Financial Aid Terms

Definitions are from the "Student Guide" published by the U.S. Department of Education.

Capitalized - The interest will be added to the principal amount of your loan and additional interest will be based upon the higher amount.

Consolidation -- allowing the borrower to consolidate several types of federal student loans with various repayment schedules into one loan

Default -- Failure to repay a loan according to the terms agreed to when you signed the promissory note. Default also may result from failure to submit requests for deferment or cancellation on time.

Deferment - Allows you to temporarily postpone payments on your loan.

Forbearance - If you are unable to meet your repayment schedule but are not eligible for a deferment, you may receive forbearance for a limited and specified period. During forbearance, your payments are postponed or reduced.

Grace period - After you graduate, leave school, or drop below half-time enrollment, you have six months before you begin repayment. This is called a "grace period".

Repayment plans....

• A Standard Repayment Plan requires you to pay a fixed amount each month - at least $50 or the interest that has accrued.
• Under a Graduated Repayment Plan, your payments will be lower at first and then increase over time. Each of your payments must at least equal the interest accrued on the loan between scheduled payments.
• An Income-Sensitive Repayment Plan bases your monthly payment on your yearly income and your loan amount. As your income rises or falls, so do your payments. Each of your payments must at least equal the interest accrued on the loan between scheduled payments.