Student Loan Glossary

If you have any student loans in your name there is a good chance that you may not be 100 percent sure as to what you are up against. After all, there are many student loan terms that can be quite confusing. Luckily, if you take the time to learn the more common terms associated with student loans you should be able to understand exactly what is going on. And all in all, this is quite important.

Cancellation: Some loan programs will allow you to cancel your debt, but only under extreme circumstances such as permanent disability or the death of the borrower.

Consolidation: With consolidation you can combine all of your student loans into one big loan. This will make things easier for you to manage.

Deferment: This is when a borrower has permission from the lender to delay the repayment of the loan. With most federal loan programs, you have the ability to take advantage of deferment if you are in college as at least a part time student.

Default: A loan is put in default when a borrower fails to pay their monthly amount on time over an extended period of time. This can also occur when any other term or condition of the student loan is not met by the borrower.

Grace Period: This is a brief period after graduation that the borrower does not have to make any payments. Generally speaking, the grace period for most student loans is either six or nine months.

Guarantee Agency: This is a state agency that insures student loans against default and is also responsible for the approval process. They also enforce industry rules.

Holder: The lender that holds the title to a student loan. This can be a bank, a guarantee agency, etc.

Lender: A credit union, bank, or any other type of financial institution that offers loans to students.

Forbearance: During forbearance, the borrower has permission from the lender to temporarily suspend payment on the principal of the loan. But during this time the borrower must still pay the interest.