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Glossary
Account

A grouping of one or more Direct Loans disbursed by the U.S. Department of Education. Borrowers can have one or more accounts.
Each account has a unique number assigned to identify it. The format of an account number is your Social Security Number (SSN) plus a one-digit
identifier added to the end (e.g., 123-45-6789-1). If you receive a notice that affects all of your possible accounts, the account number on the
notice may be abbreviated to the Social Security Number only.

Accrue

The process whereby interest accumulates on your loan. When we speak of “interest accruing on your loan,” we mean that the interest due on your
loan is
accumulating.

Alternative Documentation of Income (ADOI)

A form that is used to accurately identify the income level of borrowers on, or requesting to be on, the Income Contingent Repayment (ICR)
or Income-Based Repayment (IBR) Plan. The Alternative Documentation form is used in situations when obtaining income information from the

IRS is inappropriate such as the first year or two of repayment on your loan(s) or when we are unable to obtain income information from the
Internal Revenue Service (IRS).

Borrower

Individual who signed and agreed to the terms in the promissory note and is responsible for repaying a loan.

Cancellation

Some student loan programs allow for all or part of the total loan principal and accrued interest to be canceled in certain circumstances.
A canceled loan may also be referred to as a “discharged loan.”

Capitalization

Adding unpaid accrued interest to the principal balance. Capitalizing interest increases the principal amount of the loan and the total cost of the loan.

This occurs at the end of a deferment, forbearance, or grace period on Unsubsidized Loans,
and at the end of a forbearance period on a Subsidized Loan.

Note: If you are repaying under the Income-Based Repayment (IBR) Plan and have a partial financial hardship
when a deferment or forbearance ends,
accrued interest (1) will capitalize only after your partial financial hardship ends or you leave the IBR Plan and
(2) will not capitalize after your deferment
and/or forbearance ends.

Collection Costs

When a defaulted Direct Loan or FFEL is included in a Direct Consolidation Loan, collection costs of up to 18.5 percent of the outstanding
principal and interest are added to the outstanding balance. When defaulted Perkins Loans and Health and Human Service (HHS) loans are consolidated,
collection costs are also added. However, collection costs on these loans may exceed 18.5 percent of the outstanding principal and interest.

Consolidation

The process of combining one or more eligible educational loans into a single new loan. The Direct Loan Program offers a Direct Consolidation
Loan for those borrowers who are interested in consolidating their eligible educational loans.

Consolidation Hold

Delays the processing of your Direct Consolidation Loan until closer to the end of your grace period
if any of the loans you want to consolidate are in a grace period.

Normally, when you consolidate your existing loan(s) into a new Direct Consolidation Loan, you will be required to start repayment of your new loan immediately.
However, if any loan you want to consolidate is still in a grace period, you can delay entering repayment on your new Direct Consolidation Loan until closer

to your grace period end date by entering your expected grace period end date (month and year) in the space provided on the application. We will start
processing your application about 45 days before the expected grace period end date that you provide. If you leave the expected grace period end date blank
on your consolidation application, your Direct Consolidation Loan will enter repayment immediately.

You can select a date up to nine (9) months into the future. If your grace end date is more than 9 months away, wait to submit your application.

Default

Failure to repay a loan according to the terms agreed to when borrowers signed their promissory notes. Default occurs when a Direct Loan
borrower becomes 270 days delinquent in making payments on their loan(s). The consequences of default can be severe.

Default Aversion

The activities of a guaranty agency that are designed to prevent a default by a borrower who is at least 60 days delinquent and that are directly
related to providing collection assistance to the lender.

Deferment

A deferment is a temporary suspension of a borrower’s monthly loan payment. There are many different types of deferments available.

During deferment of subsidized loans, principal payments are postponed and interest does not accrue.

During deferment of unsubsidized loans, principal payments are postponed but interest continues to accrue. Accrued unpaid interest will be added to the
principal balance (capitalized) of the loan(s) at the end of the deferment period. This will increase the amounts borrowers owe.

Note: If you are repaying under the Income-Based Repayment (IBR) Plan and have a partial financial hardship
when a deferment ends, interest accrued during deferment will not be capitalized until after your partial financial hardship ends or you leave the IBR Plan.

