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Glossary
Basis on which students without high school diplomas or GEDs may qualify for federal student aid. If the school fails to verify your ability to benefit—or does so inappropriately—you can file an ATB application to discharge aid borrowed to attend that school.
- Download an Ability to Benefit Loan Discharge Application (pdf, 0.09 MB) .
- Find out more about loan discharge options.
Annual amount of time you spend in class, as determined by your school. Schools measure the academic year based on the number of weeks you attend class and either the credit hours or clock hours you earn.
Process of adding up interest over time.
- Interest accrues on student loans every day.
- If you had a $10,000 loan at a 6.8% interest rate, your interest would accrue at $1.86 every day (10,000 X 0.068).
- If interest is not paid as it accrues, it may be added—or capitalized—into you principal balance.
AGI is used in the calculation of your income tax liability—and determines whether you are eligible for certain student loan tax benefits. Additionally, AGI is used to determine your financial aid eligibility on your Free Application for Financial Aid (FAFSA). AGI takes into account your full (gross) income, which includes wages, alimony, Social Security, and business, investment, and dividend income. It then adjusts your income downward based on certain deductions, but not standardized and itemized deductions.
- Find out more about student loan borrower tax incentives.
Negative credit caused by making late payments on debt—like credit cards and student loans—or by declaring bankruptcy.
Total amount you can borrow throughout your academic career. Aggregate loan limits depend on the type of loan borrowed and what type of borrower you are (undergraduate, independent, etc.).
Process of paying off your loans in regular installments over a period of time.
Maximum loan amount you can borrow during an academic year.
Date you are expected to complete your academic program requirements.
Arrangement that allows graduate students to assist a professor in the teaching of an undergraduate class. Assistantships can be granted as financial aid, with the student receiving a full or partial tuition waiver, fee payment, and/or a small stipend.
Letter that details the types of financial aid—and how much of each type—you are eligible for in an academic year. You will receive an award letter every year you attend school.
- Find out how to understand your award letter.
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Process used by a person unable to repay his or her debt. Filing for bankruptcy turns over a person’s available assets to his or her creditors to cancel the debt. Student loans (both federal and private) cannot normally be cancelled through bankruptcy.
Student or parent/legal guardian who signs a Master Promissory Note to take out a student loan. The borrower is legally responsible for repaying a loan.
Bursar's Office (Student Accounts Office)
Office responsible for billing and collection of charges like tuition.
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Federal financial aid programs administered directly by schools. The federal government provides eligible schools with a fixed amount of campus-based aid each year. Financial aid administrators at the school then award those funds to needy students. Types of campus-based aid include Perkins loans, supplemental education opportunity grants, and work-study.
- Find out more about different types of financial aid.
The process where a lender adds unpaid interest to the principal balance of a loan, which increases the overall balance of the loan.
Accrued interest that has been added to your outstanding principal balance.
Lender request for reimbursement of a loan. Claims may be issued because of a borrower’s consistent, consecutive delinquency or failure to begin payment (i.e., default). Lenders submit claims to guarantors. Lenders can also request reimbursement of losses due to:
- The borrower’s death, disability, default or bankruptcy.
- School closure.
- False certification.
Company that specializes in the collection of delinquent or defaulted loans. Lenders often hire a collection agency to recover loans.
- See how collection agencies fit in with other key industry players.
Individuals who borrow a loan together are considered comakers. Each comaker is responsible for the loan’s entire repayment. Comakers could be married individuals who consolidated their loans together or parents who jointly borrowed a PLUS loan before April 16, 1999.
Loan that combines several student loans into a new loan from a single lender. The new Consolidation loan is used to pay off the balances on the old loans.
- Find out more about consolidation loans.
Estimate of your educational expenses for a period of enrollment. Schools determine COA by calculating how much money you will need to attend school for a year. This amount includes all reasonable expenses, like books and room and board.
- Find out how COA impacts your financial aid award.
Numerical evaluation of your ability to handle loans and other types of credit. Eligibility for PLUS loans is partially based on your credit rating.
- Learn more about why having good credit matters.
