Your SlideShare is downloading. ×
0
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Student Lender Terminology Explained
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Student Lender Terminology Explained

861

Published on

Easy to understand explanations of all student lender terminology!

Easy to understand explanations of all student lender terminology!

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
861
On Slideshare
0
From Embeds
0
Number of Embeds
6
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Student Loan Terminology Explained Your Glossary For All Important Lending Terms!
  • 2. Accrued Interest • Loans accrue interest based upon the unpaid balance of the loan principal and the current repayment status of the loan.
  • 3. Alternative Student Loan • An “alternative loan” is one that is offered by a private lender. These loans are credit based, can have variable rates and often require a cosigner. Alternative loans are also known as a “private student loans.”
  • 4. APR • APR Stands for “Annual Percentage Rate.” This not only takes interest into account, but the points, broker fees and other charges that might be associated with a loan.
  • 5. Capitalized Interest • With capitalization, unpaid accrued interest is added to the principal amount to be repaid later. You are then incurring interest on this accrued interest as well as interest on the original loan principal.
  • 6. Compound Interest • Interest that is calculated not only on the initial principal but also the accumulated interest of prior periods. Interest may be compounded annually, quarterly, monthly, or daily, depending on the terms of the note.
  • 7. Consolidation Loan • A loan that combines your existing loans into one new loan, and one payment. Usually, a consolidation loan has a lower monthly payment and a longer term than your combined original loans.
  • 8. Co- Signer • Someone who signs a promissory note along with the borrower, and is legally obligated to assume responsibility for loan repayment if the borrower does not make his or her payment.
  • 9. Default • Failure to repay your loan(s). In FFELP, a loan made before 10/1/98 is considered in default at 180 days past due. Any loan made on or after 10/1/98 is considered in default at 270 days past due.
  • 10. Deferment • A temporary postponement of student loan principal and/or interest payments that may be granted if the borrower satisfies certain criteria.
  • 11. Delinquent • The status of your loan changes to “delinquent” when at least one payment is missed.
  • 12. Disbursement • When a lender sends a check or electronically sends funds for your loan to the school. • Multiple Disbursements are provided to coincide with each term of school and fees (where applicable) are usually deducted proportionately.
  • 13. Expected Family Contribution • The total money that a family is expected to pay for a student’s college education based on a detailed assessment of the family’s financial situation.
  • 14. Fees • Some lenders charge a fee to originate, insure or guarantee a student loan. This includes the Federal Loans. Fees are usually proportionately charged to each disbursement. • Origination Fee- charge deducted from loan proceeds for all federal loans- some private loans have an origination fee as well.
  • 15. Forbearance • Written permission to postpone, reduce, or extend payments, usually for three to six months, because of serious economic hardship. Interest continues to accrue and remains the responsibility of the borrower. Therefore, the borrower will owe a higher total amount on the loan when forbearance ends.
  • 16. Grace Period • Applicable to many student loans, is the six- month period after you graduate, leave school, or drop below half-time status. Once the period is over, you must start making monthly loan payments or already have obtained a deferment or forbearance.
  • 17. Interest • The amount a lender charges a borrower for the use of money borrowed, calculated as a percentage of the principal balance. • Some rates are fixed for the term of the loan. Others are variable tied to an index with a margin
  • 18. Independent Student • You are automatically considered a dependent unless you are: 24 years or older (as of 12/31 of the award year), a graduate or a professional student, married, have legal dependents other than a spouse, an orphan or ward of the court, or are a veteran of the U.S. Armed Forces.
  • 19. Index • Index is the rate that determines the average interest rate at which banks lend to each other at. This interest rate is variable and subject to change by quarter.
  • 20. Margin • Margin is the flat rate which a lender will add to the lending index in order to determine the interest rate a consumer will pay. Loan margins are tiered, and determined based on credit score.
  • 21. Parent Plus Loan • A government-backed loan designed for parents of financially dependent undergraduate students.
  • 22. Principal • The full amount you have borrowed for your loan. When you are repaying the loan, the principal is the portion of the original amount you still owe, plus capitalized interest, if any.
  • 23. Promissory Note • A legally binding contract between a borrower and lender that contains the terms and conditions under which the borrower promises to repay the loan.
  • 24. Repayment Schedule • A document listing the total amount you owe, the amount of your monthly payment, and the date your first payment is due.
  • 25. Secondary Market • A state agency or private company that purchases student loans from individual lenders. It holds and collects loans until they are paid. The company may employ an outside servicer.
  • 26. Separation Date • The official date you drop below half-time status or withdraw from school. If you are entitled to a grace period, it begins on that date.
  • 27. Servicers • Companies that contract with lenders and secondary markets to provide all customer service activities of loan servicing and loan collection.
  • 28. Subsidized Student Loan • A need-based, government-backed student loan in which the government will pay the interest while the student is in school at least half-time.
  • 29. Unsubsidized Student Loan • Loan is not based on need, allowing students at all income and asset levels to be eligible for a lower-cost student loan. The student is responsible for paying interest while in school. However, interest will accrue and capitalize.

×