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Student Loan and College Funding Glossary

Be sure to understand these important terms as you review your financial aid options. For additional information on some of these topics, and how they impact your choices, please visit our Student Loan Resources.

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24/7 Application Processing

Lender accepts applications and can do preliminary approvals of applications seven days a week, all day and evening.

A

Accreditation

In higher education, the process by which colleges and universities are reviewed by independent third parties and deemed to have met specific standards. In order for an institution to be eligible for Title IV funding (part of the Higher Education Act of 1965), they must be reviewed and accredited by one of the regional accreditation agencies. This means that non-accredited institutions cannot provide federal financial aid to their students.

Additional Education Borrowing (Other Education Debt)

Refers to any other student loans – such as private student loans – that you may have that you cannot consolidate with your federal student loans. This amount has an impact on the length of extended repayment for federal consolidation loans. Note that this additional borrowing is not calculated as part of your consolidation loan.

Adverse Credit History

Also called non-status credit history or impaired credit history. It can be caused by being in default on a previous debt, being more than 90 days late on any debt, bankruptcies or other adverse action on any Title IV debt. It is not the same as having a low credit score. PLUS Loans (Parent Loans for Undergraduate Students) and Graduate PLUS Loans perform a check only for adverse credit history - not for credit score.

Alternative Loans

See Private Student Loans.

Amortization

The process of paying back a loan over a given set of months. Re-amortization means that once a borrower reward is applied to the loan, the loan will be recalculated to generate a new monthly payment amount.

Amount of Loan

The maximum amount you wish to borrow. You may borrow up to the student's estimated cost of attendance for the current (or upcoming) school year minus any estimated financial assistance the student has or will be awarded during the period of enrollment, including other types of loans, scholarships, grants, and income from work-study.

If you are unsure of what to enter, start with the total cost of attendance for the school year, including tuition and fees, room and board, books and materials, and travel to and from school. Then subtract any aid that has already been awarded in the form of federal loans, scholarships and grants. The leftover amount is an approximation of the contribution the student and his/her family is expected to make through loans, savings, and other income. It might be better to overestimate; the school can reduce the amount of the loan at the time of certification to account for additional aid and you, as the borrower, can reduce the amount of the loan if you should find you do not need to borrow as much.

APR (Annual Percentage Rate)

Takes into account principal, interest rate and structure, fees and other costs of the loan, and length of repayment. Some lenders offer various borrower rewards (or borrower benefits) that might result in a lower effective APR. You may not be eligible for all borrower rewards or you might lose those benefits, which would result in your effective APR being different than that shown on this site. It is important to consider these results, including APR, as estimates to help compare one loan to another. With variable rate loans, the APR will increase if the interest rate increases. The APR on a loan can vary among lenders because of differences in up-front fees, deferment periods, capitalization of interest, interest compounding, loan terms, and repayment terms, even if the interest rates are the same.

Auto-Debit

Setting up a payment by having it automatically taken from a checking or savings account.

B

Bankruptcy

A legally declared inability or impairment of ability of an individual to pay creditors. There are many different kinds of bankruptcy that can have different effects on student loans. Consult with a financial advisor for more information about bankruptcy.

Bar Study Loans

Loans providing funds to be used to pay for expenses related to studying for and taking the Bar Exam (the qualifying exam for practicing lawyers). Borrowers can take out a loan to cover living expenses for the time relevant to preparing for and taking the Bar Exam, but check with your selected lender for any limitations.

Base Rate

The interest rate that applies before any borrower rewards (or borrower benefits) are included.

Base Repayment Length

Each loan has a maximum amount of time over which you can repay the loan. In many cases, if you earn borrower rewards (or borrower benefits), the loan repayment term will be shorter than this base length. You can also choose to make additional payments to repay the loan more quickly. In general, loans with longer base repayment lengths will have lower monthly payments, but a higher total cost.

Benefits Lost if Lender Sells Loan

Note that some borrower rewards offered on this loan may be lost if the lender sells your loan. Be sure to ask the lender for details on this policy before assuming borrower rewards cannot be lost.

Borrower

Person legally responsible for repaying a loan and who has signed the promissory note.

Borrower Benefits

See Borrower Rewards.

Borrower Rewards

Also called borrower benefits or loan discounts. Many lenders offer these incentives to encourage borrowers to repay the loans in a responsible way. Borrower rewards also provide lenders with competitive advantages over their competitors.

Some borrower rewards are applied automatically, meaning that you receive the benefit just for getting the loan. For example, some lenders offer an up-front interest rate reduction - a benefit that is automatically calculated when the loan begins.

The most common type of borrower reward is earned when the borrower makes a certain number of on-time payments or sets up automatic debit of their monthly payment. For example, many lenders offer an interest rate reduction after receiving a certain number of on-time monthly payments. Some of these earned borrower rewards become permanent once you qualify.

But note that many benefits are lost if you stop meeting the requirements. You should ask your selected lender for details about borrower rewards, including requirements to qualify and/or to later be disqualified for them.