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Status federal student loans enter if your payments are more than 270 days past due. Private loans and older federal student loans may have different time frames for default. Refer to your loan's promissory note to determine its default time frame.
- Learn all about student loan default.
Period of time in which you can postpone repayment of your loans. If you meet the eligibility criteria, you cannot be denied a deferment.
- Find out more about postponing repayment with a deferment.
Failing to make a full scheduled loan payment by its due date.
- Learn all about student loan delinquency.
Students who do not meet the federal criteria of a self-supporting student. It is assumed that dependent students are relying at least partially on support from their families.
Direct Loan Program (William D. Ford Federal Direct Loan Program (DL))
Student loan program authorized on July 23, 1992, by the Higher Education Act. The Direct Loan program (DL) offers subsidized and unsubsidized Direct Stafford loans, federal Direct Consolidation loans, and Direct PLUS loans. Funding comes directly from the United States Treasury rather than from private lending institutions.
- See how the Direct Loan program fits in with other key industry players.
Release of your loan funds to your school.
Cancellation of a student loan debt due to certain rare circumstances, such as a school closure, death of the borrower, or total and permanent disability.
- Learn about different loan discharge options.
Student who fulfills his or her college credit responsibilities in a non-classroom setting, either through a correspondence course or through online learning.
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If you face extreme economic difficulties, you can apply for this temporary postponement of your payments.
- Download an Economic Hardship Deferment Request for FFELP (pdf, 0.06 MB).
- Find out more about postponing repayment with a deferment.
Tax benefits for qualified education expenses paid for you, your spouse, or a dependent. Eligible expenses can include tuition, books, and other supplies.
- Learn more about borrower tax incentives.
Person who is not a U.S. citizen but is eligible for federal student aid. Eligible non-citizens include U.S. permanent residents who are holders of valid green cards, U.S. nationals, and holders of form I-94 who have been granted refugee or asylum status. Non-citizens who only hold a student visa or an exchange visitor visa are not eligible for federal student aid.
- Find out more about eligible non-citizens from the U.S. Department of Education.
Schools declared eligible by the U.S. Department of Education to participate in federal student loan programs.
Signer of a promissory note who is secondarily liable for a loan obligation. A lender may require a PLUS loan borrower with adverse credit to obtain a creditworthy endorser in order to receive a loan.
Your status once you complete the registration requirements at the school you are attending or will attend.
Counseling session you must take part in upon receiving your first federally guaranteed student loans. Your school arranges and conducts your entrance interview, which covers topics like loan repayment and debt management. An entrance interview must be conducted before you can receive your loan proceeds.
e-Sign
Efficient and secure method that allows you to apply for federal loans and sign your Master Promissory Note online.Estimated Financial Assistance (EFA)
School’s estimate of the amount of federal, state, or other scholarship, grant, work, or loan program assistance that you have been or will be awarded for a loan period.
Assumption of how much money you or your family will make in the next year. You may have to estimate your income when completing your FAFSA. You can rely on your previous year’s tax return to do this.
Counseling session you must take part in when you graduate or otherwise leave school. The school arranges and conducts your exit interview, which covers topics like loan repayment and debt management.
Estimate of the amount you, your spouse, and your family may be expected to contribute toward your education during an academic year. EFC is calculated using information from your FAFSA.
- Find out more about how EFC fits into the financial aid process.
Loan repayment schedule that can extend your repayment to up to 25 years. This repayment schedule is available to new borrowers as of October 7, 1998, with an outstanding balance of more than $30,000.
- Learn about whether you qualify for extended repayment.
- Estimate your monthly payments under this schedule with our extended repayment calculator.
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Pre-printed application and promissory note sent to you for your signature.
Federal Family Education Loan Program (FFELP)
Loan program authorized by the Higher Education Act of 1965. Federal Family Education Loan Program (FFELP) loans include Stafford, PLUS, SLS, and Consolidation loans and are guaranteed against default by the federal government. As of July 1, 2010, new FFELP loans will no longer be made.
- See how FFELP fits in with other key industry players.
Formula used to determine your estimated family contribution (EFC). Federal methodology takes into account assets, your family’s size, taxable and nontaxable income, and how many family members you have in college (but not net value of your family’s residence).
