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Adjusted Gross Income (AGI)

 

The total amount of your wages, salaries, and other income sources you might have, minus certain deductions from income as reported on a federal income tax return. AGI is used to calculate your monthly repayments under the Income-Driven Payment Plans

 

 

Capitalization

 

The addition of unpaid interest to the principal balance of a loan. Sometimes, the interest on the loans is not paid during eligible periods such as grace period or periods of in-school status, deferment, or forbearance. In this case, your lender may capitalize the interest. Capitalization increases the outstanding principal and interest is then charged on that higher principal balance, increasing the overall cost of the loan, and could cause in an increase of your monthly payment.

 

 

Collection Agency

 

A company or organization that recovers unpaid debt from borrowers that failed to make payments and defaulted on their loans.

 

 

College Aid

 

Financial support or aid provided by your career school, university or career school.

 

 

Credit Bureau

 

A company that tracks and reports borrowers' selected financial activities to various organizations. These activities include the opening and closing of accounts, payments history and payment behaviors such as late payments or default. Lenders and other organizations use these reports to evaluate your risk when you apply for a new service, credit card, loan etc. Your credit report is the data upon which your credit score is calculated. 

 

 

Credit Score

 

A credit score is a number that represents borrower's ability to repay his debt. It is used by lenders to evaluate potential borrowers credit risk. The higher the number to more confidence the lender has that the borrower will repay his loans.  

 

 

Default

 

Failure to repay a loan according to the terms agreed upon by the lender and the borrower, as described in the promissory note. If you fail to make payments for more than 270 days on your federal loan, your loan will be considered to default. 

Defaulting on your loan will probably cause serious legal consequences.

 

 

Default Rate

 

The percentage of borrowers of in a specific group that failed to repay their loans according to the agreed terms in the promissory notes.

 

 

Deferment

 

A temporary postponement of payments on loans that is allowed under certain conditions. During deferment, interest generally does not accrue on Direct Subsidized Loans, the subsidized portion of Direct Consolidation Loans, Subsidized Federal Stafford Loans, the subsidized portion of FFEL Consolidation Loans, and Federal Perkins Loans. All other federal student loans that are deferred will continue to accrue interest. Any unpaid interest that accrued during the deferment period may be added to the principal balance (capitalized) of the loan(s).

 

 

Delinquent

 

Your loan becomes delinquent when you fail to make loan payments according to your loan's terms. Your loan remain delinquent until you make up all the missing payments. 

 

 

Direct Consolidation Loan

 

The U.S. Department of Education that allows you to combine one or more federal student loans into a single new federal loan called Direct Consolidation Loan. As a result of the consolidation, you will have to make only one payment each month on your federal loans, and the amount of time you have to repay your loan may be extended. Consolidating your loans doesn't change your loans' interest, and the direct consolidation's interest rate is determined as a weighted average of the interest rate of the loans you've consolidated. 

 

 

Direct Loan

 

A federal student loan, made through the William D. Ford Federal Direct Loan Program, that eligible students and parents borrow directly from the U.S. Department of Education at participating schools.

 

 

Direct PLUS Loan

 

A loan made by the U.S. Department of Education to graduate or professional students and parents of dependent undergraduate students. 

 

 

Disbursment

 

Generally, when a student receives a loan, it is being paid in 2 or more disbursements to the school. 

 

 

Discharge

 

The cancellation of a borrower's obligation to repay a portion or all of the remaining outstanding balance owed on a student loan. Forgiveness and cancellation are also types of discharge. 

 

 

Exit Counseling

 

A mandatory information session which elaborates your loans repayments terms. Every borrower must complete in order to receive his/her degree. This session takes place before graduation or when a student drops below half-time enrollment. 

 

 

FAFSA

 

Free Application for Federal Student Aid

 

 

FFEL - Federal Family Education Loan 

 

This program is no longer active and no new loans under FFEL program have been made since June 30th, 2010. 