At SimpleTuition, you can view loan results data with borrower rewards (or borrower benefits) included or excluded. We separate borrower reward types into:

  • Automatic
  • Pay on time (for making a certain number of on time payments - ask lender to clearly define what "on time" means)
  • Set up auto debit
  • Other

You can include or exclude each of these borrower reward types in the results data. (Note that automatic borrower rewards are always included.)

SimpleTuition makes no representations about the accuracy or availability of any borrower rewards (or borrower benefits) for any loan product shown here. They are included for informational purposes only, and you should check with your selected lender for details about borrower rewards, including requirements to qualify and/or to later be disqualified for them.

Browser

An application used to view and interact with the World Wide Web and other internet resources. Common examples include Microsoft's Internet Explorer (IE), Netscape Navigator, Mozilla Firefox, and Safari.

C

Cancellation

The release of a borrower from the obligations to repay all or a portion of a loan. Borrowers must meet certain requirements, which may vary from lender to lender.

Capitalized Interest

Unpaid, accumulated interest that is added to the loan principal. Because the principal increases, so does the total cost of the loan. Lenders may add interest back to the principal at varying intervals. Check with your lender for more specific information.

Certified Private Loan

A private loan that requires notification and verification by a school official prior to disbursement. The school usually certifies that the borrower is not borrowing in excess of the total cost of education less other aid received. Certified private loans are generally disbursed to the school to be applied to the student's account. Any remaining balance is returned to the student. Ask the financial aid office at your school how the refund process is handled. Compare Private Loan options.

Citizenship (U.S.)

The status of people who indicate that they were born in the United States, Puerto Rico, a U.S. Island Area, or born abroad to a U.S. citizen parent(s). People who indicate that they are U.S. citizens through naturalization are also citizens.

Some loans may not be available to borrowers who are not U.S. Citizens or Permanent Residents and/or who do not have a co-signer who is a U.S. Citizen or Permanent Resident. To receive federal student aid, you must be a:

  • U.S. citizen
  • U.S. national (includes natives of American Samoa or Swain's Island)
  • U.S. permanent resident who has an I-151, I-551, or I-551C (Alien Registration Receipt Card)

To learn more, visit the U.S. Department of Education's Student Aid on the Web.

Co-signer

A joint signer of a promissory note for a loan, also called a co-borrower or a surety. Undergraduate students are strongly advised to apply with a credit-worthy co-signer when seeking a private loan. This will increase your chances of approval and of obtaining lower interest rates and fees. Some lenders require that you to apply with a co-signer regardless of your income or credit score.

Most lenders will require a borrower to have a strong credit score (good to excellent) in addition to other criteria such as no negative credit history (missed payments), debt-to-income ratio (amount of debt vs. your current income) and even proof of current employment and income.

If you are a student without sufficient personal income or credit history you'll almost certainly need to apply with a credit-worthy co-signer.

A credit-worthy co-signer is someone with a good credit history and good credit score, such as:

  • A parent
  • A guardian
  • A grandparent or other relative

Co-signer Release

The ability to free the joint signer of a loan from the responsibility of the loan when certain requirements are met. Ask your lender for details.

Combined Balance of Federal Loans to Consolidate

SimpleTuition will make an estimate of your consolidation options based on the overall amount you tell us you need to consolidate. We make a general assumption that your borrowing came through the Stafford or Direct Loan programs (for students) or through the PLUS program (for parents). You can enter more detail about the loan types you wish to consolidate by selecting the "Detailed Form" option.

Compounding Interest

With a loan, this is the practice of charging interest on the total balance of the loan and on any interest that has already accumulated.

Consolidation Loan

A type of loan that allows a borrower to combine several individual loans into one single loan. This can simplify the borrower's paperwork (one loan payment to make instead of several) and may bring additional benefits. For instance, in the federal consolidation program, the borrower can extend repayment from the standard 10-year period to 12, 15, 20 or more years (depending on the amount consolidated). This will lower the monthly payment, but will increase the overall cost of the loan. Some lenders provide additional borrower rewards (or borrower benefits) to offer even more savings.

Continuing Education Loans

Loans specifically for students in non-degree programs (not leading to a degree to certificate).

Continuing education students' eligibility for certain loans and loan amounts can depend on their enrollment status. Check with your school about how enrollment status is defined. Compare Continuing Education Loan options.

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Text files placed on your hard disk by our web server to store your preferences. Cookies, by themselves, do not reveal your email address or other personal information unless you choose to provide it. However, once you choose to provide the personal information, this information may be linked to the data stored in the cookie.

To search for a loan on SimpleTuition, you must have cookies enabled at the "medium" level for SimpleTuition.com.

Cost of Attendance

The amount of funding needed for a student's education including tuition, room and board, transportation and books, as defined by the institution the student is attending.

Credit Check

A process where a person has his or her credit report reviewed before credit is extended for a loan or other financial obligation. Most financial institutions will review a credit report from one or more of the three leading credit reporting agencies, Equifax, Experian and TransUnion.

Credit Inquiry

See Credit Check.

Credit Rating

See Credit Score.