Delinquent

Delinquency status indicates that borrowers’ accounts have become past due on payment. This occurs when borrowers’ loan payments are not received
by the due dates. Accounts remain delinquent until borrowers bring their accounts current with payments, deferments, or forbearances.
If borrowers’ accounts have become delinquent and the borrowers are unable to make payments, deferments or forbearances should be considered.

Dependent student(dependent undergraduate 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, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents other than a spouse.

Direct Loan Servicing Center

The U.S. Department of Education’s agent contracted to collect Direct Loans and handle deferments, forbearances, and repayment options

Direct PLUS Loan (PLUS Loan)

Direct PLUS Loans are unsubsidized loans available to parents of dependent students, and to students enrolled in graduate or
professional programs.
These loans are available regardless of financial need and the amount of eligibility depends on the total cost of education.

Disbursement

Payment of loan proceeds by the lender. During consolidation, this term refers to sending payoffs to the loan holders of the underlying
loans being consolidated.

Disclosure Statement

A statement showing a borrower’s loan term, payment schedules and monthly payment amount for their loans.

Eligible Loans

The following federal education loans are eligible for consolidation into a Direct Consolidation Loan:

  • Direct Subsidized and Unsubsidized Loans
  • Federal Subsidized and Unsubsidized Stafford Loans
  • Direct PLUS Loans and Federal PLUS Loans
  • Direct Consolidation Loans and Federal Consolidation Loans
  • Guaranteed Student Loans
  • Federal Insured Student Loans
  • Supplemental Loans for Students
  • Auxiliary Loans to Assist Students
  • Federal Perkins Loans
  • National Direct Student Loans
  • National Defense Student Loans
  • Health Education Assistance Loans
  • Health Professions Student Loans
  • Loans for Disadvantaged Students
  • Nursing Student Loans
Family Size

This number includes you and your spouse and is used to help determine your monthly payment amount for the ICR and IBR Plans.
Family size includes your children if they receive more than half their support from you. For the IBR Plan, this includes children who
will be born during the year you certify your family size if for the IBR Plan. For the ICR Plan, family size can also include other people
only if: (1) they now live with you, and (2) they now get more than half their support from you and
they will continue to get this support from you.
For the IBR Plan, family size can include other individuals if, at the time you certify your family size, these other individuals
(1) live with you and (2) receive more than half of their support from you and will continue to receive this support
for the year you certify your family size. For both ICR and IBR Plans, support includes money, gifts, loans, housing, food, clothes, car,
medical and dental care, and payment of college costs.

Federal Family Education Loan Program(FFEL Program)

A Federal program authorized under Title IV of the Higher Education Act that provides loans to eligible student and parent borrowers.
The program consists of Subsidized and Unsubsidized Federal Stafford Loans, Federal PLUS Loans, and Subsidized and Unsubsidized Federal Consolidation Loans.
Funds are provided by private lenders such as banks, credit unions, and other private financial institutions. The loans are backed by the Federal government.

Forbearance

A period during which your monthly loan payments are temporarily suspended or reduced. You may qualify for forbearance if you are
willing but unable to make loan payments due to certain types of financial hardships.>

During forbearance, principal payments are postponed but interest continues to accrue. Accrued unpaid interest will be added to the
principal balance (capitalized) of the loan(s) at the end of the forbearance period. This will increase the amounts borrowers owe.

Note: If you are repaying under the Income-Based Repayment (IBR) Plan and have a partial financial hardship
when a forbearance ends,
interest accrued during forbearance will not be capitalized until after your partial financial hardship ends or you leave the IBR Plan.

Grace Period

After borrowers graduate, leave school, or drop below half-time enrollment, loans that were made for that period of study have
several months before payments are due. This period is called the “grace period.”

Grace periods extend from 6 to 12 months after borrowers leave school:

  • Most FFEL and Direct Loans have 6-month grace periods.
  • Perkins Loans have grace periods of either 6 or 9 months, depending on when the loan was first disbursed.
  • Health professions loans have grace periods of 9-12 months.

During the grace period, no interest accrues on Subsidized loans. Interest accrues on
Unsubsidized loans during grace periods,
and this interest is capitalized when borrowers’ loans enter repayment.

Borrower’s repayment periods begins the day after the grace period ends. First payments will be due within 60 days after the repayment period begins.

Each loan has only one grace period. If borrowers return to school after the grace periods has expired, the borrowers’
loans qualify for deferment while borrowers are enrolled but return to repayment after borrowers leave school. There is no additional grace period.

