Glossary of Lending Terms

Contact

Senior Associate Director of Financial Aid

E-mail Roberta

914.395.2570

Below is an abbreviated glossary of terms used by lenders.

  • APR - Annual percentage rate calculates the cost of borrowing money. It includes the annual interest rate, insurance, and origination fees associated with lending money.
  • Borrower benefits - Special interest rates, incentives, or terms offered by an individual lender. These benefits may lower your payments or reduce your cost of alternative borrowing.
  • Capitalization - Adding unpaid accrued interest charges to the principal balance of a loan.
  • Consolidation - Combining all of your loans into one new loan. You will make one payment to one lender. A consolidation loan has its own terms and conditions. Loan consolidation makes repayment easier if you have more than one federal educational loan. It combines all of your eligible loan obligations into a one new loan with one monthly payment. It may also lower your monthly payment. If you choose to do so, you may be able to extend your repayment schedule beyond the 10 year standard. The interest rate on a consolidation loan is fixed and the rate cannot exceed 8.25 percent.
  • Default - The borrower fails to begin repayment (delinquency) or arrange a deferment or forbearance 270 days after repayment is scheduled to begin.
  • Deferment- You may qualify to defer making payments for a specified period of time. For a subsidized loan, the interest does not accrue because the government pays it on behalf of the borrower. Deferments are available for:
    • Enrollment in undergraduate or graduate school
    • Person with a disability enrolled in a qualifying rehabilitation program
    • Unemployment
    • Economic hardship
    • Military service
  • Delinquency - The status of a loan when payments are late. The servicer may charge late fees. Delinquency precedes default.
  • Disbursement dates - The date the lender expects to send your loan amount to the college.
  • Forbearance - Forbearance is granted by the individual lender. This allows the borrower to not make payments during the forbearance period however interest does accrue. Borrowers should apply for a deferment before considering a forbearance.
  • Grace period - The time between the end of enrollment (graduation, leave of absence, less-than-half-time enrollment, or withdrawal) and when repayment begins. No payments are required during the grace period.
  • Graduate PLUS (GPLUS) - This loan is also known as Plus Loan for Graduate/Professional Students. This loan allows credit-worthy graduate students to borrow the difference between the total cost of attendance and any financial aid offered to the student.
  • Interest Rate - The rate at which interest accrues on a loan or cost of borrowing money.
  • Loan/Origination fees - Fees subtracted from the amount borrowed to cover the expenses for lending. Fees are retained by the US Department of Education.
  • Minimum monthly payment - The lowest amount you are required to pay each month during the repayment period.
  • Private Educational Loans - These loans are offered by individual lenders to meet the gap between the cost of attendance and any financial aid offered. They are not subject to the same government regulations as federal loans.
  • Repayment date - The day following the end of the grace period.
  • Servicer - Some lenders assign educational loans to a servicer. This third party company becomes responsible for collecting and processing payments for that lender.
  • Total repayment amount - The amount you borrowed plus the accrued interest.
  • Unsubsidized - Graduate students may borrow up to $20,500 in unsubsidized loan funds per academic year from the federal Stafford/Direct educational loan programs. Unsubsidized means that the student borrower must make interest payments on the amount of the loan in use while the student is enrolled in school.