Credit Report

A detailed report outlining the credit history of an individual which includes current and previous debts, payment amounts, late payments, past due amounts and other related information on every credit source the individual has used. The three largest credit reporting agencies are Equifax, Experian and TransUnion.

Credit Score

Also called a credit rating. A measure of the likelihood that you will pay your debt as agreed. The lower your credit score, the more likely you are to default on your debt. Most lenders rely on your credit score to determine eligibility for private loans. Your credit score can also affect the cost of your debt, with lower interest rates and fees reserved for borrowers with better credit scores. Terms of federal student loans generally do not depend on your credit score.

Credit Sensitivity

How much lenders depend on a borrower's credit score when determining approval and rates or fees of an offered loan. Some loans are more credit-sensitive than others. In general, federal loans, such as Stafford Loans, are available regardless of your credit score, and as such should be the first choice for borrowers who have a limited or poor credit score. Private loans may be attractive options, but they have restrictions on who can qualify for them and may have higher rates and fees the worse your credit score is.

D

Debt-to-Income Ratio

A borrower's total debt as compared to the borrower's overall income.

Default

Failure to repay a loan in accordance with the terms of the promissory note.

Default Fee

A mandatory fee charged to a borrower by a lender to pay the guarantor of a federal student loan as insurance against default. Default fees are charged as the loan is disbursed and can be no more than 1% of the amount of the loan. Also known as an "insurance fee" and formerly known as a "guarantee fee". See also Fees, Origination Fee and Repayment Fee.

Deferment

The ability to postpone payment of a loan for a period of time after leaving or graduating from an educational program or due to special circumstances. Lenders frequently allow student borrowers to postpone making payments on their loans while enrolled in school at least half-time and extending a number of months after the student leaves their program or graduates. During this time, interest may accrue. Some lenders allow you to pay the accruing interest during this time; these are called interest-only payments.

Deferment usually lasts from the time the money is taken until graduation or until a student leaves their program, plus an additional number of months. These grace periods are typically 6 to 12 months long and vary by loan type and lender. Some loans, such as Continuing Education or K-12 Education loans for boarding or private schools, may have a shorter deferment period or no deferment period at all. Check with your lender for details.

If you are concerned that you will not be able to repay your loan, you should contact your lender to inquire about the possibility of deferment or forbearance. Make this inquiry before you miss payments. In most cases, if you default on your loan, you are no longer eligible for a deferment or forbearance.

Deferment Rate

A different, and usually lower, interest rate during the period in which the borrower does not have to make payments on a loan (called Deferment).

Delinquency

The failure to make payments when due, as specified in the promissory note and in the repayment plan the borrower selected. Delinquency can lead to default.

Dependent Student

A classification of a student for the purposes of the federal financial aid application. Most traditional college students are dependent – even if they are paying their own way through college or no longer have a relationship with their parents. The federal definition of an independent student is one who can answer yes to any of the following questions, for the 2008-2009 filing year:

  1. Were you born before January 1, 1985?
  2. Will you be working on a degree beyond a bachelor's degree, such as a master's or doctorate, in school year 2008-2009?
  3. As of the date you will be submitting the FAFSA, are you married? (Answer yes if you are separated, but not divorced.)
  4. Do you have children who receive more than half of their support from you, or do you have dependents (other than your children or spouse) who live with you and receive more than half of their support from you, now and through June 30, 2009?
  5. Are you an orphan or ward of the court or were you a ward of the court until age 18?
  6. Are you a veteran of the U.S. Armed Forces?
  7. Are you currently serving on active duty in the Armed Forces for other than training purposes?

Applicants who answer “no” to all of these questions are dependent students and are required to report parental information on the application.

Be aware that you are not automatically independent for financial aid purposes simply because your parents stop claiming you as a tax exemption or refuse to give you support for your college education. Your parents' unwillingness, inability or reluctance to help pay for your educational costs does not make you independent. Becoming emancipated or qualifying for in-state tuition at a public institution also does not mean that you are independent for federal financial aid purposes. In cases where you do not qualify as an independent student but you receive no parental support, counselors in the financial aid office ca provide you with information about alternative financing and employment opportunities to help you pay for your college expenses.

See also Independent Student.

Direct Lending

See Direct Loans.

Direct Loan Servicing Center

The federal agency that collects Direct Loans as it processes payments, deferments, forbearances, and repayment options.

Direct Loans

Loans made by the U.S. Department of Education (instead of a private lending institution) under the William D. Ford Federal Direct Student Loan Program. As of July 1, 2010, all schools will participate in the direct lending program where the student loan lender is the U.S. Government. Direct Loans consist of Direct Subsidized Stafford Loans, Direct Unsubsidized Stafford Loans, Direct PLUS Loans and Direct Consolidation Loans. A student can receive a Direct Unsubsidized Stafford Loan regardless of financial need. The interest rate on a Direct Subsidized Stafford Loan for the 2010-2011 academic year is 4.50% and the interest rate on a Direct Unsubsidized Stafford Loan is fixed at 6.80% (for loans disbursed on or after July 1, 2006). The interest rate on Direct Consolidation Loans is fixed at the weighted average of the loans being consolidated and capped at 8.25%. The interest rate on Direct PLUS Loans is fixed at 7.90% (for loans disbursed on or after July 1, 2006). Students and parents can receive Direct Loans only if the student's school participates in the Direct Loan Program.

