Student Loan

Grace Period

Begins the day after a student stops being enrolled at least half- time at an eligible school. Students are not required to make any payments on a loan during this time.

FAFSA

Free application for Federal Student Aid.

Expected Family Contribution (EFC)

The number that's used to determine your eligibility for federal student aid. This number results from the financial information you provided in your FAFSA application. Your EFC is reported to you on your Student Aid Report (SAR).

Capitalized Interest

Unpaid interest that has been added to the outstanding balance of a loan. Interest is charged on the increased balance. Under most plans this will increase your monthly payment and the amount you have to pay over the life of the loan.

Acceleration

When the entire unpaid balance of a loan becomes immediately due and payable. This can happen if any one of the following events occurs: (1) You do not enroll as at least a half-time student at the school that certified loan eligibility; (2) You do not use the proceeds of the loan solely for educational expenses; (3) You make a false representation that results in receiving a loan for which you am not eligible; or (4) You default on the loan.

Delinquent

Your loan is called this the first day after you miss a payment.

Deferment

A period during which repayment of the principal and interest of your loan is temporarily delayed.

Master Promissory Note (MPN)

A legal document in which you promise to repay your loan and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan.

Disbursement

A portion of a federal student loan that the school pays out by applying the funds to the student's school account or by paying the borrower directly. Students generally receive their federal student loans in more than one of these.

Loan Servicer

An entity that collects payments on a federal student loan. This entity also responds to inquiries and performs administrative tasks.

Cost of Attendance (COA)

Average cost of attending college. It is based on whether you will be living on campus, off campus or commuting. The cost of attendance includes costs that will appear directly on your bill, such as tuition, fees and, if you are living on campus, room and board.

Interest

Cost to borrow money. Calculated as a percentage of the outstanding balance.

Loan Holder

Entity that holds your loan promissory note and has the right to collect from you.

Default

Failure to make your payments on your student loan as scheduled according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan.

Loan Fee

Fee charged for each federal student loan you receive that is a percentage of the total amount you are borrowing. It is deducted proportionately from each disbursement of your loan, which reduces the net amount of reimbursement you receive.

Forbearance

If you can't make scheduled loan payments but don't qualify for deferment, this may allow you to stop making payments or reduce your monthly payment for up to 12 months.

Student Loan

Money you borrow for school and must repay with interest.

Student Aid Report (SAR)

Paper or electronic document that gives you some basic information about your eligibility for federal student aid as well as listing your answers to the questions on your FAFSA. Your EFC is reported to you on this document.

Principal

The loan amount plus any capitalized interest. During repayment, this amount is usually referred to as the outstanding (or unpaid) balance.

Repayment Period

The maximum time period over which you must pay your federal student loan. This may range from 10 years to 30 years, depending on the loan amount and type.

Financial Need

The difference between the cost of attendance (COA) at a school and your Expected Family Contribution (EFC). While COA varies from school to school, your EFC does not change based on the school.