Important Loan Terms
Capitalization -
Adding accrued interest to the principal. Lenders may capitalize interest monthly,
quarterly, semi-annually, annually or at repayment.
Credit Bureau -
Agency that collects and distributes credit information to creditors. Student
Loan default information appears on a credit report.
Default -
If a borrower's monthly payments are more than 180 days overdue, the borrower
is in default. The borrower is still responsible for repayment of the principal
and accrued interest, as well as collection costs.
Deferment -
A limited period of time to postpone repayment of student loans.
Delinquent -
A loan payment that is more than 30 days late. If the borrower fails to fix
the delinquency, the borrower will default.
Disclosure Statement -
Statement of actual cost of a loan, including interest rate and any additional
finance charges. Provided by the Lender.
Fixed Interest -
Rate that does not change during the life of the loan.
Forbearance -
Special arrangement between the borrower and lender (at lender's option), which
allows borrower to temporarily stop making payments, obtain an extension
for making payments, or make smaller payments than scheduled.
Grace Period -
Six-month period from the day you graduate, withdraw or drop below half-time
enrollment status to the beginning of the repayment period.
Guarantee Agency -
The organization that administers the Federal Family Education Loan Programs
in your state. This agency guarantees repayment of a student loan if the
borrower defaults.
Interest Rate -
A percentage of the principal that is charged for the use of the borrowed money.
Lender -
Bank, savings and loan, credit union or other approved entity from which you
receive your student loan.
Origination Fee/Insurance Premium -
Fees deducted from principal of loan by Federal Government as insurance against
loan default.
Principal -
The amount borrowed and the amount on which interest is charged.
Master Promissory Note -
The legal document which lists conditions under which you are borrowing and
the terms of repayment.
Repayment Schedule -
A form provided by a lender which indicates the monthly payment amount, the
date when payments are due, and the terms of the loan.
Secondary Market -
A state or private agency that purchases student loans from lenders
Servicer -
The company that provides services to students on behalf of a lender or secondary
market.
Variable Interest -
Rate of interest that is tied to an index and changes periodically as the index
changes.
Contact Financial Aid at 920-498-5444
or email for specific questions. |