Disbursement

When a lender transmits funds on a student loan to the school on behalf of the borrower or to the borrower directly. In general, federal loans will always be disbursed (or paid) directly to the schools, while private loans may be disbursed to the school or to the borrower directly. Additionally, the rates and fees charged on loans disbursed directly to the borrower may be different from those charged when disbursed straight to the school.

Discharge

The release of a borrower from the responsibility of repaying a loan or debt.

E

Effective Rate with All Borrower Rewards

The rate on your loan once you have earned or qualified for all of the available borrower rewards or benefits.

Email Address

SimpleTuition forwards your loan choices via email so that you may revisit your options whenever convenient. We do not share your email address with third parties for the purposes of marketing.

Endorser

Someone responsible for repayment of a loan if the primary borrower does not pay as agreed; the endorser is secondarily liable for the debt. An endorser is similar to a co-signer, but typically only used for federal PLUS Loans. Individuals borrowing PLUS Loans may be required to obtain an endorser.

Enrollment Status

The number of credit hours for which a student is registered. This status determines continuing education students' eligibility for certain loans and loan amounts. Half-time or less is generally 6 or fewer credit hours per term. Check with your school about how enrollment status is defined.

eSignature

An electronic signature or the electronic equivalent of a hand-written signature.

eSignature-Capable

This indicates that the lender offers eSignature for this loan product.

Estimated Family Contribution

The amount you will be expected to pay for one year of college as determined by the FAFSA.

Expected Graduation Date

The month and year you expect to graduate from your academic program.

F

FAFSA

The U.S. Department of Education's Free Application for Federal Student Aid is the first step in the financial aid process. Use it to apply for federal student financial aid, such as a Pell grant, student loans, and college work-study. In addition, most states and schools use FAFSA information to award their financial aid. You can file your FAFSA for free at the Department of Education's website, http://www.fafsa.ed.gov.

Federal Family Education Loan Program (FFELP)

As of July 1, 2010, the Federal Family Education Loan Program (FFELP) program has been discontinued. All Stafford and PLUS loans are now obtained from the Direct Loan program.

Federal Student Loan Consolidation

Combining one or more federal student loans into one consolidation loan. See Consolidation Loan.

Federal Student Loans

Loans offered to students to assist in the payment of the costs of higher education that are supported and regulated by the federal government. See also Student Loans.

Fee Paid From

There are two methods that determine how fees are handled in a loan. The fee can be paid from the proceeds or added to the principal. Federal loans have their fees paid from proceeds, while private loans usually have the fee added to the principal. As an example, with a $10,000 loan with a 5% fee, if the fee is paid from proceeds, you would receive a check for $9,500, and the principal amount of the loan would be $10,000. If the fee is added to the proceeds, you would receive a check for $10,000, and the principal amount would be $10,500.

Fees

Many loans involve additional charges. These fees are usually presented as a percentage of the requested loan amount. Fees are usually added to the amount you requested to borrow - but sometimes they are deducted from loan proceeds. Consult your selected lender and read your promissory note carefully to determine the types of fees (if any) associated with your loan. Note that the amount of fee charged often varies depending on your (and your co-signer's) credit score.

Financial Aid

The monetary support a student receives from federally and privately funded sources to attend college. Financial aid can include loans, grants, scholarships, and work-study programs.

First Payment Due

An estimate of when the first payment on this loan will be due based on several factors.

  • The type of loan.
  • When repayment begins for the loan as determined by the lender.
  • The date you entered for graduation, if repayment begins at graduation. If you don't know, enter an estimated date to use the timeline as a guide.
  • The grace period offered by the lender.

This date should be viewed as an estimate; your lender will provide you with specific repayment terms and schedules.

Fixed Interest Rate

A loan expense charged to a borrower for the use of borrowed money at a percentage of the amount of money borrowed that does not change over time. See also Interest Rate and Variable Interest Rate.

Forbearance

A debt management provision offered by many lenders whereby payments on the loan in question are temporarily suspended.

A forbearance is not automatically granted and requires documented proof of extreme financial hardship or other unusual circumstances. Even if a forbearance is granted, the suspended payments will still be due eventually -- plus any interest that might have accrued on the suspended payments. For more information, contact the financial aid office at the school that issued the loan or the original lender or current servicer of your loan.

If you are concerned that you will not be able to repay your loan, you should contact your lender to inquire about the possibility of deferment or forbearance. Make this inquiry before you miss payments. In most cases, if you default on your loan, you are no longer eligible for a deferment or forbearance.

Full Deferment

A situation in which the borrower pays neither interest nor principal on a loan. Full deferment is often available during the enrollment period (when the student is enrolled in school) on federal and private student loans.

Funds Disbursed

See Disbursement.

G

Grace Period

The time between a student leaving the educational program for which they borrowed, such as graduation, and when the borrower needs to make the first payment. For loans in the student's name, this is typically 6 to 12 months after graduation. For loans in the parent's name, Continuing Education loans, or K-12 loans for boarding or private school, there may be a shorter period or no grace period at all.

