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Loan Terminology
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Having trouble deciphering the language of loans? This handy guide should help clear up some of the confusion! Remember, if you still have questions about the loan or loans that are right for you and your family, don't hesitate to call a financial aid counselor and ask for help in explaining your options!
- Alternative Loan
- Private loan source through individual lender; borrower/co-signer needs to be credit worthy; often requires school certification; rates and terms differ from federal loan programs.
- Capitalization
- Accrued interest is added to outstanding principal balance at designated times.
- Default
- Technically when repayment of a loan is discontinued for 180 days or longer.
- Direct Lender (FDLP)
- Schools that are given loan funds directly from the federal government to award and disburse to eligible students; also known as the William D. Ford Direct Loan Program for Stafford and PLUS.
- Disbursement
- When funds are made available to the student at the school; school determines dates based on academic year and federal regulations.
- Disclosure Statement/Notice of Guarantee (NOG)
- Notice to student regarding loan given at time of guarantee by lender; indicates amounts of disbursements and payment dates.
- EFT
- Electronic funds transfer of loan from lender to school.
- Entrance/Exit Interview
- Pre- and post-counseling of student borrowers provided by the school and required by the federal government.
- Federal Family Education Loan Program (FFELP)
- The Stafford and PLUS programs as disbursed from a lending agency.
- Grace
- Period after student leaves school before repayment of loan begins.
- Guarantee Agency/Guarantor
- Agency that guarantees the funds for the federal government to the lenders; Great Lakes Higher Education Corporation and United Student Aid Funds are two common agencies in Ohio.
- NSLDS
- National Student Loan Data System; federal data base of student borrowers and their borrowing levels.
- PLUS
- Federal Parent Loan for Undergraduate Students program.
- Repayment
- Repaying student loan as agreed upon in promissory note; students should check with lender at time of repayment to understand responsibilities.
- Secondary Market
- Agency that purchases and manages student loans for lenders; Student Loan Funding Corporation is the designated secondary market for the state of Ohio.
- Servicer
- Agency that follows the loan application from time received until repayment by student.
- Stafford Loan
- Federal student loan.
- Subsidized
- Federal government pays interest on loan while student is in school and during times of deferment; based on need.
- Unsubsidized
- Student is responsible for interest on loan; not need based.
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