Student Loan Vocabulary
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Acceleration
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Demand for immediate repayment of your entire federal student loan
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Accrue
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To accumulate interest on a loan
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annual loan limit
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The maximum federal student loan eligibility per academic year
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Award Letter
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A letter from your school that details your federal, state, institutional and private student financial aid
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Borrower
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The individual who signed and agreed to the terms in the promissory note and is responsible for repaying a loan
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Capitalized Interest (Capitalization)
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Unpaid interest that has been added to the principal balance of a federal student loan
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Consolidation
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The process of combining one or more loans into a single new loan
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Default
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Failure to repay a loan according to the terms agreed to
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Deferment
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Allows you to temporarily stop making payments on your federal student loans
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Delinquency
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This happens when you don't make a payment when due
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Disbursement
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A portion of a federal student loan that the school pays out by applying the funds to the student's school account or by paying the borrower directly. Students usually receive more than one of these, usually before each semester.
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Expected Family Contribution (EFC)
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The number that's used to determine your eligibility for federal student aid
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FAFSA
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Free Application for Federal Student Aid
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Federal Student Aid PIN
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A number used in combination with your Social Security Number, name, and date of birth to identify you as someone who has the right to access your own personal information on Federal Student Aid Web sites
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Forbearance
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Allows you to temporarily stop making payments or reduce your federal student loans' monthly payment. Interest will continue to be charged on your subsidized, unsubsidized and PLUS loans.
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Grace Period
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A period of time that generally begins on the day after a borrower graduates, leaves school, or drops below half-time enrollment and ends on the day before the repayment period begins. A borrower is not required to make payments during this time.
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Graduated Repayment Plan
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Under this plan, your monthly payments start out low and increase every two years are made for up to ten years (not including periods of deferment or forbearance) will at least equal the amount of interest that accrues between your payments won't be more than three times greater than any other payment
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Grant
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Monetary gifts to people who are pursuing higher education. These do not require repayment.
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Half-Time Enrollment
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The minimum hours or credit hours you need to be enrolled to be eligible for a federal student loan.
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Loan Fee (Origination Fee)
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A fee charged for each federal student loan you receive that is a percentage of the total loan amount you are borrowing (gross amount). It is deducted proportionately from each disbursement of your loan.
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Loan Forgiveness
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The cancellation of a loan debt under various programs.
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Loan Servicer/Federal Loan Servicer
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An entity that collects payments on a federal student loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a federal student loan on behalf of a loan holder. If you have a Direct Loan, you will be assigned one of these.
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Master Promissory Note (MPN)
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A legal document in which you promise to repay your federal student loan(s) and any accrued interest and fees to your lender or loan holder. There is one of these for Direct Subsidized/Unsubsidized Loans and a different one for Direct PLUS Loans,
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Perkins Loan
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A loan for students with exceptional financial need.
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PLUS Loan
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For eligible graduate or professional students and eligible parents of dependent undergraduate students to help pay for the cost of the student's education at participating schools
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Principal
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The loan amount you borrow plus any capitalized interest.
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Standard Repayment Plan
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Under this plan, your monthly payments are a fixed amount of at least $50 each month
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Student Aid Report (SAR)
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A summary of the information you submit on your Free Application for Federal Student Aid (FAFSA) that provides you with your Expected Family Contribution (EFC).
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Subsidized Loan
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A federal student loan for which in some cases, a borrower is not responsible for paying the interest while in an in-school, grace*, or deferment period. * Interest will be charged during your grace period, if your loan is first disbursed July 1, 2012 through June 30, 2014.
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Undergraduate Student
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A student who is enrolled in a course of study at a college/university or career school that usually doesn't exceed four years and that leads to a degree or certificate.
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Unsubsidized Loan
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A federal student loan for which the borrower is fully responsible for paying the interest regardless of the loan status. * The FFEL Program ended July 1, 2010 and no new loans have been made since that date.
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William D. Ford Federal Direct Loan (Direct Loan) Program
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Student loans provided by the U.S. Department of Education to enable a student to pay for education after high school. Eligible students borrow directly from the U.S. Department of Education at participating schools. There are four different types of these loans.
