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<strong>NOLA</strong> – Notice of Loan Approval, a paper copy of the MDHE' s loan guarantee statement which schools may receive if profiled for this service.

<strong>MASFAP</strong> – Missouri Association of Student Financial Aid Personnel. May be found on the world wide web at www.masfap.org.
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<strong>Voluntary Flexible Agreement (VFA)</strong> – Individually negotiated contract between a FFEL Program guarantor and the U.S. Department of Education. On October 7, 1998, President Clinton signed the Higher Education Amendments of 1998 (P.L. 105-244), authorizing the Department of Education to enter into no more than 6 VFAs. A VFA may modify the guarantor provisions under sections 428 (b) and (c) of the Higher Education Act, such as the issuance of insurance on FFEL Program loans, defined default aversion activities, collection activities on defaulted loans, guarantor revenue and funding models, and other requirements. For more information on VFAs, see Volume 64, No. 144 of the Federal Register, published July 28, 1999.
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<strong>FP</strong> – Type of Dear Colleague Letter addressed to FFEL Program participants.
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Child, Sir Francis, 1684!-1740 (B3)<br />In 1721 he became head of the family banking firm Francis Child & Co.; elected Member of Parliament for Middle###### in 1727 and 1734, Lord Mayor of London in 1731. He introduced promissory banknotes in 1729, thereby abandoning the GOLDSMITH BANKING SYSTEM.
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fix(G1)<br />Twice daily fixing of the price of gold by the London gold market.

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implementation lag (E6)<br />The time it takes to institute a discretionary change in policy. These lags are usually shorter for MONETARY POLICY than for FISCAL POLICY as in the former case a sudden announcement of a change in interest rates can be made, whereas fiscal changes often need legislation.<br /><em>See also:</em> recognition lag
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<strong>Repayment period</strong> – The period during which payments of principal and interest are required. The repayment period follows any applicable in-school or grace period (for Stafford Loans) and excludes any period of authorized deferment or forbearance.
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<strong>GB</strong> – Graduate borrower, a loan type within CommonLine file specifications used on/after July 1, 2006 to designate a PLUS Loan made to a graduate or professional student as a Grad PLUS Loan. Grad PLUS Loans display within the MDHE' s online product, MODEL Direct, as “GB.”
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firm-specific asset (L2)<br />Tangible and intangible property of use only to a particular firm. These assets enhance the uniqueness of a firm and its competitiveness but affect its ability to borrow as specific assets cannot be redeployed so are unsuitable as collateral for loans.<br /><em>See also:</em> specific training
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deemed tax (H2)<br />US corporate tax concession equal to the amount of total income already paid to a foreign government. If a US corporation has paid $10 million tax abroad on a pretax income of $20 million when it remits $5 million in dividends to the USA its deemed tax will be $10 million x 0.5.

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currency swap (F3)<br />A capital market exchange of a loan in one currency for a loan in another, e.g. a fixed interest dollar loan for a floating interest loan in Swiss francs.
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contingent market (D4, Gl)<br />A market, particularly an insurance market, which transfers risk from those facing it to those who are prepared to undertake it. An example of this is when a ship owner faced with the risk of the loss of a ship can transfer the risk to LLOYD'S insurers. If the insurance market is in equilibrium, the insurance premium should settle at the rate which equates the marginal cost of insurance to the marginal benefit of losing an undesired risk.
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standard deviation (C1)<br />A measure of the dispersion of values of a variable about its ARITHMETIC MEAN that is calculated as the square root of the sum of the differences between each of those values and the arithmetic mean divided by the number of values minus one.<br /><em>See also:</em> mean deviation; variance
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<strong>CL4</strong> – CommonLine Release 4, the most widely used CommonLine file format within the FFEL Program. The CommonLine Release 5 (CL5) formats, although in existence for many years, were never widely adopted and implemented by FAMS vendors or FFEL Program participants.
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loanshark (G2, K4)<br />A person lending money at exorbitant rates of interest usually to borrowers with no collateral and no access to conventiona l lenders such as ba n ks. This form of lending has long been a major activity of organized crime.

