Private Student Loan Glossary
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A
Accrued Interest: Interest that accumulates on the unpaid principal balance of a loan.
Annual Percentage Rate (APR): The APR is a measure of what a loan will cost. It takes into account the rate, fees, repayment length of the loan and the timing of all payments. The APR will increase if the LIBOR index increases.
Application: The combined form that contains the loan application and the promissory note for a private loan application.
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B
Bankruptcy: A person is declared bankrupt when found to be legally insolvent and the person's property is distributed among creditors or otherwise administered to satisfy the interests of creditors. Generally, federal and private student loans cannot be discharged through bankruptcy.
Borrower Incentive: Borrowers are eligible to receive a 0.25% interest rate reduction for payments made via automatic debit.
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C
Cancellation: If you choose to cancel your loan, please call 888.426.7820 immediately. An Educated Borrower® private loan may be cancelled at any time within 15 days of receipt of the disclosure statement after approval. An Educated Borrower® private consolidation loan may be cancelled at anytime with in 5 business days of receipt of the disclosure statement after approval.
Citizen/Eligible Noncitizen: You must be one of the following to receive federal student aid:
- U.S. citizen
- U.S. national (includes natives of American Samoa or Swain's Island)
- U.S. permanent resident who has an I-151, I-551, or I-551C (Alien Registration Receipt Card)
Collateral: Property of a borrower that is pledged by the borrower to protect the interests of a lender. Collateral is the lender's security for loans made and may become property of the lender if the borrower fails to repay.
Consolidation: Combining multiple private student loan obligations into a single loan for a variety of reasons, including (1) to lower monthly obligations to ease cash flow in the early years of repayment and (2) to combine all private (non-Federal) student loan obligations into one monthly payment.
Co-signer: A signer of a promissory note who is liable for a loan obligation (i.e., who agrees to pay if the borrower does not).
Cost of Attendance (COA): The total amount it will cost a student to go to school-usually expressed as a yearly figure. The COA usually includes tuition and fees; on-campus room and board (or a housing and food allowance for off-campus students); and allowances for books, supplies, transportation, loan fees, and, if applicable, dependent care, costs related to a disability, and miscellaneous expenses, including an allowance for the rental or purchase of a personal computer. Also included are reasonable costs for eligible study-abroad programs.
Talk to the financial aid administrator at the school you're planning to attend if you have any unusual expenses that might affect your cost of attendance. (Not applicable to Private Consolidation Loan)
Credit Check: A credit check is the process whereby the lender makes an inquiry into the credit reporting agencies, also know as credit bureaus, to determine your creditworthiness. The credit bureaus store data which reflect the timeliness of your loan payments, your total use of credit and adverse credit history, if any, that may have resulted from untimely loan payments. The credit check for our loan program is valid for 60 days. If you do not return your required documentation within that time frame, your loan application may be cancelled or an additional credit check may be necessary.
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D
Default: Failure to repay a student loan according to the agreed-upon terms of a promissory note.
Deferment: Deferment refers to the period of time during which the lender agrees to postpone monthly payments. Our loan program's Undergraduate, Graduate, Health Professional and Degreed Undergraduate loans are in deferment during the in-school and grace periods. For these products, the maximum in-school period is 48 months. The maximum time period before repayment begins (the "Interim Period") is 54 months, which represents the 48 months plus a 6-month grace period.
For our Private Consolidation Loan, there is no interim or grace period. Repayment for this loan begins immediately upon disbursement.
Delinquent: Delinquent is the term used when a borrower is late in making their student loan payments as defined in the promissory note. Delinquencies have an adverse effect on the borrower(s)' credit rating.
Department of Education: The federal agency that establishes financial aid programs and processes federal financial aid applications.
Dependent Child: A student who is not married, is under 24 years of age, is not enrolled in a graduate or professional education program, does not have legal dependents, is not an orphan or ward of the court nor a veteran of the US Armed Forces.
Disbursement Amount: The amount requested or approved for disbursement.
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E
Eligible School: In order to be eligible for our loan program, a borrower must attend a school that has been approved for participation in the program. There are thousands of such eligible schools, representing four-year public and private institutions for virtually all levels of education across the country. If you are not sure your school is an eligible school, please call during the hours of 8:00 a.m. to 5:00 p.m. (Mountain Time) and one of our agents will assist you.
Enrollment Status: In order to be eligible for our loan program, you must be attending school on at least a half time basis, as defined by your school. (Not applicable to Private Consolidation Loan)
Enrollment Verification: First-year (freshmen) borrowers are required to submit a school document on school letterhead verifying the student's enrollment. Acceptable documents include but are not limited to a letter of acceptance, financial aid award letter, invoice for tuition, room, board and other fees, or an academic transcript from the school. (Not applicable to Private Consolidation Loan)
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F
The Free Application for Federal Student Aid (FAFSA): The official application form for all federal financial aid programs. In order to apply for and determine eligibility for federal aid, families must report income, savings, and other personal confidential information.
FFELP or Federal Loan: FFELP is the acronym for Family Federal Education Loan Programs and refers to student loans offered by the United States Department of Education. Our loan program is funded with private lender capital and is not affiliated with FFELP.
Finance Charge: The finance charge is interest paid over the life of the loan, plus the origination fee.