During this time, interest still accrues on the loan. The grace period is effectively an extension of the deferment.

Graduate PLUS Loans

Federally guaranteed loans that are available to graduate and professional students. A version of the Parent Loan for Undergraduate Students (PLUS).

You might want to choose a GradPLUS loan if:

  • You like the certainty that a fixed-rate loan provides.
  • Your credit is good, fair, or poor (your cost will likely be lower than through a private loan).
  • You like the protection that the greater deferment and forbearance options provide
  • The repayment incentives offered may bring the repayment interest rate cost to a lower rate than currently available from private loans.

You might want to choose a private loan instead if:

  • You are comfortable with the possibility of interest rates increasing beyond the interest rate cap of the GradPLUS loan
  • You have an excellent credit score. Such borrowers may be charged a lower interest rate than that of the fixed-rate GradPLUS program, but if interest rates climb, this benefit decreases or disappears altogether.
  • You believe that there is little possibility that you would use the deferment or forbearance options.
  • You plan to repay the loan within a short period of time.

A credit check is required, but only for adverse credit history - not for credit score. Compare Graduate PLUS Loan options.

Grant

A form of financial aid or monetary assistance that does not have to be repaid and is usually based on need.

Gross Annual Income

The total amount of money you earned (or your family earned) in a given year. Often used as part of the federal financial aid formulas to determine eligibility for certain kinds of aid.

Guarantor

An agency that specializes in protecting lenders from default costs. These guarantors often act as a resource to aid the borrower in default prevention.

H

Half-Time

Half-time (or part-time) or less is generally considered 6 or fewer credit hours per term. Check with your school about how enrollment status is defined as it may affect your eligibility for certain types of loans.

Home Equity Loans

Loans where the applicant's residence is used as collateral for a secure line of credit based on the available equity in the home (much like a second mortgage). Homeowners can borrow up to the current value of their home minus any outstanding amount owed.

I

Independent Student

A classification of a student for the purposes of the federal financial aid application.

The federal definition of an independent student is one who can answer yes to any of the following questions, for the 2008-2009 filing year:

  1. Were you born before January 1, 1985?
  2. Will you be working on a degree beyond a bachelor's degree, such as a master's or doctorate, in school year 2008-2009?
  3. As of the date you will be submitting the FAFSA, are you married? (Answer yes if you are separated, but not divorced.)
  4. Do you have children who receive more than half of their support from you, or do you have dependents (other than your children or spouse) who live with you and receive more than half of their support from you, now and through June 30, 2009?
  5. Are you an orphan or ward of the court or were you a ward of the court until age 18?
  6. Are you a veteran of the U.S. Armed Forces?
  7. Are you currently serving on active duty in the Armed Forces for other than training purposes?

In unusual circumstances, a student who does not meet any of these criteria may still be considered independent if a compelling case can be made to override the dependent status. This can only be done by a qualified financial aid officer and is very rare.

A common misconception is that by virtue of not being claimed on your parent's income tax for two years, you can become an "independent" student.

See also Dependent Student.

Index

A single number calculated from an array of prices or of quantities. Indexes can be used to set interest rates. See also Prime Rate and LIBOR.

Interest

A loan expense charged to a borrower for the use of borrowed money. Interest is calculated as a percentage of the total amount originally borrowed and any capitalized interest. Accrued interest is interest that accumulates on the unpaid principal balance of a loan.

Interest Only Deferment or Principal Deferment

With many student loans, borrowers can elect to make "interest-only" payments during the enrollment period (when the student is enrolled in school).

Interest Rate

A percentage (rate) of the original amount of a loan, including any accumulated interest, charged to the borrower for the use of borrowed money.

Interest charged on a loan varies from loan to loan and lender by lender. The interest rate is usually computed on a monthly basis, and may compound over time (that is, the interest charged during month one will itself have interest charged on it during month two, and so on). See also Fixed Interest Rate and Variable Interest Rate.

Interest Rate Structure

"Variable" rate loans have interest rates that will vary with prevailing rates over time. "Fixed" rate loans have a set interest rate that won't vary over time.

Is Payment Deferral Allowed?

Most student loans allow full deferral of payments while the student is enrolled at least half-time, while most parent loans do not allow any deferral. Additionally, some loans will support the concept of making interest-only payments. Interest-only payments will ensure that, at the end of the deferral period, the principal balance has not increased, and the payments will be smaller than if the borrower had deferred Principal and Interest.

J

JavaScript

A programming language that is mostly used in web pages, usually to add features that make the web page more interactive. Examples of JavaScript include mouseovers and drop-down menus.

L

Lender

A bank, private company, credit union or other entity from which someone borrows money.

Lender Name

The name of the lender providing the loan. Even with federally-backed loans, there is always a lender who provides the service to the borrower.

LIBOR

Stands for London Interbank Offered Rate. A daily reference rate based on the interest rates at which banks offer to lend funds to other banks in the London wholesale money market. Some lenders base their interest rates on the LIBOR.