<strong>Title IV</strong> – The section of the Higher Education Act of 1965, as amended, that authorizes federal student loan, work, and grant programs.
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<strong>Parent</strong> – For the purpose of PLUS Loan eligibility, a parent is defined as a student' s natural or adoptive mother or father, or the spouse of a parent who remarried if that spouse' s income and assets would be required for completion of the FAFSA.

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foreign trade zone (F1)<br />A tariff-free area, often around a port or an airport, which, by allowing the dutyfree import and export of goods, can make manufactures flourish.

international reserves (E5)<br />A CENTRAL BANK'S holdings of foreign currencies, gold and SPECIAL DRAWING RIGHTS which can be used in foreign exchange markets to change the value of a currency.
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<strong>HEA</strong> – the Higher Education Act of 1965, as amended, which created the federal student aid programs.

special drawing rights (F3)<br />International reserve assets under the control of the INTERNATIONAL MONETARY FUND available for settling intercount ry indebtedness since 1968. This 'paper gold' was created after the Washington Communique of March 1968 closed the Gold Pool because leading countries saw no need for more official holdings of official gold. Special drawing rights have a gold guarantee and carry a small amount of interest; they are 70 per cent wholly owned and 30 per cent credit. Over a five-year period each pa rticipant country must keep, on average, 30 per cent of its reserves in special drawing rights to avoid a few countries having all. On 1 January 1970, $3,500 million were distributed, followed by $3,000 million on 1 January 1971 and $3,000 million on 1 January 1972. A count ry can use its special drawing rights to finance a BALANCE OF PAYMENTS deficit or to support its exchange rate. When drawing on them, a country informs the managing director of the IMF who finds a par tner to swap special drawing rights for currency. Special drawing rights grew to about one-twentieth of world reserves within twenty years of their creation. Without the large US balance of payments deficit and the resources of the EURooor.. LAR market, a larger volume of special drawing rights would be needed.

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Galbraith, john Kenneth, 1908- (B3)<br />A Canadian American liberal economist who has achieved astounding publishing success in his books on capitalism, the Great Depression, the affluent society and the industrial state. With a training in agriculture in Ontario and in agricultural economics at Berkeley, California, he has taught at Harvard University since 1949. His early work on industrial price rigidities and on price controls made use of his wartime experience as head of the Price Section of the US Office of Price Administration. In 1952, American Capitalism launched his career as a best-selling economic guru. His works contain strikingly novel analyses, e.g. of consumers' couNTERVAILING POWER to large oligopolists, of the contrast between private affluence and public squalor and of the managerial nature of modem capitalism. Outside the university, he was a leading adviser to President John F. Kennedy and his ambassador to India. Much of his writing has the broad sweep of an eighteenth-century economist who has espoused the mixed economy: this approach is not without its critics as modem economists are often irritated by his avoidance of the empirical testing of his theories. But it is greatly to his credit that one of his most thorough books is his late survey of economic thought in 1987.<br /><em>Reference</em><br />Galbraith, J.K. (1938) Modern Competition and Business Policy, Boston, MA: Houghton Mifflin; London: Hamish Hamilton.<br /> - (1952) American Capitalism: the Concept of Countervailing Power, London: Hamish Hamilton.<br /> - (1952) A Theory of Price Control, Cambridge, MA: Harvard University Press.<br /> -(1954) The Great Crash 1929, Boston: Houghton Mifflin; London: Hamish Hamilton.<br /> - (1958) The Affluent Society, London: Hamish Hamilton.<br /> - (1967) The New Industrial State, Boston: Houghton Mifflin; London: Hamish Hamilton.<br /> - (1973) Economics and the Public Purpose, Boston: Houghton Mifflin; London: Hamish Hamilton.<br /> - (1987) A History of Economics: The Past as Present, London: Hamish Hamilton.<br /> Reisman, D.A. (1980) Galbraith and Market Capitalism, New York: New York University Press.
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<strong>MDHE e-distribution list</strong> – The Missouri Department of Higher Education' s electronic news service. To sign up for this service, visit http://www.dhe.mo.gov/mdhedigest/signup.shtml.

wage contour (B)<br />The connected wage rates offered by firms with INTERNAL LABOUR MARKETS to persons in the E)..'TERNAL LABOUR MARKET. These are the 'key rates' for the few jobs at which a person can enter a firm; they are connected into a contour because competing firms in the external labour market cannot get out of line with other employers' wage offers.<br /><em>Reference</em><br />Dunlop, J. J. (1957) 'The task of contemporary wage theory', in G.M. Taylor and F.C. Pierson (eds) New Concepts in Wage Determination, pp. 117-39, New York: McGraw-Hill.

