Glossary
Alphabetical listing of of Frequently-Used Terms
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A:
Academic Year
September through May, when most schools are in session.
Accrual Date
The date when a loan’s interest charges begin to add up.
Accrued Interest
Interest that accumulates on the unpaid principal balance of a loan.
Alternative/Private Loan
A loan that helps bridge the gap between the actual cost of financing a post-secondary education and the amount you’re able to borrow from federal loan programs. Private/Alternative Loans are not supported by the US government and carry different rates and terms than federal loans.
Amortization
The term that describes the process of paying back the principle balance of your loan over a period of time.
Annual Percentage Interest Rate
A calculation that reflects the total interest costs of a loan on an annual basis.
C:
Consolidation Loan
A loan that enables the borrower to combine a number of existing loans into one easy and convenient loan, usually to lower monthly payments.
D:
Default
Failure to repay a loan according to the terms agreed upon; Federal consolidation loans are considered to be in default if they delinquent for 270 days or more.
Deferment
The postponement of payments on the loan under certain conditions.
Delinquency
Failure to make loan payments when due, which may lead to default. Delinquency begins on the first missed payment and is cured only when all past due payments are brought current.
Direct loans
Loans made by the U.S. Department of Education (instead of a private lending institution) under the William D. Ford Federal Direct Student Loan Program. Direct Loans consist of Direct Subsidized Stafford Loans, Direct Unsubsidized Stafford Loans, Direct PLUS Loans and Direct Consolidation Loans.
Disclosure
A notification of the actual cost and terms of a loan, including the interest rate, principal balance, monthly payment, etc.
Disbursement
The release of loan funds to the school lender for delivery to the borrower, or in some cases, directly to the borrower, or to the original lender in the case of a consolidation loan.
Disclosure Statement
A statement of the actual cost of a loan, including the interest costs and loan fee (if any).
E:
E-signature
Electronic signature; an option that allows borrowers to electronically sign a document online.
F:
FDLP-Direct Lending
The William D. Ford Federal Loan Program offers Stafford and PLUS loans
directly from the federal government to select colleges and universities.
FFELP-Federal Family Education Loan Programs
The Federal Family Education Program Stafford and PLUS loans are financed by private lenders and guaranteed by the federal government.
Fixed Interest
Loan interest rates that remain the same over the loan’s lifecycle.
Forbearance
Temporarily allows the borrower to postpone principal and interest payments on a loan as a result of financial hardship. However, interest that accrues during the forbearance period is still the borrower’s responsibility.
G:
Grace Period
The time lapsed between a student’s graduation or leaving school full time for some other reason and the beginning of loan repayments – usually six to nine months.
Graduated Repayment
A schedule where the monthly payments are smaller at the start of the repayment period and gradually become larger over time.
I:
Income-Sensitive Repayment
A payment option under which the borrower’s monthly payment is annually adjusted, based on the borrower’s expected total monthly gross income received from employment and other sources during the repayment period.
L:
Lender
Any institution that loans money, such as banks, credit unions, savings and loan associations, organizations like Fundamental and schools (under the Federal Direct Loan Program).
P:
Perkins Loans
Low-interest loans made under the Federal Perkins Loan Program to undergraduates and graduate school students with the greatest financial needs.
PLUS Loans
Loans made to the parent of the student, including FFELP PLUS Loans and Direct PLUS Loans.
Prepayment
Any amount paid on a loan by a borrower before it is required to be paid. There is never a penalty for prepaying principal or interest on federal student consolidation loans.
Private Loans
Also known as alternative loans, private loans help bridge the gap between the actual cost of education and the limited amount the federal government allows students and parents to borrow under the FFELP or Direct loan programs.
Promissory Note
A legally binding agreement the borrower signs to obtain the loan in which the borrower promises to repay the loan with interest.
R:
Repayment period
The period during which a borrower is obligated to make payments on his or her loan.
S:
Stafford Loans
Loans – both subsidized (need-based) and unsubsidized (non-need-based) that are guaranteed by the federal government and available to students to fund higher education expenses.
T:
Term of a Loan
The length of time allowed for repayment
V:
Variable Interest
Interest rates that adjust over time.
