| A | B |
|---|
| AA | An associate of arts degree. Can be earned at most two-year colleges. |
| AAS | An associate of applied science degree. Can be earned at some two-year colleges. |
| Accrual Date | This is the date that interest begins to accumulate on a loan. |
| Accrued Interest | Interest that accumulates on the unpaid principal balance of a loan. |
| Amortization | The process of gradually repaying a loan over an extended period of time through periodic installments of principal and interest. |
| Annual Percentage Interest Rate | A calculation that reflects the total cost of a loan on an annual basis. |
| Award Letter | An official document issued by a financial aid office listing all the financial aid awarded to the student. |
| BA or BS | Bachelor of Arts or Bachelor of Science. Both degrees can be earned at four-year colleges. |
| Bankruptcy | Found to be legally insolvent and the person’s property is distributed among creditors. |
| Borrower | A person that signs and agrees to the terms in the loan promissory note. |
| Campus Based Aid | Financial aid programs administered by the university (example: Perkins Loan Program) |
| Capitalizing Interest/Capitalization | The process of adding unpaid interest to the principal balance of a loan, thereby increasing the total amount to be repaid. |
| Consolidation | When a lender pays off loans the borrower has and issues a new, single loan for the total amount. |
| Co-signer | A person who signs the promissory note and is jointly responsible for the repayment of the loan |
| Cost of Attendance (COA) | The total cost of attending a post-secondary institution for one academic year. |
| Credit-ready | A borrower who has no credit history or a credit history with no excessive number of delinquencies, charge offs, or bankruptcy. |
| Credit scoring | A method, based on statistical analysis of applicant characteristics, through which lenders determine the applicant’s qualification for credit. |
| Credit worthy | An individual with no negative credit history per the criteria established by the lender. |
| Default | When a borrower fails to make an established number of payment on the loan, according to the Promissory Note (example: 270 days for Federal Consolidations) |
| Deferment | An agreement with a lender where a borrower may temporarily suspend loan payments. |
| Deferred Interest | Accrued interest on which payment is delayed. |
| Delinquent | When a borrower’s loan payment is late or missed according to the terms of the promissory note. |
| Dependent Student | An undergraduate student whose parents provide more than half of their financial support. |
| Direct pay | Borrowers authorize automatic transfers of funds from checking or savings accounts to cover monthly loan payments. |
| Disbursement | When the lender cuts a check on a loan to releases funds. |
| Disclosure Statement | A document that includes the actual cost of the loan, estimated interest costs and loan fees. |
| Due Diligence | Frequent attempts by a lender to contact the borrower to encourage payment on the loan. |
| Eligible non-citizen | Someone who is not a US citizen but nevertheless eligible for Federal Student aid. |
| Enrollment status | Whether a student is a full-time, less than half time, and/or part-time student. |
| Entrance/Exit Interview | Required counseling sessions that borrowers must attend before they receive their first loan disbursement and again before they leave school. |
| FAFSA (Free Application for Federal Student Aid) | The Federal form used by student loan borrowers when applying for Federally guaranteed student loans. |
| FDLP (Federal Direct Loan Program) | Stafford, PLUS loans and Consolidation Loans are available directly from the federal government. |
| Fellowship | A form of aid given to graduate students to help support their education. |
| FFELP (Federal Family Education Loan Program) | Stafford, PLUS, and Consolidation Loans that are financed by private lenders and guaranteed by the federal government. |
| Financial Aid | A combination of scholarships, loans, grants, and work-study programs provided by Federal and state governments to help students meet the cost of a college education. |
| Fixed Rate Interest | An interest rate that is predetermined and constant throughout the life of the loan. |
| Forbearance | An agreement the borrower enters into with the lender to postpone their repayment obligation for a time. |
| Garnishment of Wages | The deduction of a portion of a borrower’s pay, with or without the borrower’s consent. |
| Gift aid | Financial aid, such as grants and scholarships, which does not need to be repaid. |
| Grace Period | The period between the time a borrower leaves school or drops below half-time study and the time that they are obligated to begin repayment. |
| Graduate Student | A student in as postsecondary institution who is enrolled in a master’s or higher-level degree program. |