<strong>DAAR</strong> – Default Aversion Assistance Request, the request sent by the lender to the MDHE to request DAA when a borrower is more than 60 days delinquent.
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deprivation. It is also argued that excessive international AID can have the same effect on whole countries.
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sovereign risk (G1)<br />The rating given to an issue of government bonds by Standard & Poor or another rating agency. The grades are AAA, AA, A, BBB, BB and B.

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<strong>Accrued interest</strong> – Each day interest is calculated on the unpaid principal balance of a loan and increases (accrues). Interest accrues on a subsidized Stafford Loan after the grace period is completed and the borrower enters repayment. For unsubsidized Stafford, parent PLUS, and Grad PLUS Loans, on the other hand, interest begins to accrue after the first disbursement of the loan.
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Fisher equation of exchange (E5)<br />A famous statement of the QUANTITY THEORY oF MONEY as MV = PT. M is the stock of money, P the general price level, V the velocity of circulation and T the volume of transactions.
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postmodern economics (A1)<br />An epistemological critique of modern economic theory that takes into account the community producing such knowledge. It attacks the use of a deterministic 'scientific' methodology economics and a GENERAL EQUILIBRIUM approach in favour of recognizing indeterminacy, uncertainty, the randomness and multiplicity of possible causes. In its analysis of LATE CAPITALISM it recognizes the fragmented nature of modem life and the many motivations inspiring economic conduct.<br /> <br /><em>Reference</em><br />Cullenberg, S., Amariglio, J. and Ruccio, D.F (2001) Postmodernism, Economics and Knowledge, London and New York: Routledge.
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<strong>FT</strong> – Full Time, an enrollment status indicating the student is carrying a full academic workload as determined by the school.
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<strong>LTH</strong> – Less than half time, an enrollment status indicating the student is carrying less than a half-time academic workload, as determined by the school. Students who are less than half time are not eligible to borrow FFEL Program loans.
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cap (E4, Gl)<br />The maximum interest rate paid on a floating rate security by its issuer. The seller gives funds to cover interest paymen ts over a specified rate. Also applies to an adjustable ra te mortgage.<br /> See also: collar; floor capacity {D2, E4)<br />1 The maximum output that a firm or a national economy can produce from its existing supply of factors of production. A firm can increase its capacity by enlarging its labour force or its capital stock.<br /> 2 The maximum amount of money which a financial institution can lend.<br /> See also: capital utilization capacity charge (D4, M2)<br />A component of the price of the goods or services of public enterprises which is expected to cover the costs of fixed capital.<br /> capacity ratio (J2) see volume ratio capacity uti lization (DO, EO)<br />The ratio of the actual output of a fll111, industry or national economy to its maximum output at a point in time. This ratio will fluctuate cyclically. A high degree of utilization will be a signal for more net investmen t.<br /> See also: accelerator principle; trade cycle capital (DO, EO)<br />1 Durable goods capable of producing a stream of goods or services over a period of time.<br /> 2 A factor of production distinct from land, the entrepreneur and the labour currently being used.<br /> 3 A sum of money which is invested in a business enterprise.<br /> 4 Accumulated expenditures giving rise to higher subsequent incomes, as in HUMAN CAPITAL.<br /> 5 Wealth.<br /> 6 Stored-up labour; exchange value which is becoming wealth, according to Marx.<br /><em>See also:</em> Cambridge con troversies; capital theory
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<strong>Proration</strong> – A reduction of the standard annual loan limit for an undergraduate student if the student' s program or remainder of the program is less than a full academic year in length.

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cumulative security (Gl )<br />A stock exchange security which accumulates unpaid interest or preference dividends so that the holder does not suffer from a year of poor profitability. In return for this greater security of income, many cumula tive PREFERENCE SHARES are without voting righ ts.
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<strong>EFA</strong> – Estimated Financial Assistance (or Aid), a school' s estimation of the amount of financial aid for which the student is eligible during any given enrollment period. EFA may include loan, grant, or scholarship aid from federal, state, institutional, or other sources.

