Student Loan Glossary

When taking on any type of loan, it is a must to familiarize yourself with the industry-specific terms so that you would know what exactly it is that you are getting into. If you are about to go to college and you are in the process of applying for a student loan, here are some of the terms that you need to learn about.

Balance Transfer – This is the process of transferring a debt from one creditor to another, which usually applies to credit card debts.

Default – This is a term which is applied to the instance when a student fails to meet the repayment terms of his or her student loan. Usually, there is a 270-day period given before a student loan is placed at default, at which time the borrower's name can be placed in default or collection status for the student financial aid.

Deferment – This is a term which is applied to the period when the borrower is not required to make a payment for his or her student loan. This applies when the borrower meets eligibility requirements such as unemployment, economic hardship and graduate fellowship.

Forbearance – This term refers to the act of temporarily postponing the payments or providing an extension period for the payment to be made.

Grant – A grant is a student financial aid which does not need to be repaid. This is usually awarded to students who have a qualified financial need.

Lender – This term refers to the bank or the lender from which an individual obtained the student loan.

Private Student Loan – This is a type of loan which can be obtained from banks or other financial institutions. Unlike federal loans, private student loans usually have a higher loan amount, with corresponding interest rates. The interest rates are based on the credit rating of the borrower and the co-signor, if there is a need for one.

Repayment Period – This is the period when the borrower is required to make payment towards the amount of student loan borrowed.