Program that provides undergraduate and graduate students with part-time employment during the school year.
- Learn more about work-study and the other types of financial aid.
Program that provides financial support to a graduate student and tracks the student's progression through his or her program.
- Learn more about fellowships and the other types of financial aid.
Funds you and your family receive to help pay for your education.
- Learn about all the different types of financial aid.
Financial Aid Administrator (FAA)
College or university employee who administers financial aid for his or her school.
Combination of grants, scholarships, loans, and work-study from all sources (federal, state, institutional, and private) offered to help you attend college. Financial aid packages are detailed in financial aid award letters.
- Find out how to understand your award letter.
Concept of understanding financial matters, especially areas such as budgeting, financial planning, and investment.
To raise awareness and promote greater understanding of financial matters, the Treasury Department and Congress established April as financial literacy month.
Non-variable, or steady, interest rate. A fixed interest rate will not change for the life of a loan.
Period of time in which you can postpone making payments on your loan. Interest accrues on loans during forbearance, and you are responsible for paying it—either during the forbearance or once the forbearance ends.
- Find out more about forbearance.
Free Application for Federal Student Aid (FAFSA)
Application used to apply for federal student aid. To receive any form of federal financial aid—loans, grants, or scholarships—you must fill out this form, which can be completed online.
- Find out how completing the FAFSA fits into the financial aid process.
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Period of time some borrowers receive before their first payment is due. Your grace period begins once you stop attending school at least half of the time, and its length depends on the type of loans you have. Once your grace period ends, you will need to begin repayment.
PLUS loan that can only be borrowed by eligible graduate or professional students.
- Find out more about Grad PLUS loans and other types of student loans.
Repayment schedule in which your payments start small and then slowly increase so your loan is repaid in 10 years.
- Learn more about graduated repayment.
- Estimate your monthly payments under this schedule with our graduated repayment calculator.
Loan postponement available if you are pursuing an approved course of study under graduate or postgraduate fellowship program. You must be enrolled full time in an eligible program and hold at least a bachelor's degree.
- Learn more about postponing repayment through deferment.
Student enrolled in a post-baccalaureate program of study at a qualified institution of higher education.
Type of financial aid that you do not have to repay.
- Learn about all the different types of financial aid.
Your total revenue (including non-job-related income) before federal and state taxes, credits, exclusions, and other withholdings are deducted.
Nonprofit organization that works with the U.S. Department of Education, lenders, servicers, and schools under the Federal Family Education Loan Program (FFELP) to ensure student loan borrowers successfully repay their loans.
- See how guarantors fit in with other key industry players.
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Half of a full course load, as defined by your school. Definitions of half-time enrollment vary by school—it’s important to know how your school defines this. Being enrolled only half time impacts how much aid you receive. Also, if you drop below half-time enrollment, your loans can enter repayment.
Higher Education Act of 1965 (HEA)
Legislation that enables students attending postsecondary schools to receive financial assistance. The HEA was reauthorized in 1968, 1972, 1976, 1980, 1986, 1992, 1998, and 2008.
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Income-Based Repayment Schedule
Repayment schedule that bases your payments on your income and family size. Borrowers who have high student loan debt, a low income level, or both may be eligible for IBR.
- Learn more about income-based repayment.
- Estimate your monthly payments under this schedule with our income-based repayment calculator.
Income-Sensitive Repayment Schedule
Repayment schedule that adjusts monthly payments based solely on your expected total monthly gross income. Total income includes money received from employment and other sources during the course of the repayment period.
- Learn more about income-sensitive repayment.
- Estimate your monthly payments under this schedule with our income-sensitive repayment calculator.
Student who is at least one of the following: 24 years old, married, an orphan or ward of the court, a graduate or professional student, a veteran or active duty member of the U.S. Armed Forces, or economically responsible for legal dependents other than a spouse.
Postponement of loan payments for when you are enrolled at least half time at an accredited school.
- Download an in-school deferment application.
- Find out more about postponing repayment with a deferment.
Formula a college or university uses to determine how it will allocate its financial aid funds.
