- Academic year
The measure of the academic work to be accomplished by a student each
year as defined by the school. For instance, at a school that uses
terms, the academic year must contain at least 30 weeks of instructional
time in which a full-time student is expected to complete at least
24 semester or trimester hours, 36 quarter hours, or 900 clock hours.
Interest that builds gradually on the loan.
Person responsible for repaying a loan who has signed and agreed to
the terms in the promissory note.
Adding accumulated interest to the loan principal rather than having
the borrower make interest payments. Capitalizing interest increases
the principal amount of the loan and the total cost of the loan.
The combining of existing loans into one totally new loan.
A person who signs the promissory note in additional to the borrower
and is responsible for the repayment obligation if the borrower does
Failure to repay a loan according to the terms of the promissory note.
This failure must persist for 180 days.
A deferment means you may postpone making payments on your loan under
certain specific conditions.
- Dependent student
A student who does not meet any of the criteria for an independent
student. An independent student is at least 24 years old, married,
a graduate or professional student, a veteran, an orphan, a ward of
the court, or someone with legal dependents other than a spouse.
A payment of loan proceeds to the student or parent borrower.
The release of a borrower from the obligation to repay his or her
- Disclosure statement
Statement of the actual cost of a loan, including the interest costs
and the loan fee.
- Direct Loan Servicing Center
The U.S. Department of Education's agent contracted to collect Direct
Loans and handle deferments, repayment options, and consolidation.
A signer of a promissory note who is secondarily liable for
a loan obligation.
Expected Family Contribution (EFC)
The amount a student's family is expected to contribute toward college
costs. The U.S. Department of Education calculates a student's EFC
based on information provided on the
Free Application for Federal Student Aid
- Federal Direct Loan Program
The William D. Ford Federal Direct Loan Program, also referred to
as Direct Loan Program, is a federal program that provides loans to
student and parent borrowers directly through the U.S. Department
- Federal Direct Stafford/Ford Loan
Also referred to as Direct Subsidized Loan. A federally financed and
subsidized student loan made on the basis of the student's financial
need and other specific eligibility requirements. The federal government
does not charge interest on these loans while borrowers are enrolled
at least half-time, during a six-month grace period, or during authorized
periods of deferment.
- Federal Direct Unsubsidized Stafford/Ford
Also referred to as Direct Unsubsidized Loan. A federally financed
student loan made to students meeting specific eligibility requirements.
Interest is charged throughout the life of the loan. The borrower
may choose to pay the interest charged on the loan or allow the interest
to be capitalized (added to the loan principal).
If you're unable to make payments on your Direct Loan for reasons
such as unexpected personal problems or poor health and you don't
qualify for a deferment, you may request forbearance of loan payments.
- Grace period
A six-month period before the first payment must be made on a Direct
Subsidized or Unsubsidized Loan. The grace period begins the day after
the borrower ceases to be enrolled at least half time.
- Independent student
A student who is at least 24 years old, married, a graduate or professional
student, a veteran, an orphan, a ward of the court, or someone with
legal dependents other than a spouse.
An expense of borrowing money that is calculated as a percentage of
the amount borrowed.
Money borrowed that must be repaid.
- Loan fee
An expense of borrowing deducted proportionately from each loan disbursement.
- Principal balance
The amount owed on a loan or loans at any given time. The principal
balance may include capitalized interest.
- Promissory note
A legally binding contract between a lender and a borrower. The promissory
note contains the terms and conditions of the loan, including how
and when the loan must be repaid.
- Repayment period
The period during which a borrower is obligated to make payments on
his or her loan(s).
- Repayment schedule
A statement provided by the Direct Loan Servicing Center to the borrower
that lists the amount borrowed, the amount of monthly payments, and
the date payments are due.
- Variable interest
Rate of interest on a loan that is tied to a stated index and changes
annually every July 1 as the index changes.
Last Modified: July 23, 2008