Aggregate Loan Limit - Sometimes referred to as "lifetime loan limit", this is the maximum total unpaid loan debt a borrower is allowed to take out during any educational program.
Adjusted Gross Income (AGI) - As reported by the IRS, the AGI is your gross income minus any pre-tax deductions. The AGI is frequently employed to determine a student's income on income sensitive repayment plan options like IBR or ICR.
Annual Percentage Rate (APR) - The total yearly interest cost of a loan.
Capitalization - This is defined as the process of adding unpaid interest to the principal balance of a loan. Capitalization increases the cost of a loan as interest will now accrue on a higher balance. If possible, paying off some interest before it capitalizes can reduce the overall cost of loans.
Co-Borrower/Co-Signer - A person who signs a loan promissory note with a borrower in order to guarantee the repayment of the loan. If the borrower is unable to make payments, the co-borrower is legally responsible for repaying the debt.
Consolidation – The process wherein 2 or more separate loans are combined into one larger loan. Loan terms may change as the original loans will no longer exist.
Cost of Attendance - A sum total of all relevant educational costs that a student may face for a given academic year. This includes direct costs like tuition, as well as indirect costs, such as room and board.
Credit Report - A report produced by credit bureaus in order to determine an individual's creditworthiness. Reports will show a listing of current debts, including any debt that is currently past due.
Credit Score - Typically between 300 and 850 (higher is better), this number is included in credit reports, and is used as a measure of a borrower's likelihood to repay a loan.
Default - A loan status that indicates that a borrower has failed to repay their loan debt. Default officially occurs when borrowers are 270 days late for a payment. This status will negatively affect a borrower's credit score.
Deferment - A period where loan payments are not required. Loan interest may accrue even during an eligible deferment, so borrowers should refer to the terms of their loan agreements for more information. Loan interest will generally not capitalize until the end of a deferment period.
Delinquency - Delinquency occurs when a borrower misses a payment. Only one missed payment is enough to trigger a delinquent status.
Department of Education - The federal government agency that administers federal aid programs. The Department owns all Direct Loans, but may employ "servicers" to handle the administrative tasks of maintaining address records and collecting payments.
Direct Consolidation Loan - Offered through the Department of Education, consolidation loans allow borrowers to combine some different types of federal loans into one, new Direct Consolidation Loan. One advantage to consolidating is that borrowers may be able to simplify their loan portfolios by eliminating one or more different servicers. Consolidation loans can take up to a month or more to process, and currently carry no grace period. Repayment begins the month after the process is complete.
EFC – Expected Family Contribution (also Total Family Contribution), or the amount determined by the school/FAFSA that the family can afford to finance for a given year. The EFC is a complicated formula based on many factors like assets, income, family size, and number of children in college.
Endorser - A person who signs a promissory note with the borrower, agreeing to pay back the loan if the borrower does not. Endorsers are sometimes necessary if a borrower has a poor credit history.
Entrance Counseling (Entrance Interview) - An online process required of federal loan borrowers before loans are disbursed. Students will be presented with information regarding their rights and responsibilities as borrowers. Sessions also cover basic financial literacy topics, and include loan terms and conditions.
Exit Counseling (Exit Interview) - Similar to Entrance Counseling, an Exit session reviews the borrower's rights, responsibilities, and loan terms. Exit counseling attempts to prepare borrowers for what to expect in repayment. This is a requirement for all students dropping below half-time status, graduating, or taking a leave of absence.
FAFSA – Free Application for Federal Student Aid, available online.
Federal Direct Loan Program - Stafford, PLUS, and consolidation loans offered directly from the federal government. The Department of Education is the lender for these loans and sets all relevant terms like interest rates and repayment schedules. The government allows private companies to "service" Direct Loans by keeping track of address changes, billing borrowers, and otherwise handling the administrative duties associated with loans.
Federal Family Education Loan Program (FFELP) - Before June 30th, 2010, some schools used the FFELP for federal loans. The Department of Education regulated the terms of the loans, but private lenders were allowed to finance the loans with the idea that competition would drive lenders to create better options for borrowers. The Department of Education has now subsumed all Stafford, PLUS, and consolidation loans within the Direct Loan Program.
Federal Work-Study Program - A government program that helps students get jobs on campus to help earn money for their educational costs.
Financial Need - "Need" is defined by taking the difference between a school's Cost of Attendance (COA) and what the student can afford to pay (EFC).
Forbearance – A set time period when a lender does not require payment due to borrower financial hardship. Interest accrues during a forbearance. Borrowers must typically apply for a forbearance yearly.
Grace Period - A period of time when loan payments are not required. Grace periods typically begin when a student drops below half-time enrollment. Most federal loans carry a 6 month grace period, but some are longer. Students may not opt out of a grace period, but they may consolidate loans to enter repayment right away.