Loan

An advance of funds from a lender to a borrower with an agreement that the borrower pays interest on the amount borrowed and pays back the initial amount of the loan over an agreed period of time.

Loan Holder

The organization that currently "owns" the loan and to which the borrower owes repayment. Many banks sell their loans, so the initial lender and the current holder could be different.

Loan Needed

This date should reflect the month and year in which the first tuition bill (or other expense) will need to be paid. This will determine the timing of the disbursement of the loan, either directly to the school or to the borrower. The date the loan is actually awarded can also mean the start of the accrual of interest, so be sure you are not choosing a date too early, or the interest will start adding to the total cost of the loan sooner than you actually need it.

Loan Principal

The total sum of money borrowed. Loan principal includes the original amount borrowed plus any interest that has been capitalized.

Loan Re-amortization

When lenders offer borrower rewards, there are two ways they can implement them. The most common way is by keeping the monthly payment fixed. By doing this, more of each payment goes to pay down the principal on a monthly basis, so you wind up paying the loan off more quickly. For example, a loan that normally had a monthly payment of $100/month, and a term of 10 years (120 months), might have the same monthly payment but be paid off in 113 months with Borrower Rewards.

Conversely, other lenders will change the monthly payment each time a new borrower benefit kicks in, but will keep the term of the loan the same. So, in the example above, the loan might go from $100/month for 120 months, to $98/month after the first borrower benefit, and then $95/month, and so on. In this case, the lender is said to re-amortize the loan.

Loan Type

Different types of education loans include federal student loans (Stafford, Perkins, GradPLUS), federal parent loans (PLUS), private student loans, continuing education loans, K-12 education loans, and home equity loans.

Loan Types

Federal Stafford Loan
A fixed-rate loan backed by the U.S. Government. Subsidized or unsubsidized Stafford Loans should be used before private loans. To qualify, regardless of need, you must fill out the FAFSA (Free Application for Federal Student Aid). A financial aid award letter from your school will show specific award amounts.
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Private Loan
A loan from a bank or other private entity. A loan expressly for paying for college expenses such as tuition, room and board, and other associated costs. Private student loans are based on credit and usually a credit-worthy co-signer.
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Federal GradPLUS Loan
A fixed-rate federal loan for graduate students. Graduate PLUS loans can be used to cover the full cost of attendance, less other aid. They perform a check only for adverse credit history - not for credit score.
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Federal PLUS Loan
A fixed-rate federal loan for parents of undergraduates. PLUS Loans can be used to cover the full cost of attendance, less other aid. They perform a check only for adverse credit history - not for credit score.

M

Master Promissory Note

See Promissory Note.

Maximum Deferment Period

Lenders frequently allow borrowers to postpone making payments on their loans while enrolled in school at least half-time and extending a number of months after the student leaves their program or graduates. During this time, interest may accrue. Some loans, such as continuing education loans, put a limit on the amount of time repayment can be deferred before a borrower is required to begin making monthly payments.

Maximum Loan Amount

The greatest amount that can be taken out using this loan product. You may not be eligible to take out this much money; the exact amount any borrower is eligible for will depend on the lender and product detail, so consult with your lender for specifics.

Minimum Loan Amount

The smallest amount that can be taken out using this loan product. Some lenders will offer different borrower rewards and rates based on the size of the loan. You may not be eligible to take out this much money; the exact amount any borrower is eligible for will depend on the lender and product detail, so consult with your lender for specifics.

Minimum Monthly Payment

The lowest amount that can be paid each month toward the repayment of a loan. Some lenders may enforce a minimum monthly payment for loans with low dollar amounts, such as Stafford Loans. This will mean that any extra amount will be paid towards the principal, thereby resulting in a shorter repayment period and a lower total cost.

Monthly Payment

How much you are expected to pay each month toward your loan. When using the SimpleTuition loan comparison tools, if the monthly payment amount changes when you select or deselect "Borrower Rewards" in the sidebar, then the amount shown is an estimate of the monthly payment you will achieve after all borrower rewards are factored in. Note that borrower rewards can sometimes be lost - check with your lender for details.

N

Name of Lender

Your lender may make a special offer available to its current borrowers. By telling us the name of your lender we can be sure to highlight these opportunities for you. Don't worry if you don't know your lender - there are lots of great consolidation deals to be found.

Non-Degree Granting Program

A type of educational program not structured toward its students obtaining a degree, such as a Bachelor's degree or Master's degree. These might include continuing education programs, certificate programs, or adult education programs.

NSLDS (National Student Loan Data System)

The National Student Loan Data System (NSLDS) is the U.S. Department of Education's central database for student financial aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, the Pell Grant program, and other Department of Education programs. You can look up your current federal student loans using the NSLDS at http://www.nslds.ed.gov/nslds_SA/.

Number of Disbursements

Student loans are paid out in a variety of different ways. In many cases, a loan is taken out for a full year's need, but the school requires the money on a semester by semester basis. In these cases, the loan is usually paid twice; half of the loan amount once at the start of the fall semester, and the remainder once at the start of the spring semester. In this way, the borrower is only charged interest on the money that is actually disbursed. Other loans will only make one disbursement. In this case, interest is charged on the entire disbursed amount immediately. The number of disbursements can depend on the loan type as well as the school.