Institutional Student Information Report
Version of your Student Aid Report (SAR) sent electronically to your school.
Charge you take on by borrowing money. Lenders typically charge interest monthly. Multiplying your loan’s interest rate by its principal balance (the amount still needing to be repaid) determines the interest owed.
Tax deduction of up to $2,500 for eligible student loan borrowers. Eligibility is based on your student loan payments and your adjusted gross income during a calendar year.
- Find out more about student loan borrower tax incentives.
Loan postponement available while you are serving in an internship or residency program in order to begin professional practice or service. You can also use this if you are serving in a health professions internship or residency training program that leads to a degree or certificate. To qualify, you must have an outstanding balance on a Federal Family Education Loan Program (FFELP) loan that was made prior to July 1, 1993.
- Learn more about postponing repayment through deferment.
Seizure of the income tax refunds of borrowers with defaulted loans. The U.S. Internal Revenue Service (IRS) uses this money to repay the defaulted loans.
- Learn about additional consequences of default.
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Colleges that offer 2-year programs and grant associate degrees, typically. Students sometimes attend junior college before transferring to a 4-year school.
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Student-requested enrollment break approved by the school based upon its leave of absence policy. Leaves can total no longer than 180 days within an academic year and do not include semester or spring breaks.
Financial institution or entity that provides funds to you or your parent for an educational loan under the Federal Family Education Loan Program (FFELP) or through private loans. FFELP was terminated as of July 1, 2010. The U.S. Department of Education is the lender of federal student loans that originated after July 1, 2010.
- See how lenders fit in with other key industry players.
Cancellation of a loan’s remaining balance—or a portion of the balance—by the federal government.
- Learn about the different types of loan forgiveness.
Company that has possession of a loan. Often your holder is also your lender.
- Find out who currently holds your loan by using the National Student Loan Data System.
Process of making a new loan. Origination begins once a lender receives a Master Promissory Note or school certification from either you or your school.
Attendance period within an academic year your loan is certified for.
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Contract that allows you to receive loans. When you sign an MPN, you make a commitment to repay the money you borrow plus accrued interest.
Money—typically in the form of scholarships or grants—awarded by schools and other organizations based on your academics, not your financial need.
- Learn about all the different types of financial aid.
Postponement if you are serving on active duty, or National Guard duty, during a war, a military operation, or a national emergency. This deferment begins when you enter active duty and ends 180 days after you are demobilized.
- Download a Military Deferment Request for Direct Loans and FFELP (pdf, 0.09 MB).
- Learn about postponing repayment through deferment.
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National Oceanic and Atmospheric Administration Deferment
Loan postponement available while you are serving in the National Oceanic and Atmospheric Administration (NOAA). You can use this deferment for up to 3 years. You must have an outstanding balance on a Federal Family Education Loan Program (FFELP) loan that was made prior to July 1, 1993.
- Learn how to postpone repayment through deferment.
National Student Loan Data System (NSLDS)
The U.S. Department of Education’s central database for information about federal student aid. You can log on to NSLDSSM to find information like how much you have borrowed and who holds your loans.
- Access NSLDS online.
- Find out why it’s important to know what you owe.
Standardized assessment of your ability and/or your family’s ability to contribute toward education expenses.
Amount left after federal and state taxes, credits, exclusions, and other withholdings are deducted from your gross income.
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Loan that has had its principal and interest paid entirely.
Loan postponement available if you are pregnant or caring for a newborn or newly adopted child. You can use this deferment for up to 3 years. You must have an outstanding balance on a Federal Family Education Loan Program (FFEL) loan that was made prior to July 1, 1993.
- Download a Working Mother Deferment Request for FFELP (pdf, 0.07 MB).
- Learn about postponing repayment through deferment.
Peace Corps/ACTION/Tax-exempt Volunteer Deferment
Postponement available if you are serving as a full-time, paid volunteer for a tax-exempt organization. You can use this deferment for up to 3 years. You must have have Stafford or SLS loans disbursed prior to July 1, 1993, or PLUS loans disbursed prior to August 15, 1983.
- Learn about postponing repayment through deferment.
Federal need-based grants.
