DEfinitions

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 may 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.

Cosigner (or co-applicant, or co-borrower) - Any adult 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 cosigner is typically a parent or other relative.

Consolidation - Occurs when you refinance one or more education loans into one new loan with a new repayment term and interest rate.

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.

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

Deferment - 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.

Disbursement - 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.

Electronic Funds Transfer (EFT) - Any transfer of funds that is initiated through electronic means, such as a wire transfer from a bank to a school.

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

Forbearance - 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 cost of borrowing money, expressed as a percentage, over a period of time.

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

Joint Credit - Joint Credit is issued to 2 people bases on an evaluation of each party's credit history. Both parties credit history. Both parties are fully responsible fro repaying the debt.

Joint Liability - Liability shared among 2 or more people, each of whom is liable of the debt.

Lender - The 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.

Permanent Resident - Any person not a citizen of the United States of America who is residing in the U.S.A. under legally recognized and lawfully recorded permanent residence as in immigrant. Also know was a "Permanent Resident Alien", "Lawful Permanent Resident", "Resident Alien Permit Holder" and "Green Card Holder".

Principal - 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.

U.S. Citizen - A person who is born in the United States of America, including the lower48 states, Alaska, Hawaii, Puerto Rico, Guam and THe U.S. Virgin Islands; or who became a citizen through naturalization; or who is born outside the United States of America to U.S. Citizen Parents under qualifying circumstances (derivative citizenship) and how has not renounced U.S. citizenship.