SAGE Scholars Glossary
- 529 Plans
- A plan that allows individuals to set aside money in a special account designed to pay for future college expenses. Funds in the account grow tax-deferred, and withdrawals used for college expenses are exempt from federal income taxes. Parents are permitted to change from one state plan to another once a year with no penalty. Many states also offer tax incentives for these plans.
- Annuity
- A contract or agreement by which one receives fixed payments on an investment for a lifetime or for a specified number of years.
- Equity-Indexed Annuity
- A contract with an insurance company that promises periodic payments keyed in a specified manner to a stock market index. Unlike variable annuities, equity-indexed annuities specify a guaranteed minimum return that is typically around 2%. These contracts may also specify an upper limit (cap) on the return that is paid. Indexing methods vary, and surrender charges often apply to early withdrawals.
- CDs
- A certificate from a bank stating that the named party has a specified sum on deposit, usually for a given period of time at a fixed rate of interest.
- Expected Family Contribution (EFC)
- A formula has been created, approved by the government, which most heavily counts family income (including the student), places somewhat less emphasis on assets, and pays very little attention to family debt. After examining these factors, a figure is produced, called the Expected Family Contribution, or EFC. This figure indicates how much money, on an annual basis, parents are considered to be able to afford to pay for their children’s education. All colleges and universities, public or private, must use the EFC figure when awarding government scholarships, loans, or work-study money to students.
- Guaranteed Scholarship
- A Guaranteed Scholarship earned from Tuition Rewards Points is the minimum amount that a SAGE Scholars member College or University will award to a student. The amount that a given school will accept varies based on the amount of tuition at the school and can be either stacked or blended with any other institutional scholarship. The guaranteed scholarship is worth up to one full year's tuition, divided evenly over four years.
- Mutual Funds
- An investment company that continually offers new shares and stands ready to redeem existing shares from the owners. Because the shares are purchased directly from and are sold directly to the mutual fund, there is no secondary market in these companies' stock. Individual mutual funds vary substantially in terms of the types of investments, their sales charges (many have none), and their management fees.
- Need vs Non-need based Financial Aid
- Private colleges use financial aid for two purposes
- Need based is used to help students pay for college who otherwise could not afford to attend.
- Non-need based is used to attract more desirable students, and the definition of “more desirable” (athletes; highest grades; economically, geographically, racially diverse; children of alumni, etc.) is left to each college to determine. Non-need based aid often is given as a discount off full tuition
- Plus Student Loans
- The Parent Loan for Undergraduate Students (PLUS) is a part of the Federal Family Education Loan Program (FFELP). A PLUS loan allows parents to fund 100% of the cost of their student's education at a low interest rate. It's a cost-effective alternative to using savings, income, retirement accounts or home equity loans for education costs.
- Stafford Loan
- A Stafford Loan is a loan from the federal government to a student. All Stafford Loans are either subsidized, with the government paying the interest on the loan while the student is still in school, or unsubsidized, in which case the student pays all the interest. However, payments on unsubsidized loans can be deferred until after graduation. A student must show financial need to receive a subsidized Stafford Loan.
- Tuition Rewards Points
- Simply put, one Tuition Rewards Point is equivalent to a one dollar guaranteed scholarship at SAGE Scholars member Colleges and Universities. The total scholarship is equal to up to one full year's tuition - so the amount accepted by our members schools varies. The rewarded scholarship is spread evenly over four years. Colleges and Universities may decide to award additional scholarships as they see fit. For example, if a year's tuition at the school is $15,000, and the college awards a scholarship to your student of $5,000, then the college is obliged to accept 10,000 Tuition Rewards Points from your SAGE Scholars account to bring the total reward up to $15,000. Tuition Rewards Points have no cash value.
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