Student Loan Consolidation Info

Consolidation Loan Glossary

When you decide to consolidate your loans, it may help to check out this student loan consolidation glossary, which contains a few of the most important and relevant terms for students who need help with consolidation.

  • Alternative Education Loan - (also known as Private Education Loan) When the federal loans won't cover the cost of schooling, private companies provide loans (at a higher rate of interest) to students or families. These may depend on the credit worthiness of the applicant.
  • Borrower benefits Offered by some consolidation companies as extra incentive, borrower benefits usually include lowered interest rates and small credits to one's account as a reward for being in good standing with the company and making payments on time.
  • Capitalization If there is any unpaid interest accrued on a loan at the end of a payment period, the amount is added to the original loan, thus increasing the first balance.
  • Deferment a period of time in which the borrower is not required to make payments to the lender. A period of deferment is more likely with a federal student loan than with a private or alternative student loan.
  • Exit Counseling Stafford loan borrowers must get exit counseling before graduation to get information about payments and payment options.
  • Extended Repayment Loan term is extended so that borrower's monthly rate is lowered. Keep in mind, however, that total interest paid increases when the repayment period is extended.
  • FAFSA (Free Application for Federal Student Aid) the application form for any type of federal student aid.
  • Federal Perkins Loan A low interest loan for both undergrads and graduate students. These loans are made by the school using both Federal and college funding. Repayment is directly to the school.
  • Federal PLUS Loan enables parents to borrow funds for children's educations, without passing a credit check.
  • Federal Stafford Loan a federal loan program that enables students to borrow from specific lenders and defer payments while still enrolled.
  • FFELP (Federal Family Education Loan Program) both the Federal Stafford and PLUS federal student loan programs.
  • Financial need (Cost of education) (expected family contribution) = extent of financial need, which determines what kind of loan you are eligible for, and how much money you are eligible to receive.
  • Forbearance period of time (usually after a deferment or grace period) where the borrower can make significantly lower monthly payments or defer payments for up to a year. Interest is accrued during this period which will capitalize at the end of the forbearance period if not paid during.
  • Forgiveness - Certain Federal loans are eligible to be discharged, or cancelled, for a variety of reasons. Most of these involve choice of working in certain designated professions, locations or programs.
  • Private Education Loan - (also known as Alternative Education Loan) When the federal loans won't cover the cost of schooling, private companies provide loans (at a higher rate of interest) to students or families. These may depend on the credit worthiness of the applicant.
  • Student Loan financial aid given to a student by a federal or private lender that is specifically intended for education costs. The student loan must be repaid, most likely with interest.
  • Standard Repayment Borrower repays lender at a monthly rate.