Grace Period End Date

The date on which a grace period for a loan is expected to end.

When applying for a Direct Consolidation Loan, a grace period end date must be less than nine (9) months from the date you apply,
or your Consolidation application cannot be accepted.

Half-time

A student is considered half-time when carrying at least one half the academic
workload of a full-time student as determined by the school.

Health Professions Loans

Loan programs authorized by the Public Health Services Act and administered by the U.S. Department of Health and Human Services
(HHS) rather than the U.S. Department of Education. Although health professions loans can be included in consolidation loans,
borrowers should be aware of the advantages and disadvantages of consolidating these loan types because of the differences between the programs.
See the benefits comparison chart for details.

HHS loans include:

  • Health Professions Student Loans (HPSL)
  • Loans for Disadvantaged Students (LDS)
  • Health Education Assistance Loans (HEAL)
  • Nursing Student Loans (NSL)
Holder (also holder of loans/loan holder)

A holder (loan holder) is an entity that holds a loan promissory note and has the right to collect from the borrower.

Income Contingent Repayment(ICR) Plan

A repayment plan that bases your monthly payment on your yearly income, family size, and loan amount. As your income rises or falls, so do your payments.
After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.

Each year your monthly payment will be based on your family size, annual Adjusted Gross Income (AGI) as reported on your federal tax return,
and the total amount of your Direct Loan(s). To participate in the ICR Plan you must authorize the U.S. Internal Revenue Service (IRS) to inform the U.S.
Department of Education (Department) of the amount of your income. This information will be used to calculate your repayment amount,
which will be adjusted annually to reflect changes in your AGI If you select the ICR Plan, you will be billed for only the interest amount that accrues
on your loan each month until you complete and return the required documentation. We cannot place you on ICR Plan until we receive your completed forms.

Income-Based Repayment(IBR) Plan

The Income-Based Repayment (IBR) Plan bases your monthly payment on your yearly income and you must have a partial financial hardship to enroll.
This plan is an alternative to the Income Contingent Repayment (ICR) Plan and is designed to make repaying education loans easier for students
who intend to pursue jobs with lower salaries, such as careers in public service. It does this by capping the monthly payments at a percentage
of your discretionary income (the difference between your Adjusted Gross Income and 150% of the poverty guideline for your
family size and state of residence). If you are married AND file taxes separately, only your income will be considered when calculating
your IBR payment amount. Like ICR, after 25 years of qualifying repayment, any remaining balance on the loan will be forgiven,
but you may have to pay taxes on the amount forgiven.

The IBR Plan is NOT available for repayment of your Direct PLUS Loan(s) made to parent borrowers and/or Direct Consolidation Loan(s)
that repaid PLUS Loans made to parent borrowers. If you choose to include any ineligible loans, the resulting new Consolidation Loan
cannot be repaid under the IBR Plan.

To participate in the IBR Plan, you must authorize the U.S. Internal Revenue Service (IRS) to inform the U.S. Department of
Education (the Department) of the amount of your income.

Note: If you choose to leave the IBR Plan at any time, your account will be placed on the Standard Repayment Plan.
You cannot change to any plan other than Standard at any time after being on the IBR repayment plan.

Independent Student

An independent student is at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan,
a ward of the court, or someone with legal dependents other than a spouse.

In-School Status

The status of a loan prior to entering the grace or repayment period.

Interest

A loan expense charged by the lender and paid by the borrower for the use of borrowed money. The expense is calculated as a percentage of
the unpaid principal amount (loan amount) borrowed.

Loan(s)

Money borrowed from a lending institution or the U.S. Department of Education that must be repaid.

NSLDS

The National Student Loans Data System is a centralized database that stores information on all U.S. Department of Education loans and grants.
NSLDS also contains borrowers’ school enrollment information.
Borrowers can access this information online using their Department of Education PIN.

Out of School

Borrowers are “out of school” if they are making scheduled payments on their federal education loans (repayment)
or they are in a period of grace,
deferment, or forbearance.

Partial Financial Hardship

A circumstance in which the annual amount due on all the borrower’s eligible loans, as calculated under a 10-year Standard Repayment Plan,
exceeds 15 percent of the difference between the borrower’s Adjusted Gross Income (AGI) and 150 percent of the poverty line income for the
borrower’s family size. If you believe you have a partial financial hardship and your Direct Loan(s) are currently in repayment,
you may want to repay your Direct Loan(s) under the Income-Based Repayment (IBR) Plan.

