Key Loan Terms

Interest- a percentage rate calculated on the principle of a loan charged to a borrower and paid to the lender.


Lender- an organization that made the loan initially; lenders could be a bank, credit union, or other lending institution or the Department of Education.


Loan Servicer- a company that collects payments on a loan, responds to customer service inquiries and administers the loan on behalf of the lender.


Deferment- a postponement of payment that is allowed under certain conditions, during which time the interest does not accrue.


Forbearance- a postponement or reduction of payments under certain conditions, during which time the interest accrues.


Capitalized Interest- accrued unpaid interest from a loan is aggregated and added to the principle of the original loan.


Subsidized- interest does not accrue on a loan while the student is in school or in deferment.


Unsubsidized- interest accrues on a loan, generally from the point of disbursement.


Grace Period- a period of time when the student ceases attendance (less than 6 credits), but is not yet in repayment. For Direct Loan, students are given a 6 month grace period, for Perkins, students are given 9 months before repayment begins.

Student Loan Repayment

Before you receive a loan, you would have completed the Master Promissory Note. At that time, you promissed to pay back the funds that were disbursed. The loans you borrowed, may or may not have accrued interest while you were in school at least half-time.

Subsidized Direct Loan or Federal Perkins Loan- Interest did not accrue while you were in school.

Unsubsidized Direct Loan &/or Alternative Loans- Interest accrued from the time it disbursed (paid out).


Understanding your repayment terms and conditions is critical, in order to avoid delinquency and default. It is important to know which loans you have borrowed, so the first place you should go to is the National Student Loan Database System (NSLDS). Select "Financial Aid Review" and log in to see a listing of all the Federal student loans you have borrowed while in college.

NSLDS will not provide a listing of any Alternative/Private student loans you have borrowed.