Student Loan Dictionary

Borrower

The person that has successfully applied for and been granted a loan.

Capitalization

For a loan, this typically refers to the process of interest capitalization where unpaid accrued interest is added to the principal balance. This process typically happens at the conclusion of a loan deferral or in-school period.

Certified loan

If your loan is certified, it means that the university where you are studying is required to confirm that the loan amount provided is correct. This serves to ensure that the amount withdrawn corresponds to need and is not in excess.

Consolidated loan

One loan results as a combination of several, separate loans. When consolidation occurs, the repayment period is often extended and the monthly payment is less.

Cosigner

If you are an international student studying in the United States, in order to withdraw a loan in most cases, you need either a United States citizen or permanent citizen to serve as cosigner. This person is equally responsible for the loan, and, thus, must repay the loans with you.

Cost of Attendance (COA)

The sum of the price for attending a university in a year. This estimated value includes tuition, room and board, as well as additional collegiate expenses.

Creditworthy

If you are creditworthy, it means that you have a positive credit rating and are a candidate for receiving credit or withdrawing loans.

Credit Report

A credit report provides a potential borrower’s credit history to a prospective lender. This report includes a variety of information, both personal and fiscal.

Credit Score

This is a grade given between 300 and 850 based on credit history and rating.

Default

Default occurs when the borrower breaks the agreement previously established with the lender. For example, default can result due to tardy or no payments.

Deferment

In respect to a loan, deferment involves temporarily postponing or significantly reducing monthly loan payments. Deferment leads to negative amortization (increasing the loan balance remaining) because the borrower is not paying the interest accruing in each period. In some deferment cases, missed payments are added to the end of the loan term.

Delinquent

An individual or group that has refused to pay loans on time and in full. Consequences vary from a late fee to serious legal battles.

Disbursement

Once an education loan has been agreed to by the lender and borrower, the funds are sent (or disbursed) to the borrower’s school based on the agreed-upon date and schedule.

Disbursement Date

The date on which the lender disburses the loan amount to the borrower’s school.

Due Date

The date when loan payment is due. This varies based on the individual agreement between the borrower and the lender.

Endorser

An endorser, like a cosigner, is a person who supports your loan withdrawal and is equally responsible under the law for repayment.

Enrollment Status

The amount of credits taken in a semester, which influences financial aid.

Expected Family Contribution (EFC)

The estimated funding given by a student’s family annually. Financial aid is calculated accordingly.

E-signature

An electronic representation of the person’s signature which has the same force and effect as an actual signature.

FAFSA

The Free Application for Federal Student Aid is a document that students can complete and submit each year requesting financial support.

Forbearance

A type of loan modification potentially offered when a borrower is unable to meet the required minimum payment. In most cases, forbearance allows a borrower to skip payments. After forbearance, the payment amount is re-amortized over the remaining term of the loan which will likely increase the monthly payment amount required.

Grace Period

The amount of time in between missing the loan payment due date and the penalization date, during which a borrower is not yet punished.

Grade Point Average (GPA)

The average score of all classes completed.

Graduate student

A student who pursues an education in the form of graduate studies.

Gross Income

The total sum earned by a person before taxes and other deductions are taken into account.

Guarantor

A government agency that protects lenders in the case that the borrower defaults and is not able to repay the loan. Without a guarantor, it is difficult for borrowers with a poor credit rating to receive a loan.

Interest

The amount owed based upon the loan’s interest rate and outstanding principal balance. Depending on the loan agreement, interest can accrue daily, weekly, monthly, or annually.

Interest Rate

The annualized rate by which interest accrues on the loan. Using this rate with the outstanding principal balance and accrual period yields the accrued interest that must be paid in addition to the principal balance.

Lender

The individual or group that approves and distributes the loan to the borrower. With the borrower, the lender determines the terms on your international student loan, especially regarding the logistics of repayment.

Loan

A loan refers to the lending of money to later be reimbursed, in addition to interest accrued.

Minimum Monthly Payment

The minimum amount that a borrower is required to pay on a monthly basis in order to maintain a positive credit rating.

Origination Fee

A fee paid by the borrower in conjunction with the consummation of the loan. An origination fee may also be charged as a processing fee or underwriting fee. This fee is usually assessed at loan closing and may be financed as part of the overall loan amount.

Origination

The origin of applying for and eventually the issuance of a loan. This involves a series of interactions between a borrower and a lender, with the borrower providing both personal and financial data, and the lender using this information to determine the type of loan that is applicable.

Principal

The total amount that has been withdrawn, without interest, that the borrower still owes the lender.

Private Loans

A loan issued by a private lender. It is also known as an alternative loan.

Promissory Note

A written and signed agreement, indicating a promise between a lender and a borrower to repay a loan, including interest rates and other fees, by a predisposed due date.

Repayment

The process of paying back a loan to the lender. Normally this is done incrementally, for example, on a monthly or bi-monthly basis.

Social Security Number (SSN)

A SSN is a unique number, specific to each United States citizen, as well as permanent residents, and is used to identify each person. It can also be used to view credit ratings.

SOFR

The Secured Overnight Financing Rate is a benchmark interest rate based on overnight Treasury repurchase agreements. It is derived from the cost of investing in U.S. Treasury securities and serves as an alternative to LIBOR as a reference rate for financial transactions. It is used to determine the interest rate associated with certain loans.

Stafford Loan

A set loan value offered to higher education students in the United States.

Subsidized Stafford Loan

This loan is affirmed by the federal government and is distributed according to need. It does not accrue interest prior to graduation.

Transcript

An official document, provided by an accredited university, that indicates the coursework completed by a student and the corresponding grades for each course.

Tuition

The total cost for course instruction, as well as the credits and courses taken at a university.

Undergraduate student

A student pursuing undergraduate studies at a university.

Unsubsidized Stafford Loan

A loan that is affirmed and distributed by the federal government according to need. It does accrue interest prior to graduation.

Variable Interest

Interest that varies according to the state of the market and current cost of goods and services.