Graduate PLUS Loan - A federal loan available to graduate or professional students to pay for their expenses.
Guarantor Agency - A non-profit or state agency the works with the FFELP to guarantee loans on behalf of the federal government.
Half-Time Enrollment - As determined by the Registrar, half-time enrollment is usually the minimum level required for financial aid eligibility. Students enrolled at least half-time are considered to have "in-school" status, and loan payments are typically not required.
Income Based Repayment - Or IBR, a type of income sensitive repayment plan commonly used with Public Service Loan Repayment. IBR often results in the lowest payment of any of the PSLF-eligible plans. Students need not plan to apply for PSLF to use IBR.
Income-Contingent Repayment - Another repayment plan available on many federal loans. ICR payments are based on the borrower's income, but payments are typically higher than on IBR.
Institutional Loan - Loans offered to students directly from the school. Most Institutional Loan are offered at terms as good or better than current federal offerings. At TUSM the Institutional Loan is called the "Wolfson Loan". Wolfson Loans are serviced through the Student Loan Office located on the Medford campus.
Interest - The rate of money which accrues on any given loan, expressed as a percentage.
Lender - A bank, school, or organization that lends money to a borrower. The Department of Education is the lender for all Direct Loans. Older federal loans may still have a private company as the lender if those loans were offered under the Federal Family Education Loan Program.
Loan Fee - A processing (or origination) fee that a borrower pays upfront when borrowing funds. Not all loans charge fees, so refer to the terms of your loan agreement for more information.
Loan Servicer - A company or organization contracted by the Department of Education to handle administrative duties for Direct Loans. The Servicer will be the main point of contact for the borrower throughout the life of the loan. It is very important to update your address with all of your servicers after graduation, and any subsequent relocations.
Master Promissory Note (MPN) - The official loan agreement that the borrower signs which binds them to the terms of the loan. Multiple loans can be issued under one MPN, and an MPN can be valid for up to 10 years.
Merit-Based - A term for financial aid awarded based on student ability or accomplishment, as opposed to financial need.
Need-Based - A term for financial aid given to those students with the least financial resources.
NSLDS – National Student Loan Database System, an online record of students federal borrowing history. Borrowers can view current loan totals and find contact information for their servicers on this site.
Partial Financial Hardship - A term used in calculating a borrower's payment on an income-sensitive repayment plan such as IBR. The formula uses a borrower's adjusted gross income and poverty guidelines to determine their discretionary income. If a loan payment exceeds this amount, students are considered to demonstrate a partial financial hardship, and may qualify for a reduced payment.
Perkins Loan - A low-interest federal loan administered by the borrower's school.
Personal Identification Number (PIN) - A four digit number used on the FAFSA, and other Department of Education web sites, as an electronic signature.
Private Loan - Loans offered by private banks, as opposed to the federal government. Private lenders set their own terms for loans, but the interest rates are often variable, with no hard caps. Private loans are typically not subject to loan forgiveness, and may have high repayment amounts.
Public Service Loan Forgiveness - Or PSLF, a government program which can forgive certain federal loans after the borrower makes 120 payments through an eligible payment plan while working for an eligible employer. Students planning on applying for PSLF most often choose the Income Based Repayment Plan.
Reference - In the financial aid world, a reference typically refers to someone listed on a promissory note as a point of contact for the borrower. References are not liable for loan payments, they are simply a channel to get in touch with the original borrower.
Rehabilitation - The process of getting a loan out of default, and removing any negative credit effects from the borrower's credit report. Rehabilitation is typically a slow process accomplished only after making regular payments for a set period of time.
Repayment Plan - Any of the available payment schedules agreed upon by the borrower and lender. Federal Direct Loans normally default to a Standard 10-Year Repayment Plan unless the borrower elects otherwise. Some other repayment plans that may be available are Income-Based Repayment, Extended Repayment, and Graduated Repayment. While in repayment, borrowers are usually allowed to switch repayment plans only once in a 12 month period.
Subsidized Stafford Loan - A Title IV federal loan offered by the government through the FAFSA. There is a government subsidy that pays any accrued interest while the student is enrolled, or in deferment. The Department of Education no longer offers Subsidized Stafford Loans for Graduate/Professional level students.
Truth in Lending Disclosure - Written information provided to the borrower before loans disburse. The declaration includes the lender name, amount of the loan, annual percentage rate, payment schedule, total repayment amount, and contact information for questions.
Unsubsidized Stafford Loan - Similar to the Subsidized Stafford Loan, only without the interest subsidy.
Verification - The name for the process that schools use to ensure accuracy of FAFSA information. This often involves collecting copies of IRS tax returns, W2 statements, or other forms of paperwork. Students may be selected for verification by the Department of Education, or the school may opt to verify their information as well.