Student loans often come with terms that we are unfamiliar with. This can make it very difficult to understand just what you are getting yourself into. Here is a short list of some commonly-used student loan terms.
Student Loan Glossary
Accrued - Accumulated over time.
Adjusted Gross Income - Your total gross income, minus certain deductions.
Borrower - The individual applying for the loan.
Consolidation - The combining of your student loans in order to make your repayment more affordable and/or convenient.
Cost of Attendance - The sum of the education-related expenses required to attend school at least half-time.
Default - Failure to keep your promise to make your monthly repayments.
Deferment - A period of time during which the repayment of the principal and interest on your student loan is postponed.
Direct Loan - A federal student loan, made through the William D. Ford Federal Direct Loan Program, for which eligible students and parents borrow directly from the U.S. Department of Education at participating schools.
Direct PLUS Loans - A loan made by the U.S. Department of Education to graduate or professional students and parents of dependent undergraduate students for which the borrower is fully responsible for paying the interest regardless of the loan status.
Disbursed - Paid out.
Discharge - Relief from the expectation or requirement to repay your loan.
Discretionary Income - The income that remains after the deduction of taxes, mandatory payments, and expenditures.
FAFSA - The Free Application for Federal Student Aid is a form that is required to be completed in order to be considered for any type of federally-funded student assistance.
Federal Perkins Loan - A federal student loan, made by the recipient's school, for undergraduate and graduate students who demonstrate financial need.
FFEL Loan Program - Under this program, private lenders provided loans to students that were guaranteed by the federal government.Federal student loans under the FFEL Program are no longer made by private lenders. Instead, all new federal student loans come directly from the U.S. Department of Education under the Direct Loan Program.
Fixed Interest Rate - An interest rate on your student loan that remains fixed for either the entire duration of the loan, or a specified amount of time.
Forbearance - The ability to stop making payments or to reduce your monthly payment for a period of up to 12 months.
Forgiveness - Relief from the expectation or requirement to repay your loan.
Grace Period - The period of time after graduation, withdrawal, or a decrease in attendance below half-time, during which you are not yet required to make payments on your student loans.
Lender - The entity that provides the funds for your student loan.
Master Promissory Note - The legal document that you are required to sign in order to prove that you understand your obligation to repay your loans, accrued interest, and any other related fees.