Number of Payments

This is an estimate of the number of payments it will take to pay off your loan. The expected number of payments might change when Borrower Rewards are factored in. Note that Borrower Rewards can sometimes be lost - be sure to check with your lender for details.

O

Online Application

The ability to request a loan over the Internet using a form on a lender's website.

Operating System

The software program on a computer that manages all of the other programs on a computer. Some common examples are Microsoft Windows or Mac OS.

Origination Fee

A fee that is charged when the loan funds are paid to the school or borrower. See also Fees, Default Fee and Repayment Fee.

P

Parent-Sponsored Loan

A type of private loan available to parents and family or close friends of graduate and professional students, international students, and continuing education students, in addition to undergraduate students. Terms and conditions vary by lender.

Part-Time

See Half-Time.

Pell Grant

A federal financial aid program where money is given to students with the highest amount of financial need. A student must complete the Free Application for Federal Student Aid to be eligible. Pell Grants do not have to be repaid.

Perkins Loans

Loans awarded to undergraduate and graduate students with exceptional financial need. This is a campus-based loan program, with the school acting as the lender using a limited amount of funds provided by the federal government. The Perkins Loan is a subsidized loan, with the interest paid by the federal government during the in-school period and the nine month grace period. There are no origination or guarantee fees, and the interest rate is 5%. There is a 10-year repayment period.

PLUS Loans (Parent Loan for Undergraduate Students)

Low-interest federally backed loans that parents can take out on behalf of their undergraduate children to pay for educational costs. PLUS Loans can be used to cover the full cost of attendance, less other aid. A credit check is required, but only for adverse credit history - not for credit score.

Prepayment

Any amount the borrower pays on a loan before it is required to be paid under the terms of the loan's promissory note. There is never a penalty for prepaying principal or interest on federal student loans, but there may be on other types of loans. Check with your lender for more information.

Prepayment Penalty

A fee charged by a lender if the borrower pays off all or part of a loan before the loan is due or before a date defined by the lender. There is never a penalty for prepaying principal or interest on federal student loans, but there may be on other types of loans. Check with your lender for more information.

Prime

The interest rate at which banks borrow money from each other. Variable-rate loan programs base their interest rates on an index like the prime rate. Most financial sections of major newspapers will list the current prime rate. See also LIBOR.

Principal Amount

The total amount of money borrowed in a loan that includes the original amount borrowed plus any interest that has been capitalized. In some cases, it will be higher than the amount available to the borrower - for instance, if you request $10,000 in a private loan with a 5% origination fee, then the principal amount would be $10,500.

Private Certified Loans

See Certified Private Loans.

Private Loans

See Private Student Loans.

Private or Boarding School Loans

See K-12 Education Loans.

Private Student Loan Consolidation

A student loan consolidation loan lets a borrower combine several individual loans into one single loan. This has the effect of simplifying the borrower's paperwork (one loan payment to make instead of several) and may bring additional benefits. Private student loans can be consolidated, but must be kept separate from federal student loans. Some lenders provide borrower rewards (or borrower benefits) to offer even more savings. See also Consolidation and Federal Student Loan Consolidation.

Private Student Loans

A non-governmental loan made by a private lender expressly for paying for college expenses such as tuition, room and board, and other associated costs. Private student loans are based on credit score and usually a credit-worthy co-signer. Sometimes private loans are called "alternative loans". Most private loans have a range of possible interest rate and fee combinations. The pricing combination a borrower gets, if they are approved for the loan, will be determined by the credit profiles of the borrower and co-signer. Remember that a borrower may end up with a pricing combination somewhere in the middle of the range shown on SimpleTuition. Compare Private Student Loan options.

Private Uncertified Loans

See Uncertified Private Loan.

Program of Study

SimpleTuition asks for your field of study or type of academic program in order to include possible applicable loan programs and/or terms in your results.

Promissory Note

A binding legal contract between a lender and a borrower that contains the loan terms and conditions, including how and when the loan must be repaid. By signing this note, the borrower agrees to repay the loan. This document must be signed by the borrower and any applicable co-signer before the funds are distributed. The borrower should keep this document until the loan has been repaid.

R

Rate Charged During Repayment

Some loans carry different interest rates in the period in which a student is enrolled in school from the repayment period. This is the interest rate applicable during the repayment period.

Rate Index

Usually a commonly published rate, such as the prime rate, LIBOR, or Treasury Rate. Student loan interest rates are often expressed as a rate index plus an additional interest rate spread or margin. Note that there are variations on these common rate indices. Read loan details and the promissory note carefully to identify the Rate Index (if any) that is used to calculate interest on your loan. See also Interest Rate, Prime Rate and LIBOR.

Repayment

The period of time in which a borrower takes on the responsibility of repaying a loan.

Repayment Fee

A fee that is calculated and added to principal just as repayment begins. See also Origination Fee, Default Fee and Fees.

