Academic Year - The time frame schools use to measure a quantity of study. Some schools' year consists of a fall and spring semester. Some consist of quarters. Academic years vary from school to school and even from program to program at the same school.
Accrued Interest - Interest that grows or accumulates on the unpaid balance of your student loan.
Actual Interest Rate - The Annual Interest Rate a lender charges on the loan. It may be equal or less than the Applicable Interest Rate.
Add-on Form - A form that allows a borrower to add any loans to their consolidation. The borrower has 180 days to complete and submit the form after the consolidation loan was first disbursed.
Applicable Interest Rate - The maximum Annual Interest Rate that a lender may charge on a loan.
Annual Loan Limit - The maximum Federal Stafford, SLS or PLUS loan amount that a guarantor may guarantee for a borrower in an academic year.
Annual Percentage Rate (APR) - The effective interest rate including fees and other charges on a loan.
Auto Withdrawals - A secure process that allows borrower to have payments automatically deducted from a checking or savings account. Commonly referred to as "ACH" or Automated Clearing House.
Billed Interest Due Amount - The amount of accrued interest on your remaining principle balance.
Borrower - Individual who signed and agreed to the terms in the promissory note and is responsible for repaying a loan.
Borrower-specific Deferment - The federal requirement that borrower eligibility is applied to all his/her loans, rather than to each separate loan.
Capitalization - The process of adding any accrued and unpaid interest back to the original principal amount borrowed. Capitalization policies vary by loan program, but usually occur after the student graduates and his/her grace period is expired.
Campus-based Aid - Financial aid programs that the government provides the school. The government provides a fixed annual allocation that is awarded to deserving students. Examples are the Supplemental Education Opportunity Grant (SEOG) and Federal Work-Study.
Cancellation - Releases a borrower from the obligation to repay his or her loan. There are cancellation periods:
Cancellation Options - There are some options that may qualify for cancellation.
Claim - An application made to a guarantor for payment of an insured student loan for loss of payment due to borrower death, disability, bankruptcy, default or school closure.
Collection - When the borrower's loan is defaulted it goes into collection. Lenders, agencies or guarantors will take action.
Collection Charges - Costs such as attorney's fees, court costs and telegrams incurred by the lender on overdue payments sent to collection.
Collateral - Lenders' security for loans made and may become property of the lender if borrower fails to repay.
College Scholarship Service (CSS) - A division of the College Board that collects information used by colleges, universities and scholarship programs to award private financial aid.
Consolidation - Refinancing multiple education loans into one new loan with a new repayment term, monthly payments and interest rates.
Cosigner - A person who signs a promissory note in addition to the borrower and is responsible for the obligation if the borrower does not pay.
Default - Failure to repay a loan according to the terms agreed to when you signed a promissory note. For the FFEL and Direct Loan programs, default is more specific-it occurs if you fail to make a payment for 270 days if you repay monthly or 330 days if your payments are due less frequently.
ADDITION: In many cases, default can be avoided by submitting a request for a deferment, forbearance, discharge or cancellation and by providing the required documentation.
Deferment - If the borrower is eligible, s/he may suspend loan payments for a period of time. The time frame is usually three years. The borrower has to reapply every six months. The government will pay the interest on the student loan during the suspension.
Delinquency - Failure to make a monthly payment on time. The loan goes into delinquency after the first missed payment.
Dependent Student - A student who does not meet any of the criteria for an independent student. An independent student one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents other than a spouse.
Disbursement - The release of loan amounts to the school for the borrower. Disbursements are usually of equal amounts co-payable to the borrower and the school.
Discharge - The borrower has been released from their obligation to repay the loan.
Disclosure Statement - Statement of the total cost and amount of the loan, including the interest rate and any additional finance charges. Consolidation customers receive their disclosure statement from the new servicer once the loans have been funded.
Economic Hardship - A situation where the borrower is working full-time but earnings are below the poverty line for a family of two. It also exists if the borrower's monthly payments are equal or greater than 20% of your total monthly gross income. At this point, the borrower may apply for deferment.
Electronic Signature - A secure process that allows a customer to sign their Promissory Note electronically over the Internet. This process may vary to a certain extent depending on the lender, but must follow federal rules and guidelines.