Full-Time Student: A student enrolled in an institution of higher education (other than a student enrolled in a program of study by correspondence) who is carrying a full academic workload as determined by the school under standards applicable to all students enrolled in that student's particular program. The student's workload may include any combination of courses, work, research, or special studies, whether or not for credit, that the school considers sufficient to classify the student as a full-time student.
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G
Grace Period: Specified period of time between the date a student graduates or drops below half-time status and the date loan repayment begins. (Not applicable to Private Consolidation Loan)
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H
Half-Time Student: At schools measuring progress in credit hours and semesters, trimesters, or quarters, half time enrollment is at least six semester hours or quarter hours per term. At schools measuring progress by credit hours but not using semesters, trimesters, or quarters, half time enrollment is at least 12 semester hours or 18 quarter hours per year. At schools measuring progress by clock hours, half time enrollment is at least 12 hours per week. Note that schools may choose to set higher minimums than these.
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I
Income Verification: Income verification refers to evidence of your employment or earnings. Our loan programs require that the borrower or co-signer submit documentation of income in the form of a pay stub not more than 45 days old which contains the name and address of the employer on the check stub. Additional acceptable income verification includes a letter from the employer on company letterhead indicating the length of employment and the current annual salary. Self-employed individuals must provide two most recent tax returns including all relevant schedules with copies of W-2 and 1099s. "Other Income" must be documented with an Internal Revenue Service issued statement, such as a 1099 form.
Independent Student: A student who is either married, 24 years of age or older, enrolled in a graduate or professional education program, has legal dependents other than a spouse, is an orphan or ward of the court, or a veteran of the US Armed Forces.
Interest: Interest is the amount you are charged for using the lender's money. Interest is expressed as a percentage of the amount borrowed and can be "fixed", meaning it will not increase or decrease through the life of the loan, or "variable," meaning it can change due to market conditions. The loans under our program have variable interest rates.
Interest Rate: The Interest rate for our loan program is based on LIBOR (London Interbank Offered Rate) plus a margin of 7.00% to 7.50% depending on credit and the loan program applied for. The LIBOR index may change quarterly.
International Students: International Students are eligible for our loan program so long as either the borrower or co-signer is a U.S. citizen or permanent resident having resided in the U.S. for the past two years.
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L
Lender: A financial institution that provides funds to the borrower.
LIBOR: LIBOR is the loan index used to determine the actual interest rate of your loan. LIBOR means London Interbank Offered Rate. The 1-month LIBOR index is equal to the average of the 1-month London Interbank Offered Rate made available by the British Banker's Association (11:00 AM London Daily Posting) on the first business day of each of the calendar months immediately preceding each quarterly adjustment date. The LIBOR index may change quarterly.
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M
Monthly Statement: The monthly bill(s) from your lender(s) that has your account information. Please make sure that it has your personal information, total amount owed, the statement date, and lender or servicer name.
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O
Origination Fee: The origination fee is the fee charged for the administration of your loan and is paid to the loan holder. This fee is financed with and added to your loan amount so that you do not have to pay cash. The origination fee is calculated as a percentage of the loan request amount and ranges depending on the loan type and credit history.
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P
Part Time: A part-time student attends school less than half-time as determined by the eligible school. Students attending less than half-time are ineligible for Education Borrower® loans.
Payoff Amount: The total loan amount required to pay off a specific loan. This amount includes the loan principal, capitalized interest, borrower accrued interest or billed interest.
Payoff Authorization Letter: This letter is part of the process of completing your Private Consolidation Loan. While it is not required, it is strongly encouraged for a more efficient process. The letter provides explicit payoff instructions to the current holders of your loans. It can be downloaded here.
Pre-Approval: Pre-Approval refers to the almost-instantaneous conditional credit check performed for our loan program's applicants who choose to apply by phone or internet. The conditional pre-approval process is not a commitment to lend, but does provide the borrower with the peace of mind in knowing that their initial credit rating is such that they could qualify for the loan. Final approval is based on supporting documentation and an evaluation that you meet the required loan underwriting standards.
Pre-Payment: Pre-Payment refers to repaying the loan on a schedule faster than what is required in the promissory note. There are no penalties for pre-payment.
Principal: Principal refers to the portion of the loan that remains unpaid or the original amount of money you borrowed.
Principal at Repayment: The principal at repayment is the principal amount of the loan at disbursement plus interest that accrues during the deferment term which varies by loan product.
Promissory Note: Contract between a borrower and a lender that includes all the terms and conditions under which the borrower promises to repay the loan.
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R
Repayment Period: The period during which interest accrues on the borrower's loan and principal payments are required.
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S
Secured Loan: A secured loan refers to a loan made with collateral such as cash, a house or a car which the lender would have recourse to should you not repay your loan. Our loans are unsecured.
Servicer: Organization that administers and collects loan payments. May be either the loan holder or an agent acting on behalf of the loan holder.
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U
Unsecured Loan: An unsecured loan refers to a loan made without collateral such as cash, a house or a car which the lender would have recourse to should you not repay your loan. Our loans are unsecured.
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V
Variable Interest: Variable Interest means that your interest rate may change due to market conditions. This means that your interest rate will increase and decrease as LIBOR increases and decreases.
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