Repayment Length - Standard and Extended

For federal student loan consolidation loans, borrowers often have a choice of repayment structures that can include:

  • Standard: Assumes a repayment period of 10 years (120 months) of level payments.
  • Extended: Assumes the maximum allowed repayment length for which you would be eligible, which varies from 10 to 30 years, depending on the amount of the loan.

Other repayment structures exist, so check with your selected lender for more options. SimpleTuition offers information about different repayment options for informational purposes only and makes no representations about the accuracy or availability of these options. Consult with your selected lender to learn more about different repayment options.

Repayment Rate

A different rate of interest on a loan once that loan has entered repayment (usually higher than the rate charged during the deferment period). See also Deferral Rate.

Repayment Schedule

A statement the loan holder provides to the borrower that lists the amount borrowed, the amount of monthly payments, and the date payments are due.

Residency Loans

Private student loans expressly for the purpose of paying for educational expenses incurred during medical residency programs. Borrowers can often borrow to cover living expenses for the time relevant to the residency program, but check with your selected lender to understand any limitations.

S

Scholarship

These are monetary awards that do not have to be repaid; they are generally awarded based on any number of criteria, including financial need, academic or athletic achievement, or public service. Scholarships often require an application that may include an essay, recommendations, or an interview process.

Servicer

An entity that handles billing and customer service for a loan. The servicer may be a different entity than the lender. The servicer is often the most common point of contact for the borrower.

Stafford Loans

Fixed-rate, federally-backed loans available to undergraduate and graduate students. Stafford Loans should be used before private student loans. To qualify, regardless of need, you must fill out the FAFSA (Free Application for Federal Student Aid).

A Stafford Loan, as of July 1, 2010, is only available directly from the U.S. Government. This is also called a Direct Stafford Loan.

Student Loans

Loans offered to students to assist in payment of the costs of their education. See also private student loans, federal student loans, and Stafford Loans.

Student Status

A classification of a student for the purposes of the federal financial aid application - either independent or dependent. Most traditional college students are dependent, even if they are paying their own way through college or no longer have a relationship with their parents. Stafford Loan limits can vary by a student's status of independent or dependent. See also Dependent Student and Independent Student.

Subsidized Stafford Loan

A fixed-rate, federally-backed loan available to undergraduate and graduate students where no interest accrues while the student is enrolled. SimpleTuition asks for the type of loan you were awarded (or the split between subsidized and unsubsidized loans you were awarded) in order to accurately display loan details. Consult your financial aid award letter or other communications from your financial aid office to determine the type of Stafford Loan and the split between types. If you don't know the answer, make an estimate - the relative difference among loan products will be the same. See also Stafford Loan and Unsubsidized Stafford Loan.

T

Total Balance of Combined Loans

For consolidation loans, the sum of all of the outstanding loans that you want to consolidate.

Total Combined Monthly Payment

For consolidation loans, the sum of all of the monthly payments for each of the outstanding loans that you are attempting to consolidate. This would be the combined monthly payment if you DON'T consolidate.

Total Cost of Loan

An estimate of the sum of the total payments you would be scheduled to make on a loan. Total cost of loan might change when borrower rewards (or borrower benefits) are factored in. Note that borrower rewards can sometimes be lost - be sure to check with your lender for details.

U

Uncertified Private Loan

A private student loan that does not require a school official to certify any aspect of the amount borrowed. Uncertified private loans are usually disbursed directly to the borrower. Compare Private Loan options.

Unsubsidized Stafford Loan

A fixed-rate, federally-backed loan available to undergraduate and graduate students where interest accrues while the student is enrolled. SimpleTuition asks for the type of loan you were awarded (or the split between subsidized and unsubsidized loans) in order to accurately display loan details. Consult your financial aid award letter or other communications from your financial aid office to determine the type of Stafford Loan and the split between types. If you don't know the answer, make an estimate - the relative difference among loan products will be the same. See also Stafford Loan and Subsidized Stafford Loan.

V

Valid for Past Due Balances

A feature of a loan where the loan may be used to finance payments already owed to the school, such as overdue tuition bills. Contact your lender for any restrictions.

Variable Interest Rate

A loan expense charged to a borrower for the use of borrowed money at a percentage of the amount of money borrowed that can change over time. Variable interest rates are set by the lender and are often based on rate indexes, such as prime or LIBOR. See also Interest Rate and Fixed Interest Rate.

W

William D. Ford Direct Lending Program

See Direct Loans.

Work-Study

A federally-funded program in which the federal government and the college provide funds for part-time employment on campus as a component of a student's financial aid. Students earn at least the federal hourly minimum wage and the amount of the award can depend on when the student applies for the job, the level of financial need, and the availability of funds from the school. Graduate students might receive a salary instead of an hourly wage. Work-study jobs can be either on campus or off campus and may be related to the student's course of study. The amount a student can be paid, or number of hours worked, cannot exceed the Federal Work-Study award.

Y

Your Credit Rating

Please describe the general credit profile of you or your co-signer to help us better present loan options.

Z

Zip Code

Your ZIP code helps us show you any state-specific loans from our database that might be available to residents from your state.