education Act of 1965 is reauthorized every five years or so.

Recourse Fee

A recourse fee is a fee paid by a college or university to compensate the lender for a high risk of default by the school’s students. Recourse fees are a form of risk sharing by colleges and lenders.

Recourse Loan

A recourse loan is a subprime loan where the college or university pays a recourse fee to the lender to compensate the lender for the high risk of default.

Refund

A refund is money disbursed to the student from a student’s account at the college after the student aid funds are applied to institutional charges, such as tuition and fees, leaving a credit balance in the student’s account.

Regulation B

Regulation B bans discrimination by lenders according to race, color, religion, national origin, sex, marital status or age.

Regulation Z

Regulation Z is a regulation of the Federal Reserve Board that implements the Truth in Lending Act. It defines, among other things, the calculation of APR and establishes disclosure requirements for private student loans.

Rehabilitation

Loan rehabilitation is a process that returns a defaulted federal education loan to active repayment status and clears the default from the borrower’s credit history. There are two ways to rehabilitate a defaulted federal education loan. One involves making 9 out of 10 consecutive, on-time, full, voluntary, reasonable and affordable monthly payments on the loan. The other involves consolidating the loan with a requirement that the borrower repay the loan in the income-based repayment plan. Rehabilitation is a one-time opportunity to remove the default from the borrower’s credit history and regain eligibility for federal student aid. If the borrower defaults again, the only option to clear the default is to repay the debt in full.

Rejection

A student whose application for admission is rejected by a college is denied admission to the college. The student may receive a rejection letter telling him or her about the admission committee’s decision.

Renewable Scholarship

A renewable scholarship is available for all four years of the student’s undergraduate education, instead of for just one year. Scholarship recipients may have to maintain satisfactory academic progress, write annual reports to the sponsor and/or participate in particular activities to retain the renewable scholarship.

Renewal FAFSA

Students who have filed the FAFSA during the previous year may file a Renewal FAFSA. The Renewal FAFSA prefills the answers to some questions on the FAFSA with answers submitted during the previous year. This reduces the amount of time required to complete the Renewal FAFSA.

Repayment Period

The repayment period is when a borrower must begin repaying his or her student loans. The repayment period begins after the end of the grace period.

Repayment Plan

A repayment plan determines the monthly payments on a loan. Examples include standard repayment, extended repayment, graduated repayment, income-contingent repayment, income-based repayment, income-sensitive repayment and pay-as-you-earn repayment.

Repayment Schedule

The repayment schedule is a schedule of the monthly or quarterly payments on a loan, showing the due date and amount for each payment.

Repayment Term

The repayment term is the number of monthly or quarterly payments, usually expressed as a number of years in repayment.

Repossession

Repossession involves a lender seizing an asset that was specified as security on the loan when the borrower fails to make a payment when due. For example, an auto lender will repossess the automobile when the borrower fails to make timely payments on the auto loan.

Research Assistantship

A research assistantship (RA) is a form of financial aid where a graduate student receives a full or partial tuition waiver and perhaps a living stipend in exchange for performing research duties.

Reserve Officers’ Training Corps (ROTC)

ROTC is a program offered by the military and available at some colleges. ROTC offers scholarships to students who agree to serve in the military after they graduate. The program combines a military education with college study leading to a bachelor’s degree.

Reset

A variable interest rate will reset (change) periodically according to changes in the underlying index rate.

Residence Hall

A residence hall is a dormitory or dorm 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.

Residency Requirement

A residency requirement is the amount of time a student has to live in a state before he or she is eligible for in-state tuition prices and state aid at public colleges and universities.

Retention Rate

The retention rate is the percentage of first-time, first-year undergraduate students who return to the college the next year.

Return of Title IV Aid

Return of Title IV (R2T4) is a complicated set of regulations that determine how much Title IV federal student aid funds must be returned when a student withdraws. Generally, a student is considered to have earned his or her federal student financial aid on a proportional basis up to 60% of the way through the academic term, at which point the student is considered to have earned 100% of the federal student financial aid funds. Any unearned aid must be returned to the source. A preference order returns loan funds before returning grant funds, to ensure that the student is left with as little debt as possible.

Return on Investment

A return on investment (ROI) is the income, capital gains or other financial benefit that an investor derives from an investment.

Rising

A student who moves from one academic year class level to another. For example, a student who has completed his or her high school junior year would be called a “rising high school senior.”

Risk

Risk is exposure to potential loss or other harm to an investment.

Robert C. Byrd Honors Scholarship Program (Byrd Program)

The Byrd Program was a federally-funded merit-based scholarship program established in 1985. Funding for the program was eliminated starting with the 2011-2012 academic year after Senator Byrd’s death in 2010.

ROI

Return on Investment

Rolling Admission

A college with a rolling admission policy evaluates applications as they are received during a long period of time (in some cases, throughout the year). Admissions decisions are made within a few months of receipt of a completed admissions application. Some rolling admissions colleges admit the students on a first-come, first-served basis. Admitted students may start throughout the year, usually at the start of the next academic term.

Room and Board

Room and board refers to housing and dining costs paid by a student who lives on campus in a college’s dormitories or other college-owned or controlled residences.

ROTC

Reserve Officers’ Training Corps

Roth IRA

A Roth IRA is a type of retirement account in which after-tax money is invested and earnings grow on a tax-deferred basis. Qualified distributions are tax-free after the account owner reaches age 59 1/2.

rrta

RRTA is the Railroad Retirement Tax Act. It is a substitute for Social Security taxes for railroad workers.