Income-based repayment is only available for Federal student loans, such as the Stafford, PLUS loans made to graduate/professional students,
and consolidation loans. It is not available for Parent PLUS loans or for consolidation loans that include Parent PLUS loans.
(IBR is not available for Perkins loans, but it is available for consolidation loans that include Perkins loans.)
It is also not available for private student loans.

Payment Amount

The total amount of a borrower’s most recent payment.

Payment Date

The date borrower’s payments are received and applied to their loan accounts.

PIN

Your PIN serves as your identifier to allow access to personal information in various U.S. Department of Education systems.

Your PIN also acts as your digital signature with some online forms. Use your PIN to electronically sign your online Loan Consolidation
Application and Promissory Note, Deferment, or Forbearance forms.

If you do not already have a PIN, you can request one online by selecting the Request a PIN button link located on the left menu bar.
The PIN you will receive will be your universal U.S. Department of Education PIN.

PLUS Loan

PLUS Loans are available to parents of dependent graduate students and to students enrolled in graduate and professional programs.
PLUS loans are unsubsidized loans that accrue interest from the date of disbursement.

Prepayment

A prepayment is an amount in excess of the amount due on a loan. If borrowers have more than one Direct Loan, they must specify which loan
they are prepaying. Like all other Direct Loan payments, a prepayment first will be applied to any outstanding fees and charges,
next to outstanding interest, and then to the principal balance of the loan(s). There is never a penalty for prepaying principal or
interest on Direct Loan Program loans.

Principal Loan Balance Outstanding (principal balance)

The total principal amount outstanding on a borrower’s Direct Loan(s). Principal balance will include the original amount(s)
disbursed for the loan(s), any adjustments made to the loan disbursement amount, and any interest capitalized on the account(s).

Promissory Note

The binding legal document that borrowers sign when they obtain loans. Promissory notes define the conditions under which
funds are provided and the terms under which borrowers agree to pay back the loan. Promissory notes include information about the
interest rate and about deferment and cancellation provisions.

Reasonable and Affordable Payments

Rehabilitating a defaulted loan or making satisfactory payment arrangements requires borrowers to make “reasonable and affordable” payments.
The holder of a Direct Loan or FFEL Program loan determines on a case-by-case basis what constitutes a reasonable and affordable payment on defaulted loans.
Loan holders consider disposable income and such expenses as housing, utilities, food, medical costs, work related expenses, dependent care,
and other Federal education loan debt. Borrowers are then provided with a written statement of the payment and an opportunity to object to those terms.

Rebate (Direct Loan Up-Front Interest Rebate Program)

The amount of the up-front interest rebate given to Direct Subsidized Loan, Direct Unsubsidized Loan and Direct Plus Loan
borrowers beginning with loans made for the 2000 – 2001 program year. The rebate amount is equal to 1.5 percent of the loan amount borrowed.
Borrowers must make their first 12 required monthly payments on time or the rebate amount will be added back to the principal balance on their loans.

Refund

The total amount of funds returned to the Direct Loan Program as unused for the student’s education.

Rehabilitation

The process of bringing a loan out of default and removing the default notation on a borrower’s credit report. To rehabilitate a Direct or FFEL loan,
a borrower must make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten
(10) month period. To rehabilitate a Perkins Loan, a borrower must make twelve (12), on-time, monthly payments of an agreed amount to the Department.
Rehabilitation terms and conditions vary for other loan types and can be obtained directly from loan holders.

Repayment (also repayment period)

Making payments on a loan. The “repayment period” is the period during which payments are required to be made.

Repayment Plan(s)

The Direct Consolidation Loan Program offers multiple repayment plans with various term selections:

  • Standard Repayment Plan – Under this plan, you will pay a fixed amount of at least $50 each month for up to 10 to 30 years,
    based on your total education indebtedness. This plan may result in lower total interest paid when compared to repayment under
    one of the graduated plans.

    If you have not selected a repayment plan by the time repayment begins, your loan(s) will be placed on the Standard Repayment Plan.

