loans

Student Loan

Money you borrow for school and must repay with interest.

Loan Fee

A fee charged for each federal student loan you receive that is a percentage of the total loan amount you are borrowing (gross amount). The loan fee is deducted proportionately from each disbursement of your loan. This reduces the actual loan amount you receive (net amount). You must repay the gross amount. You can find your loan fee amount in a disclosure statement you will receive before the first disbursement of your federal student loan.

Interest

The cost to borrow money. Interest is calculated as a percentage of the outstanding principal balance.

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 disbursement.

Loan Servicer/Federal Loan Servicer

An entity that collects payments on a federal student loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a loan holder. A federal loan servicer is a loan servicer for the U.S. Department of Education.

Loan Holder

The entity that holds your loan promissory note and has the right to collect from you. For Direct Loans, your loan holder is the U.S. Department of Education. Throughout this counseling session, references to your loan servicer mean the loan servicer, federal loan servicer, or the loan holder.

Principal

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

Repayment Period

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

Repayment

To pay back money you borrowed by making scheduled payments to the loan servicer.

Capitalized Interest

Unpaid interest that has been added to the outstanding principal balance of a loan. Interest is charged on the increased outstanding principal balance and, under most repayment plans, will increase your monthly payment amount and the total amount you repay over the life of the loan.