Glossary

Accrued Interest: The amount of interest that accumulates on an unpaid loan over time.

Alternative Loans: Same as private loans. Student loans provided by private lenders that are used to fill financial gaps after federal loans are exhausted or if students weren’t eligible for federal loans at all. Credit guidelines are required. Terms and interest rates may vary.

Amortization: The decreasing amount of a loan and its interest due to payments made over a period of time.

Annual Percentage Rate (APR): The overall interest rate once charges and fees are included.

Automated Clearing House (ACH): When automatic payments are set up to be deducted directly from a bank account.

Borrower: The person who applies for and receives a loan and then is responsible for repayment.

Capitalized Interest: When accrued interest is added to the principal balance of the loan.

Certified Loan: A certified loan means that your school is notified to verify the amount being disbursed. This confirms the student is not borrowing more than the cost of attendance less other financial aid. The funds will be disbursed directly to the school and applied to the borrowers account.

Consolidation Loan: In which two or more loans are combined into one single loan. This allows monthly payments to be combined into one per month, but also can lengthen a repayment term.

Cosigner: Same as endorser or co-borrower. A signer of a loan’s promissory note, who agrees to accept equal responsibility as the borrower in repaying the loan, although the cosigner does not get the benefit of the product.

Cost of Attendance (COA): An estimation of the overall expense of a student’s education. This usually includes: tuition, fees, textbooks, housing, transportation and personal expenses.

Creditworthy: According to a credit report, being financially stable enough to take out a loan.

Default: When the borrower’s loan has gone unpaid for more than 9 months. Once the loan enters default, the total loan balance including interest is due immediately.

Deferment: The postponement of repaying a loan, under certain conditions.

Delinquency: Failure to make a payment on time.

Dependent Student: A student that is 23 years old or younger and depends on parental guardians for financial support.

Disbursement: The issuance of the loan installment to a borrower or a school on behalf of a borrower.

Disbursement Date: The date a lender issues funds for a loan to a borrower or to a school.

Economic Hardship Deferment (EHD): All federal student loans have a grace period following graduation before entering repayment. At that point, borrowers may apply for a deferment of payments on their education loans for certain reasons, including economic hardship.

Currently, qualified borrowers are entitled to use the economic hardship deferment for periods of up to one year at a time, not to exceed three years cumulatively. During the deferment, the federal government continues to pay the interest on the subsidized portion of the loan. Interest on the unsubsidized portion continues to accrue during this time.

Endorser: Same as cosigner. Someone who agrees on behalf of the borrower to be held legally responsible for the terms and repayment of a loan.

Expected Family Contribution (EFC): A need-based formula that determines a student’s eligibility for federal financial aid. This is determined by financial information provided on a FAFSA.

E-signature: An electronic endorsement for a promissory note or agreement in order to save time in receiving a handwritten signature.

FAFSA: The free application for federal student aid. This application determines eligibility for federal student loans. Go to the U.S. Department of Education for a FAFSA form.

FFELP: The federal family education loan program. A government program that includes all federal loans (Perkins, Stafford, PLUS and Federal Consolidation). The loans under this program are guaranteed by the government, but funded by separate lenders.

Forbearance: An agreement between a borrower and a lender to postpone repayment of a loan or reduce payments. This agreement is only based on certain hardships the borrower has experienced.

Grace Period: The specified time period after a student graduates in which the student does not have to make payments on the loan.

Graduate PLUS Loan: A federal loan designed specifically for graduate students who have already reached the limit in Stafford loans and need additional funds.

Guarantor: A government agency or institution that insures lenders against a borrowers default, disability, death or bankruptcy.

Guarantor Fee (Federal Default Fee): A percentage of the principal amount that insures lenders against loss if a borrower fails to pay.

Half-time student: A student must be taking at least half of the course load required of a full-time student. This status will be determined by the student’s school.

Income-Based Repayment (IBR): Based on the borrower’s income, family size and total amount borrowed, this helps reduce monthly payments as a percentage of the borrower’s discretionary income. IBR is only available for federal student loans.

Interest: The cost of borrowing funds from a lender.

Lender: The financial institution that provides loans.

Lender ID: A 6-digit code to identify a borrower’s loan lender.

LIBOR: The London Interbank Offered Rate. LIBOR changes quarterly plus the margin. The margin is determined primarily by the borrower’s credit profile or that of the borrower’s cosigner.

Loan: Money that is borrowed for a specific reason and is to be repaid with interest.

Medical Residency: Through a national matching program, newly graduated MD's enter into a residency program that is approximately 3 to 7 years of professional graduate training under the supervision of senior physician educators. The length of residency training varies depending on the specialty chosen. Completion of a residency program is required for board certification in a medical or surgery specialty. (source: AMA)

Medical Resident: A physician during their residency program.

Medical Resident Salary: The average medical resident salary ranges between $30,000 and $60,000 per year.

Need-based Financial Aid: Assistance and eligibility for aid that is based on a student’s financial situation.

Origination Fee: A lender’s fee for processing the loan application and originating the loan.

Originate: The course of receiving a loan application, processing the application and disbursing the funds.

Parent PLUS Loan: A federal loan in which the parent is the borrower for a dependent student. This loan is only available to parents of undergraduate students.

Principal: The amount of money borrowed with any capitalized fees.

Private Loans: Same as alternative loans. Student loans provided by private lenders that are used to fill financial gaps after federal loans are exhausted or if students are ineligible for federal loans at all. Credit guidelines are required. Terms and interest rates may vary.

Promissory Note: A legally binding contract signed by the borrower which includes the terms of the loan and establishes the borrower's responsibility for loan repayment. It is a "promise to pay."

Public Service Loan Forgiveness: As part of the College Cost Reduction and Access Act of 2007 (CCRAA) a public service loan forgiveness program was introduced. With this program, the government will forgive remaining federal debt on Direct Loans after the borrower makes 120 monthly payments while working full-time in certain public service jobs. GL Advisor will help eligible graduates understand and fully utilize this loan forgiveness program, if applicable.

Repayment period (term): The time period in which a student must pay off his/her loan.

Separation Date: The date in which a student’s status becomes less than half-time or the student graduates from their institution.

Subsidized Stafford Loan: The amount of interest accrued is paid by the government during in-school periods, deferment and until repayment begins. Subsidized Stafford loans are based on financial need.

Terms: The conditions of the agreement and repayment of a loan. This includes fees, rates and repayment period of a loan.

Treasury Bill: Same as T-bills. A short-term debt obligation issued by the government that matures within 18 months or less.

Uncertified Loan: The loan does not need to be approved by the school and the funds are sent directly to the borrower.

Undergraduate Student: A student that is enrolled in a course of study below the baccalaureate status.

Unsubsidized Stafford Loan: The amount of interest accrued is to be paid by the borrower. An unsubsidized Stafford loan is not based on financial need.