Student Loan Glossary

Confused with student loan jargon on your financial aid form? Use our extensive student loan resources to help you. Find the comprehensive student loan glossary below to aid in all your student loan needs.

Accrued interest: Interest that builds on a loan's unpaid principal balance.

Award Letter: Notification by a financial aid office to a student informing him or her of the amount of financial aid and the financial aid programs that he has been offered.

Consolidation: The process of combining a student's federal student loans into one loan, resulting in a lower monthly payment and a fixed interest rate.

Cost of Attendance (COA): A financial aid office's estimate of the total amount that a student will have to pay to attend that university.

Default: Failure to repay a loan in conformity with the terms of the promissory note.

Deferment: A temporary period during which a borrower can, under certain conditions, postpone payments on his loan.

Delinquency: Failure to make loan payments by the due date.

Disbursement: Issuance of loan moneys to the student or parent borrower.

Discharge: The release of a borrower from the duty to pay back his or her loan.

Entrance Counseling: An informational session that first time borrowers of federal student loans must attend before loan proceeds can be paid.

Exit Counseling: An informational session that borrowers of federal loans must complete around graduation time.

Expected Family Contribution (EFC): The amount that a borrower and his family can be expected to allocate to academic expenses during the school year.

Federal Work Study: A federally-financed program that allows schools to set up campus-based employment programs for financial aid borrowers.

Forbearance: Temporary deferment or decrease of education loan payments, on the basis of financial hardship during the repayment term.

Forgiveness: Cancellation by the federal government of all or a portion of a student's loan(s) under certain circumstances.

Free Application for Federal Student Aid (FAFSA): The standard application form for all federal aid programs.

Graduate PLUS Loan: A federally-backed loan program under which graduate students can borrow up to the cost of education less other aid.

Grant: A form of financial aid that is based on a borrower's financial need and that the student does not have to repay.

Guarantee Fee: A loan fee that a student pays to a lender.

Grace period: A 6-month period before the first Direct Subsidized or Unsubsidized loan payment is due.

Master Promissory Note (MPN): The binding legal document that a borrower signs when issued a student loan.

Origination Fee: A fee that a student pays to the lender for loan origination.

Parent PLUS Loan: A loan allowing creditworthy parents of undergraduate students to obtain a federally-backed loan to pay up to the total cost of education less any other aid awarded.

Perkins Loan: A federally-guaranteed and need-based student loan that is available through the university and that carries a fixed 5% interest rate.

Private Student Loan (or Alternative Student Loan): Also known as an Alternative Student Loan, this loan is issued to borrowers by finance companies or banks and is not guaranteed by a government agency.

Scholarships: Financial aid that a student does not have to repay.

Stafford Loan: A need-based, federally-backed loan that allows students to receive a certain amount of funds from lenders to cover tuition costs.

Subsidized Loan: The federal government pays the interest that accumulates on a subsidized Stafford loan while the student is enrolled at least half-time at the university.

Unsubsidized Loan: The borrower is required to pay the interest that accumulates on an unsubsidized loan, even while he or she is enrolled in college.