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<strong>Application Send File</strong> – The CommonLine file type used to send application information to guarantors and/or other entities so that FFEL Program loans may be guaranteed and disbursed.

by the !NTERSTATE COMMERCE COMMISSION in 1985.<br /> <br /><em>Reference</em><br />Baumol, WJ. and Bradford, D.E (1970)<br />'Optimal departures from marginal cost pricing', American Economic Review 60: 265 - E3.

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<strong>DAAR</strong> – Default Aversion Assistance Request, the request sent by the lender to the MDHE to request DAA when a borrower is more than 60 days delinquent.

portfolio optimization (Gl)<br />Seeking the best trade-off between RISK and reward. A technique used to strike this balance is the mean variance optimization approach to diversification.

<strong>Repayment schedule</strong> – The legal addendum to the promissory note stating the terms of repayment and fulfilling disclosure requirements. The repayment schedule includes the total principal and interest due, the regular installment amount due, and the number of installments required to pay the loan in full. It also includes the interest rate, the due date for the first payment, and the frequency of installments.

mono-economics (A1)<br />The type of economic theory regarded as applicable to every type of economic system and country, irrespective of its stage of development and economic conditions. CLASSICAL and MARXIST ECONOMICS emphasize the theoretical implications of different stages of development.<br /><em>See also:</em> stages theory
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<strong>Consolidation</strong> – The combining of existing federal student loans into one new loan with an interest rate equal to the weighted average of the loans being consolidated. Consolidation can result in lower monthly payments but higher total debt.

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<strong>PRI</strong> – Participation Rate Index, a cohort default rate appeal option for postsecondary institutions with a low percentage of students participating in the federal loan programs.

<strong>ACE</strong> – American Council on Education.

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sovereign loan (GO)<br />A commercial loan to a sovereign state. Collateral is not offered with such loans and so there is little redress in the case of default. Much of the large foreign debts of Third World countries today are of this nature. The only way of enforcing repayment of capital and interest is by negotiation and by refusing further credit facilities.<br /><em>See also:</em> senior debt; world debt problem

books or accounts of a firm or other organization. Often this valuation is made at the time that assets are originally purchased with the consequence that changes in value caused by inflation are ignored.<br /><em>See also:</em> inflation accounting
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<strong>Unconsummated loan</strong> – Loan proceeds that the school returned to the lender prior to the borrower' s having cashed the check or the school having applied the proceeds to the student' s account.

optimum tariff (Fl, F3)<br />1 The tariff that will maximize the economic welfare of a country. Providing it is a large economy and the elasticity of supply is less than infinite, through changing the TERMS OF TRADE by imposing a ta riff it is possible to have increased revenue from trade despite its lower volume.<br /> 2 A TARIFF that increases a country's welfare by maximizing the return to its potential MONOPOLY or MONOPSONY power. This ta riff must be set at that rate which equalizes the social benefit and social cost of the marginal import. Optimum ta riffs have been recommended for less developed countries with a substantial monopoly in their export trade. If the optimum tariff is zero, then there is a strong case for FREE TRADE. Corden refers to an 'orthodox optimum tariff' as an export tax which changes the TERMS OF TRADE as the tax rest ricts exports and raises their prices.<br /> <br /><em>Reference</em><br />Corden, W.M. (1974) Trade Policy and Economic Welfare, Oxford: Clarendon Press.

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first-degree price discrimination (D4) Selling different units of output at different prices so that each price is the maximum amount of money a consumer will pay.<br /><em>See also:</em> price discrimination

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<strong>Repayment period</strong> – The period during which payments of principal and interest are required. The repayment period follows any applicable in-school or grace period (for Stafford Loans) and excludes any period of authorized deferment or forbearance.
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escalator clause (M2)<br />A clause in a contract designed to revise payments due under that contract in line with changes in a specified price index. In times of considerable inflation, these clauses are popular in labour and building contracts, as well as in tax schedules and social security benefits tables.<br /><em>See also:</em> cost of living adjustment

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