| Graduated Repayments | Loan repayment that is lower at the beginning of the repayment term and generally increases during third or fifth year of the repayment term. |
| Grant | Financial aid award that does not have to be repaid. |
| Gross Income | Income before taxes, deductions, and allowances have been subtracted. |
| Guarantee Fee | An insurance premium deducted from the borrower’s loan and paid to the guaranty agency that insures the loan. |
| Guarantor/Guarantee Agency | A national or state agency that insures a student loan. |
| Holder | The institution that owns the loan. |
| Indebtedness | The total amount of loan debt a borrower incurs while paying for college expenses. |
| In-School | The period that borrowers are enrolled at least half-time. |
| Income | The amount of money received from employment or other sources. |
| Interest | This is the fee charged for use of money. |
| Interest Only Payment | A payment that covers only accrued interest owed on a loan and none of the principal balance. |
| Internship | Part/full time job during the academic year or the summer months in which a student receives supervised practical training in their field. |
| Itemization | One invoice which includes billing for several loans that may have one or more variable rates. |
| Lender | The actual source providing the loan funds being borrowed. |
| Loan | A type of funding involving an institution (bank, credit union) or the Federal Government permitting an individual to borrow a sum of money. |
| Loan Principal | The total principal amount of money borrowed. |
| Loan Servicer | Contracted by lenders to manage the day-to-day bill collection and payment processing of the loan on their behalf. |
| Loan Terms | The characteristics that define the nature of the loan. |
| Net Income | This is income after taxes, deductions, and allowances have been subtracted. |
| Origination/Insurance Fee | A fee for borrowing money. This fee is paid at the time the loan is made and is deducted from the loan principal amount. |
| Parent Loans for Undergraduate Students (PLUS) | Federally insured loans for parents of dependent students. |
| Perkins Loans | Federally insured campus based loans funded by the federal government and awarded by the school. |
| Postsecondary | “After high school” programs for graduates, including two and four year programs, technical and vocational schools. |
| Prepayment | When a borrower pays a portion or the entire amount of principal before it is due, reducing the total amount of interest charged. |
| Private Loans | Also know as Alternative Loans, help bridge the gap between the actual cost of education and gov't aid. |
| Promissory Note | The legally binding contract between a borrower and the lender. |
| Proprietary School | Postsecondary schools that are private and are legally permitted to make a profit. |
| Rehabilitation | After a borrower has made 12 consecutive monthly payments on time, the Department of Education will agree to reinsure the loan. |
| Repayment | The period when a borrower is repaying the principal and interest on borrowed money. |
| Repayment Schedule | A statement the borrower receives from the holder of the loan when it’s time to begin repayment. |
| Secondary Markets | A private or public institution that buys student loans from the original lenders to free up capital for other students to borrow loans. |
| SSN | Abbreviation for Social Security Number |
| Subsidized Loans | A Federal loan based on financial need where the Federal government pays the interest during the borrower’s in school, grace, and deferment periods. |
| Supplemental Loans for Students | Federal loans for financially independent students. |
| Undergraduate Student | A degree-seeking student at a college or university who has not earned a first bachelor’s degree. |
| Unsubsidized Loans | A federal loan not based on financial need, and the Federal gov't does not pay any interest on the loan. |
| US Department of Education – (ED, DOE) | Government agency that administers several federal student financial aid programs. |
| US Department of Health and Human Services (DHHS, HHS) | Government agency that administers several federal health education loan programs including the HEAL, HPSL, and NSL loan programs. |
| Variable Interest Rates | Rates tied to an index that change periodically |
| Weighted Average Interest | A calculation provided by the Department of Education used in Federal Consolidations to formulate the interest charged on Federal Consolidations. |
| Debt-to-income ratio | The ratio between a borrower's monthly payment obligations divided by his or her gross monthly income. |
| Equal Credit Opportunity Act | Prohibits discrimination against an applicant for credit. |
| Fair Credit Reporting Act | Establishes procedures for correcting mistakes on an individual's credit record. |
| Prime Interest Rate | An interest rate index used on loans that banks charge |