Under FFEL, private lenders made education loans that were guaranteed by the federal government. 

 

 

Federal Pell Grant

 

A grant that is given by the federal government for undergraduate students that have financial difficulties attending school. 

 

 

Federal Perkins Loan

 

A federal student loan for students who demonstrate financial need. 

 

 

Forbearance

 

A period in which you're allowed to skip your monthly payments or pay a reduced amount. While principle payments are postponed in forbearance, interest continues to accrue.  The unpaid interest during forbearance will be capitalized, resulting in an increase of the total amount owed.  

 

 

Forgiveness

 

The cancellation of a borrower's obligation to repay all or a portion of the remaining loan balance owed.

 

 

Grace Period

 

Refers to a period when you're not required to make payments towards your loans. 

In regards to some student loans, it refers to the period after you graduate, leave school or drop below half-time enrollment. For unsubsidized loans, you're responsible to pay the interest that accrues during the grace period. Any unpaid interest will be capitalized when the repayment period begins. 

 

 

Grant

 

A financial aid that is usually based on financial need and that does not need to be repaid.

 

 

Guaranty Agency

 

A state agency or a private, nonprofit organization that administers Federal Family Education Loan (FFEL) Program loans.

 

 

Independent Student

 

In order to be considered an independent student you need to meet one of the following criteria: at least 24 years old, married, a graduate/professional student, a member of the armed forces/veteran, an orphan, a ward of the court, or someone with legal dependents other than a spouse, an emancipated minor or someone who is homeless or at risk of becoming homeless.

 

 

Interest Rate (APR)

 

The interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for borrowing the loan's funds. Interest rates are typically noted on an annual basis, known as the annual percentage rate (APR).

 

 

Loan Servicer

 

A company that collects payments, responds to customer service inquiries and performs other administrative tasks associated with maintaining a federal student loan on behalf of a lender, which is usually the federal government. The biggest student loan servicing companies are Nelnet, Navient, MOHELA, and Great Lakes. 

 

 

MyStudentData Download

 

A tool that allows you to download your federal loans, grants, and aid overpayment history as provided by the Federal Student Aid website. 

 

 

New Borrower

 

You'll be considered a new borrower if you had no outstanding balance on a Direct Loan or FFEL loan when you receive a Direct Loan or FFEL loan, or after a specific date.  

 

 

Out of State Student

 

An individual that attends a school outside of his/her state of legal residence.

 

 

Outstanding Interest

 

The dollar value of the accrued interest balance on a loan.

 

 

Outstanding Principal 

 

The amount of money that is still owed. It includes the remaining portion of the original loan amount principal, plus any interest that has been capitalized. Interest accrues on the outstanding principal balance.

 

 

Partial Financial Hardship

 

In order to be eligible for some of the Income-Driven Plans, you need to be considered as having a Partial Financial Hardship. Each repayment plan has its own way of estimating your financial hardship and it usually involved comparing your adjusted gross income to the poverty line for your family size and the state you live. 

 

 

Principal

 

The total sum of money owed, which includes any interest that has been capitalized.

 

 

Proprietary School

 

A proprietary college, school or university is an institute that operates as a private, profit-seeking business and provides education and training.

 

 

State Aid

 

Financial aid from a student's state of legal residence.

 

 

Subsidized Loan

 

A federally backed student loan, which is based on financial need. The term "subsidized" comes from the fact that the federal government (in most cases) pays the accrues interest while the borrower is in one of these statuses: in-school, grace, deferment and with some limitations under certain income-driven repayment plans.  

 

 

Total Borrowed 

 

The total amount of a loan that was disbursed (paid out) to a borrower.

 

 

Unsubsidized Loan

 

A loan for which the borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan.

 

 

William D. Ford Federal Direct Loan (Direct Loan) Program

 

The federal student loan program under which eligible students and parents borrow directly from the U.S. Department of Education at participating schools.

 

 

Work-Study

 

Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the student's course of study.