Glossary

Borrower-A student or parent to whom a loan is made.

Consolidation-A method for combining student loans into one repayment plan using one lender. Through this method the repayment period can be extended.

Default-The term used when a borrower does not honor his or her obligation to repay a student loan. Student loans typically go into default when payments have not been made for 270 days.

Deferment-a period of time in which a borrower is allowed to postpone a student loan repayment, under specific conditions. There is no cost or penalty to this postponement. Interest on loans which are unsubsidized will continue to accrue at the expense of the borrower even though the loan is deferred.

Delinquent-A loan will be considered delinquent on the day after the agreed upon due date if the borrower fails to make a full loan payment

Dependent Student-An undergraduate student who does not meet the criteria established for an independent student

Disbursement-Refers to the transfer of proceeds for a loan by electronic fund transfer, master check or check from a lender for the borrower.

Federal Family Education Loan Program (FFELP)-Loan programs which are authorized by title IV, part B of the Higher Education Act of 1965. This includes Federal PLUS, Federal Stafford, Federal Consolidation Loan Programs and Federal SLS. Such loans are funded by lenders, guaranteed by guarantors and reinsured by the federal government.

Federal PLUS Loan Program-This is the Parent Loan for Undergraduate Students, intended for parents of full-time or half-time dependent undergraduate students. Eligibility for the loan is determined by the Financial Aid Administrator. The amount of money borrowed may not exceed the cost of education, minus any other aid that may be received.

Forbearance-Refers to a period of time during which the borrower is permitted to cease making payments temporarily or reduce the amount of payments temporarily. The borrower will be responsible for any interest that accrues on the loan during this time period.

Free Application for Federal Student Aid (FAFSA)-The application for federal student financial aid.

Grace period-Refers to the period that begins on the day after a student graduates, withdraws or drops below half-time enrollment status before the repayment period begins.

Graduated Repayment Plan-Refers to a repayment schedule under which the borrower’s installment payment will change, generally increasing during the term of the repayment period. This time period generally cannot exceed 10 years.

Guarantor-Refers to a private nonprofit or state organization that will agree to reimburse the holder of a loan in the event the borrower does not honor his or her obligation to repay the loan.

Holder-Refers to the organization that owns the promissory notes signed by the borrower.

Income sensitive repayment plan-Refers to a repayment schedule for some FFELP loans under which the borrower’s monthly payment will be adjusted seasonally based on the borrower’s expected total monthly gross income.

Independent student-A student who meets the following criteria is referred to as an independent student:

1. Age 24 or older as of December 31st of the award year
2. Orphan or ward of the court
3. Veteran
4. Graduate or professional student
5. Married student
6. Student with legal dependents other than a spouse
7. Person with unusual circumstances determined by the financial aid administrator

Lender-the organization that provides funds for a student loan.

Promissory note-Refers to a legally binding agreement that a borrower signs in order to obtain a private or federal loan.

Repayment Period-Refers to the period during which interest will accrue on a borrower’s loan. Principal and interest payments are required during this time period.

Repayment schedule-A plan that indicates the total principal and interest due on a loan as well as the installment payment amounts and the number of installment payments required to pay the loan in full. Also includes the due date of the first and subsequent installment payments.

Subsidized Stafford-A long term, low interest federal student loan that is designed to provide students with funding for college. Interest on the loan is paid by the government while the student is in school as well as during grace and deferment periods.

Supplemental Loan for Students (SLS)-Federal loan available before July 1, 1994 to independent undergraduate, graduate and professional students.

Unsubsidized Stafford-a long term, low interest loan that provides financial aid for students who do not qualify for other financial aid or who still need more funds for college. This loan can be made in conjunction with the subsidized Federal Stafford loan provided the maximum annual loan limits for the subsidized Federal Stafford loans have not been exceeded. The borrower will be responsible for the interest on the loan amount while in school.