- Learn about all the different types of financial aid.
Loans awarded by schools to their students with exceptional financial need. Students can borrow up to $4,000/year (up to $20,000 total) for undergraduate studies and $6,000/year for graduate school (up to $40,000 total) in Perkins loans. These loans have a fixed interest rate of 5%.
- Find out more about Perkins loans and other types of student loans.
Loans borrowed by parents of eligible dependent students (Parent PLUS loans) or by graduate students themselves (Grad PLUS loans). Borrowers can take out PLUS loans equaling the school’s cost of attendance—minus any other aid received.
- Find out more about PLUS loans and other types of student loans.
Loan postponement available if you're enrolled at least half time at an eligible school at the time of, or within 6 months prior to, being called to active duty service. You can use this deferment for up to 13 months after active duty service.
- Learn about postponing repayment through deferment.
The outstanding amount of a loan, on which the lender charges interest. Every payment you make has a portion used to satisfy the accrued interest on your loan. After that, the remainder of the payment is used to reduce your outstanding principal balance..
Loans issued by private lenders that can be used to supplement federal and state loans.
- Find out more about the different types of student loans.
Private, for-profit educational institution. Some offer degree programs, but the majority offer short-term programs aimed at supplying workers for specific industries or re-training workers.
Federal tax information form that outlines tax benefits for educational expenses.
- Find out more about student loan borrower tax incentives.
Public Health Services Deferment
Postponement available if you are serving full time in the Commissioned Corps of the United States Public Health Service (USPHS). You can use this deferment for up to 3 years. To qualify, you must have an outstanding balance on a Federal Family Education Loan Program (FFELP) loan that was made prior to July 1, 1993.
- Learn about postponing repayment through deferment.
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Money received when the amount you pay toward institutional charges is greater than the amount the school can retain under the appropriate refund policy.
Process for bringing a federal student loan out of default. You can rehabilitate defaulted loans by following specific repayment requirements.
- Learn about the other ways you can recover from default.
Rehabilitation Training Deferment
Loan postponement available if you are enrolled in a course of study that is part of a U.S. Department of Education-approved rehabilitation training program for disabled students. You must be engaged in a full-time program—30 hours per week for 3 months—of vocational rehabilitation, drug or alcohol abuse treatment, or mental health treatment.
- Learn about postponing repayment through deferment.
Length of time you have to repay your student loans. The standard repayment period for Stafford loans is 10 years, but it may be extended through other repayment schedules.
- Find out more about your different repayment plans and options.
Terms and conditions regarding repayment your lender must disclose to you, including your number of monthly payments and their amounts.
Process in which schools accept students throughout the academic year, as opposed to the traditional late fall/early winter admissions schedule.
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Money—usually privately funded—you are awarded to attend an academic institution.
- Learn about all the different types of financial aid.
Loan forgiveness if you can’t finish your educational program because your school closed.
- Download a School Closure Loan Discharge Application (pdf, 0.09 MB).
- Find out more about loan discharge options.
Agencies with the authorization to buy student loans from lending institutions.
- See how secondary markets fit in with other key industry players.
Federal agency that keeps track of men eligible for the military draft. Male students who are U.S. citizens and 18 years old and were born after December 31, 1959, must register with Selective Service to be eligible for federal financial aid.
Organization that collects loan payments and provides customer service on behalf of your lender.
- See how servicers fit in with other key industry players.
Interest paid only on the principal balance of the loan and not on any accrued interest.
The most common federal loans students receive. Stafford loans can be either subsidized or unsubsidized.
- Find out more about Stafford loans and other types of student loans.
Basic repayment schedule in which you make 120 equal monthly payments over a period of 10 years.
- Learn more about standard repayment.
- Estimate your monthly payments under this schedule with our standard repayment calculator.
Report you—and the schools you apply to—receive that details findings from your Free Application for Federal Student Aid (FAFSA).
- Find out how a SAR fits into the financial aid process.
Loans the government pays the interest on during in-school, grace, and approved deferment periods. Perkins loans are subsidized, and Stafford loans can be subsidized.
- Find out more about subsidized loans and other types of student loans.
