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Student Loan Glossary

In our ongoing effort to try and make student loans less complicated, we’ve prepared this glossary of key terms.

Accrued Interest
Interest that accumulates on the unpaid principal balance of a loan.

Annual Percentage Rate (APR)
The effective interest rate when all finance charges and upfront fees are included. The APR on a loan can vary among lenders because of differences in upfront fees, interest rates and other loan terms.

Capitalization or Capitalized Interest
Occurs when accrued unpaid interest is added to the principal balance of a loan.

College Loan
A college loan is a loan offered to students to assist in payment of the costs of professional education.

Common Misspellings of Student Loan
Studnet Loan, Studnet Loans

Co-signer (or co-applicant, or co-borrower)
Any individual, other than the primary borrower, who signs your loan documents and thereby agrees to be equally responsible for the repayment of that loan. The co-signer is typically a parent or relative.

Credit Agreement (or Loan Documents)
Contract between a borrower and a lender that includes the terms and conditions under which the borrower promises to repay the loan.

Credit Bureau
An agency that collects and distributes credit and personal information to creditors. A credit report from a bureau might include payment history on loans and other credit accounts (such as credit cards), balances of accounts, and length and place of employment.

For most guaranteed loan programs, an applicant is "credit-worthy" if s/he:

  • have a satisfactory employment history of at least two years (if self-employed, have been in business for at least two years),
  • have proof of current income,
  • have at least 21 months of credit experience and a satisfactory credit history,
  • be a U.S. citizen or permanent resident and have resided in the U.S. for the previous two years, and
  • have resided at your most current and immediately preceding addresses for a total of at least one year.

Default (also, Delinquency)
Failure to meet the terms and conditions of a loan, including failure to make required payments on time.

A period when a borrower, who meets certain criteria, is not required to make payments.

Delinquency (also, Default)
Failure to make required loan payments on time.

Occurs when the lender sends the loan funds to the school or borrower.

Disclosure Statement
Statement sent by the lender to the borrower describing the estimated costs of a loan, the interest rate and any additional finance charges.

Eligible Borrower
An individual who meets all criteria required for loan approval.

A special arrangement between a borrower who has experienced certain hardships (such as severe medical problems) and the lender in which the lender allows the borrower to temporarily stop making payments or to make smaller payments than would otherwise be required.

Interest Rate
The amount a borrower pays to borrow money.

Interest-only Payment
A payment that covers only interest that accrues on the loan and does not result in reductions in the principal balance.

The bank, credit union, or other financial institution from which you have borrowed your student loan funds.

Loan Limits
The minimum and/or maximum amount of money an applicant may borrow from a lender under a specific loan program during a specific time period.

Origination Fee
A fee charged to the borrower by the lender for processing the loan application and originating the loan.

Amount borrowed plus any capitalized fees. Principal may increase as a result of interest capitalization.

Repayment Period
The period during which a loan must be repaid.

* Think Financial refers applications to Simple Tuition, a leading student loan comparison site, and is paid a fee for this referral.