  • Graduated Repayment Plan – Under this plan, you will pay a minimum payment amount at least equal to the amount of interest accrued monthly
    for up to 10 to 30 years, based on your total education indebtedness. Your payments start out low, and then increase every two years. Generally,
    the amount you will repay over the term of your loan will be higher under the Consolidation Graduated Repayment Plan than under the
    Consolidation Standard Repayment Plan. This plan may be beneficial if your income is low now but is likely to steadily increase.
  • Extended Repayment Plan – To qualify for this plan, your Direct Loan balance must be greater than $30,000, and you will have up to
    25 years to repay your loan(s). Plan options include:

    • Fixed Monthly Payment Option – You will pay a fixed amount of at least $50 each month for up to 25 years. Repayment under this plan
      will result in lower total interest paid when compared to graduated plans with similar terms.
    • Graduated Monthly Payment Option – You will pay a minimum payment amount of at least $50 or the amount of interest accrued monthly,
      whichever is greater, for up to 25 years. Your payments start out low and then increase every two years. Repayment under this plan may provide
      lower initial monthly payments, although the total interest paid may be greater when compared to plans with similar terms with fixed payments.
      This plan may be beneficial if your income is low now but is likely to steadily increase.

    **Extended repayment terms are available to Direct Loan borrower with no outstanding principal or interest balances as of
    October 7, 1998 and with more than $30,000 in Direct Loans.

  • Income Contingent Repayment (ICR) Plan – payment amount is based on your income (and your spouse’s income, if you are married),
    loan balance and family size, and can vary year-to-year for up to 25 years.
  • Income-Based Repayment (IBR) Plan – payment amount is based on your income (and your spouse’s income,

    if you are married and you and your spouse file joint tax returns) and family size, and can vary year-to-year for up to 25 years.
    You must be experiencing a partial financial hardship to enroll in the IBR Plan.

Satisfactory Repayment Arrangements

Borrowers in default on Direct Loan and FFEL Program loans who wish to consolidate their loans in a plan other than the
Income Contingent Repayment (ICR) plan must have made satisfactory repayment arrangements with the loan holder(s).
Three consecutive, voluntary, on-time monthly payments on a defaulted Direct Loan or FFEL Program loan constitute satisfactory repayment arrangements.
Borrowers must work with their current loan holders to set up reasonable and affordable payments.
Borrowers who wish to consolidate defaulted Perkins or health professions loans should contact their loan holders for information
on satisfactory repayment arrangements under those programs.

Separation Date

The actual or anticipated date when the borrowers graduate, leave school, or drop to a less than half-time status.
The separation date is used to determine the loan’s grace period and the date the first loan payment will be due.

Servicer

An entity designated to track and collect a loan on behalf of a loan holder.

Simple Daily Interest

The method used to calculate interest on student loans.

Status (Loan status)

The present state of your Subsidized, Unsubsidized, PLUS, or Consolidation loan(s) .

An account will be either:

  • in-School
  • in-Military
  • grace
  • repayment-current
  • repayment-delinquent
  • deferment
  • forbearance
  • paid-in-full
  • suspended
  • default
Subsidized Loan

A loan for which a borrower is not responsible for the interest while in an in-school, grace, or deferment status.
Subsidized loans include Direct Subsidized , Direct Subsidized Consolidation Loans, Federal Subsidized Stafford Loans and Federal
Subsidized Consolidation Loans.

Total Education Indebtedness

Total Education Indebtedness is the sum of a Direct Consolidation Loan, and other eligible education indebtedness,
up to an amount equal to the Direct Consolidation Loan. Total Education Indebtedness is used to calculate the number of payments under
the Standard and Graduated Repayment Plans (for examples, click here).

Unsubsidized Loan

A loan for which a borrower is fully responsible for paying the interest regardless of the loan status.
Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan. Unsubsidized loans include:
Direct Unsubsidized Loans, Direct PLUS Loans, Direct Unsubsidized Consolidation Loans, and Federal Unsubsidized Stafford Loans,

Federal PLUS Loans, and Federal Unsubsidized Consolidation Loans.

Variable Interest

.

The rate of interest charged on a loan that changes annually and fluctuates with a stated index

Verification Certification

The process by which a consolidation lender requests that a loan holder certify a loan’s payoff balance.

William D. Ford Federal Direct Loan Program (Direct Loan Program)

The Federal program that provides loans to eligible student and parent borrowers under Title IV of the Higher Education Act.
The loan programs include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
Funds are provided directly by the federal government to eligible borrowers through participating schools.