A level of work performed for pay or profit that involves doing significant physical or mental activities, or combination of both. “For profit” is intended to cover self-employed individuals who are not paid by an employer. It does not refer to income from sources other than employment. Non-employment income will not be considered when determining whether a borrower is capable of substantial gainful activity.
Repayment postponement for when you complete a degree in the spring, continue enrollment at least part time in the fall, and do not have a grace period on your loan. This deferment ensures you do not enter repayment between the spring and fall semesters, when your grace period would otherwise be used.
- Find out more about postponing repayment with a deferment.
Supplemental Loan for Students (SLS)
Federal loans for financially independent students. This program was eliminated in 1994 with the creation of unsubsidized Stafford loans.
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Funds within a bank trust or custodial account set up in the United States solely to pay qualified education expenses for the account’s designated beneficiary. Examples include 529 plans and Coverdell Education Savings Accounts.
Teacher Loan Forgiveness Program
Program that allows eligible teachers to have their loans partially forgiven. Eligibility depends on where the applicant teaches and when the loans were borrowed.
- Learn about the different types of loan forgiveness.
Loan postponement available if you are teaching full time in a teacher shortage area, as defined by the U.S. Department of Education. You can use this deferment for up to 3 years. You must have an outstanding balance on a Federal Family Education Loan Program (FFELP) loan that was made prior to July 1, 1993.
- Learn about postponing repayment through deferment.
Borrower who cannot be expected to be able to attend school, work, or earn money during a period of at least 60 days due to injury or illness. A deferment for this reason is only available to borrowers with loans made before July 1, 1993.
- Download a Temporary Total Disability Deferment Request for FFELP (pdf, 0.07 MB).
- Find out more about postponing repayment with a deferment.
Temporary Total Disability Deferment
Loan postponement if you are temporarily totally disabled or unable to secure or continue employment because you are caring for a dependent or spouse who is temporarily totally disabled. You can use this deferment for up to 3 years. You must have an outstanding balance on a Federal Family Education Loan Program (FFELP) loan that was made prior to July 1, 1993.
- Download a Temporary Total Disability Deferment Request for FFELP (pdf, 0.07 MB).
- Learn about postponing repayment through deferment.
Section of the Higher Education Act that authorizes federal loan, work, and grant education financial assistance programs.
Totally and Permanently Disabled (TPD)
Condition of individuals with injuries or illnesses that prevent them from working or attending school and are expected to continue indefinitely or result in death.
- Download a Total and Permanent Disability Discharge Application (pdf, 0.49 MB).
- Find out more about TPD.
Federally funded outreach programs that help students from disadvantaged backgrounds stay in school, graduate from high school, and continue their educations. TRIO programs include Educational Opportunity Centers, Student Support Services, Talent Search, and Veterans Upward Bound.
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U.S. Department of Education (ED)
The U.S. Department of Education funds all Title IV financial aid programs and runs the William D. Ford Direct Loan Program (DL).
- See how ED fits in with other key industry players.
Loan postponement that allows you to temporarily suspend payments while your are unemployed.
- Download an Unemployment Deferment Request for FFELP (pdf, 0.06 MB).
- Learn about postponing repayment through deferment.
Loans not based on financial need. You are responsible for paying all interest that accrues on an unsubsidized loan—including interest accrued during in-school, grace, and deferment periods. PLUS loans are unsubsidized, and Stafford loans can be unsubsidized.
- Find out more about unsubsidized loans and other types of student loans.
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Process in which an employer withholds part of an employee’s pay to fulfill a federal debt. This is one of the consequences of student loan default.
- Learn about additional consequences of default.
Date you formally leave school, as determined by the school.
Loan postponement for mothers who have preschool-age children and are entering or re-entering the work force. You can use this deferment for up to 1 year. You must have a Stafford or SLS loan that was made on or after July 1, 1987, and before July 1, 1993.
- Download a Working Mother Deferment Request for FFELP (pdf, 0.07 MB).
- Learn about postponing repayment through deferment.
Action that occurs when a loan holder stops its collection efforts on a loan. Having a written-off loan can make you ineligible for additional financial aid and may negatively impact your credit.
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