Entitlement Program - Programs that award funds to qualified applicants. The Pell Grant is an example of such a program.
Extended Repayment Plan - A repayment plan with a longer period of time to pay the loan at a lower monthly payment. The qualified loan amount for the Extended Repayment Plan is between $30,000-$39,999. The term cannot exceed 25 years.
FAFSA (Free Application for Federal Student Aid) - The form a student must complete to apply and be qualified for federal Title IV financial assistance, including FFELP loans. The student must include proof of household income so the Expected Family Contribution (EFC) can be calculated.
FDLP or FDSLP - Federal Direct Student Loans Program (William D. Ford) is the government and the Department of Education. Stafford and PLUS loans may be issued directly from the government rather than through commercial lenders.
FFELP (Federal Family Education Loan Program) - The program includes Stafford, PLUS, SLS loans and Consolidation Programs. The loans are funded by commercial lenders, guaranteed by guarantors, and reinsured by the government.
Federal Loan - A loan guaranteed by the government.
Federal Rights - A federal student loan provides a borrower with federal rights, including consolidation, a right to make monthly payments, deferment/forbearance, loan cancellation/discharge and forgiveness.
Federal Student Aid Information Center (FSAIC) - The office associated with the Department of Education that assists students and families when applying for financial aid through the federal government.
Financial Aid - Monetary assistance in forms of scholarships, grants, work-study and loans for education.
Fixed Interest - The interest rate on the loan remains the same for the life of the loan.
Forbearance - If the borrower is eligible, s/he may suspend their loan payments for a period of time. Usually the time frame is three years. The borrower has to reapply every six months. The government will NOT pay the interest on the student loan during the suspension. See Mandatory Administrative Forbearance and Mandatory Forbearance.
Forgiveness - The conditions for federal loan forgiveness or discharge are based on the profession and demographic area of the borrower. Being a full-time teacher (in designated studies or demographic areas), nurse or medical technician, VISTA or Peace Corps volunteer, or a member of the U.S. Armed Forces may qualify the borrower for 50%-100% forgiveness on Perkins loans only.
Full-time Student - A student enrolled in an institution of higher education for 12 or more hours a semester. Each school varies, but it is generally for 12 hours or more a semester.
Grace Period - This is a period of time that begins after the first day a student separates from school, or the borrower drops below half-time. The borrower is not obligated to make payments on their loans until this period is up. If the borrower has a Stafford Loan, the period is six months. A Perkins Loan grace period is nine months.
Graduated Repayment - A repayment plan designed to offer financial relief for recent graduates. The monthly payments at the beginning of repayment are lower, interest only payments. Usually, a borrower can make interest-only payments for two to four years. Payments then increase to interest and principle.
Half-time Student - Each school varies, but generally a half-time student is attending school for six hours a semester.
HPSL Loan (Health Profession Student Loan) - These are low-interest loans for graduate health profession students with exceptional financial need.
Independent Student - An independent student is one of the following: at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents other than a spouse.
In-school - The time period student is attending school.
In-school Deferment - The student is not obligated to repay the loan while attending an approved institution of higher education. The borrower must request an in-school deferment form from the lender, complete it, and send it back as soon as possible.
Interest-only Payment - A payment that covers accrued interest on the loan balance only. For any payments larger than the required interest-only amount, the additional money paid goes directly towards the principle of the loan.
Interest Rate Cap - The maximum annual interest rate that a lender can charge on a loan (under the Higher Education Act). For most Federal Loans the current cap is 8.25%.
Lender - A financial institution that provides funds to the borrower.
Mandatory Administrative Forbearance - Loan forgiveness that a lender is required to grant for the time the borrower is involved in local or national emergency or military mobilization, or also if the borrower resides in a designated disaster area.
Mandatory Forbearance - Loan forgiveness that a lender is required to grant for medical or dental internships and residencies after the borrower's in-school deferment has expired.
Multiple Lenders - When a borrower has loans through two or more commercial lenders.
National Student Loan Database System (NSLDS) - Federal database of student loan borrowers operated by the U.S. Department of Education. The loan information is available for federal loans ONLY.
