Default-When a loan is delinquent for more than 270 days (for most federal student loans).  This can bring on legal consequences such as garnishments.

Delinquency-when a loan payment is not received by the due date or covered by a deferment or forbearance.

Loan Rehabilitation-the process of bringing a loan out of default.  To rehabilitate a loan typically a program is set up where a borrower makes so many on time payments at the agreed upon amount.


Enrollment Status-when the school that the borrower attends indicates what the student’s current status is at the school.  The enrollment statuses are full-time, three-quarter time, half-time, less than half-time, withdrawn, graduated, etc.  This status is determined by enrollment standards set by the school.

Grace Period -a time period after a borrower graduates, withdraws, or is no longer enrolled as at least a half time student.

National Student Loan Data System (NSLDS)-a database available at which stores information on the federal grants and loans received by the borrower.  Private loans are not listed.

Getting a Loan

Disbursement Amount -amount of student aid funds paid to a student usually over several payments called disbursements

Disbursement Date-date federal student aid funds were credited to the student’s account or paid directly to the borrower

Endorser -person who is secondarily responsible for loan and agrees to pay it if borrower does not repay

Master Promissory Note-the binding legal document that a borrower is required to sign in order to receive a federal student loan.  This document lists the terms and conditions under which the borrower agrees to repay the loans in addition to listing the borrower’s rights.

Reference-person who is listed by borrower to contact in case servicer cannot get in touch with borrower; this person is not liable for loan


Capitalization-When interest that normally accrues separately from the principal is added to the principal after it accrues during grace, forbearance, and deferment (when applicable).  This will cause your balance to increase and may increase your payment along with making your daily interest higher.

Outstanding Interest-interest that is due on the loan on a given day.  Because interest accrues daily, there will always be outstanding interest until the loan balance hits $0.00

Interest Due-The amount of interest due at the time of your payment


Deferment-A period in which payments are suspended because the borrower meets a certain criteria such as being in school at least half time or income specifications.  During a deferment, interest does not accrue on subsidized loans and Federal Perkins loans but all other loans that are deferred will accrue interest and any interest that accrues will be added to balance through capitalization.

Forbearance-period in which payments are temporarily suspended or reduced.  During a forbearance, despite being postponed, interest continues to accrue and may be added to the principal balance through capitalization.  Government does not subsidize loans during a forbearance.

Immediate Family Member-parent or spouse of borrower or student on a Parent PLUS loan that can receive information on a loan if they provide borrower’s full name, social, and date of birth.  Immediate family members cannot make changes to the account

Outstanding Principal-total amount of money borrowed plus any interest that was capitalized.  Interest that accrues, but did not capitalize, is not included in the outstanding principal.

Power of Attorney-legal document that gives an individual (or in some cases a group) access to make decisions for borrower; Power of Attorney can make changes to the account and is able to access the online account


Adjusted Gross Income (AGI)-Total wages, salaries, etc. with certain deductions subtracted from income of you and your spouse (when applicable) as reported on your federal income tax return

Direct Loans-loans that replaced the FFEL program.  Federal student loans are both guaranteed and originated through the Department of Education.

Federal Family Education Loan (FFEL) Program-a program where private lenders provided loans to students that were guaranteed by the federal government.  These type of loans are no longer made by private banks.

PLUS Loan-loan available to graduate students and parents of dependent undergraduates for which borrower is fully responsible for interest and does not receive grace period.  PLUS loans are eligible for Post-Enrollment deferment which is also 6 months.

Unsubsidized Loan-a loan given in which government does not pay for any interest regardless of loan status

Subsidized Loan-a loan in which the federal government pays for interest that accrues during an in-school, grace (depending on disbursement date) or deferment status.  This type of loan is given based on financial need.