The NSLDS website is generally available 24 hours a day, seven days a week. By using your PIN, you can get information on federal loan and Pell Grant amounts, outstanding balances, the status of your loans, and disbursements made. You can access NSLDS at www.nslds.ed.gov.
NSL - Nursing Student Loan
PLUS Loan (Parent Loan for Undergraduate Students) - A federally insured loan for parents of dependent students.
PDF (Portable Document Format) - A file format compatible with Adobe Acrobat Reader that allows a user to download forms from the Internet.
Perkins Loan - A low, fixed-rate loan issued from and maintained directly from the school. This type of loan is made to students with financial need. This loan may also be eligible for forgiveness, given the borrower is eligible. See Forgiveness.
Post-secondary - Refers to all programs for high school graduates, including two- to four-year colleges, vocational schools, and technical schools.
Principle - The loan amount without accrued interest.
Principle Balance - The amount on the loan that interest is charged to. When a borrower repays the loan, they are making principle balance payments-paying the accrued interest as well as the principle amount.
Private Loans - Educational loans not guaranteed by the government against default. Terms and conditions of private loans are set by the lender.
Promissory Note - A promissory note is a binding legal document you sign when you get a student loan. It lists the conditions under which you're borrowing and the terms under which you agree to pay back the loan. It will include information on how interest is calculated and what deferment and cancellation provisions are available to the borrower. It's very important to read and save this document because you'll need to refer to it later when you begin repaying your loan or at other times when you need information about provisions of the loan, such as deferments or forbearances.
Rehabilitation - Process a borrower must go through to "cure" a defaulted loan, typically requiring them to make 12 consecutive on-time payments.
Refinance - Revising the payment term and sometimes the interest rate from a previous consolidation.
Repayment Period - This period begins after the grace period has expired. The interest for all loans is accruing and the monthly payment amount is due. PLUS loans are in repayment period the date the loan is fully disbursed; they have no grace period.
Scholarship - Financial Assistance awarded when a student demonstrates academic achievement. The student must maintain their GPA to the standard that the student and school have agreed upon. Scholarships are not repaid.
Section 529 Plans - State post-secondary tuition savings plans, named for the section of the IRS code authorizing them.
Servicer - An organization that administers and collects loan payments. It may be the loan holder or an agent acting on behalf of a lender.
Single Lender - When a borrower has all their loans through the same lender.
Spousal Consolidation - This is a program for a married couple to consolidate their loans together into one. BOTH parties must be qualified for exercising federal rights on the loans at all times.
Stafford Loans - Subsidized and unsubsidized loans issued to post-secondary students and guaranteed by the federal government. These are the most common types.
Standard Repayment Plan - A repayment plan in which the borrower pays interest and principle throughout the life of the loan.
Subsidized Loan - A loan that the government pays interest on while the student is in school, in grace, and in authorized deferment. Subsidized loans include Direct Subsidized, Direct Subsidized Consolidation Loans, Federal Subsidized Stafford Loans and Federal Subsidized Consolidation Loans.
TERI Loan - An alternative loan issued by the Educational Resource Institute for students, parents, and other credit-worthy individuals. This is a type of private educational loan.
Title IV - A section of the Higher Education Act of 1965, as amended, that authorizes federal loan, work, and grant educational financial assistance programs.
Treasury Bill - Treasury Bills are short-term securities that mature in one year or less from their issue date. The interest rate on many federal student loans is based off this bill.
Unsubsidized Loan - The borrower is responsible for paying on the interest of the loan during in-school, in-grace and deferment periods. Unsubsidized loans include: Direct Unsubsidized Loans, Direct PLUS Loans, Direct Unsubsidized Consolidation Loans, and Federal Unsubsidized Stafford Loans, Federal PLUS Loans, and Federal Unsubsidized Consolidation Loans.
U.S. Department of Education - The government agency that administers federal student financial aid programs, including the Federal Pell Grant, the Federal Work-Study Program, the Federal Perkins Loan, the FFELP, and the FDLP.
Variable Interest Rate - An interest rate that adjusts periodically based on key market conditions.
Suggested Definitions for Glossary of Terms
From the Federal Student Aid website: www.studentaid.ed.gov
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