Student Loan Glossary 


Important Terms for Borrowers from the Department of Education

Academic Year

An academic year is one complete school year at the same school, or two complete, half years at different schools. For schools that have a year-round program of instruction, nine months is considered an academic year.


Annual Taxable Income

Your annual taxable income is the amount of income used to determine how much tax you owe in a given year. This can include wages, salaries, bonuses, tips, investment income, and unearned income.


Debt Collection

Debt collection is the course of pursuing payments of loan debts due by borrowers.


Debt Consolidation

Debt consolidation is a method of debt refinancing that involves taking out one loan to pay off others.



Default is failure to repay a loan outlined in the agreed promissory note. Most federal student loan default occurs when a payment isn't made in more than 270 days. It can result in legal consequences and a loss of eligibility for additional federal student aid.



A deferment is a temporary postponement of payment on a loan that is allowed under certain conditions and during which interest generally doesn’t accrue on certain types of subsidized loans.


Direct Consolidation Loan

A Direct Consolidation Loan combines federal education loans into one loan for free via completion of the Federal Direct Consolidation Loan Application and Promissory Note. You will have a single monthly payment on the new Direct Consolidation Loan. If trying to qualify for PSLD, this is only advisable if you do not have certain types of loans. You should speak with us before you consolidate your loans.


Direct PLUS Loan

Direct PLUS Loans are federal loans that graduate or professional students and parents of dependent undergraduate students use to help pay for education expenses.


Direct Subsidized Loan

A Direct Subsidized Loan is a federal student loan for which a borrower isn’t generally responsible for paying the interest while in an in-school, grace, or deferment period.


Discretionary Income

Discretionary income is a factor used in determining a borrower’s eligibility for certain repayment plans and/or loan rehabilitation. It’s the difference between annual income and a percentage of the poverty guideline for the borrower’s family size and state of residence.


Eligible Program

An eligible program is a program of organized instruction or study of a certain length that leads to an academic, professional, or vocational degree or certificate, or other recognized education credential.



An endorser is someone who agrees to repay the Direct PLUS Loan if the borrower becomes delinquent in making payments or defaults on the loan. The endorser may not be the student on whose behalf a parent obtains a Direct PLUS Loan.


Endorser Code

An Endorser Code is an identifying number associated to a Direct PLUS Loan application. The code is used by an endorser when completing a Direct PLUS Loan endorser addendum to the Master Promissory Note (MPN) for the loan.


Enrollment Status

Enrollment status is reported by the school you attended, and indicates whether you are, or were, full-time, three-quarter time, half-time, less than half-time, withdrawn, graduated, etc.


Entrance Counseling

Entrance counseling explains the obligations you agree to meet as a condition of borrowing a Direct Loan. Topics include: Understand Your Loans, Manage Your Spending, Plan to Repay, Avoid Default and Make Finances a Priority.


Exit Counseling

Exit counseling provides important information that you need as you prepare to repay your federal student loan(s). Topics include: Understand Your Loans, Plan to Repay, Avoid Default, and Make Finances a Priority.


Extended Repayment Plan

The Extended Repayment Plan allows you to repay your loans over an extended period. Payments are made for up to 25 years. There are specific eligibility requirements to qualify for this plan.


Family Size

Household size does not mean people who physically live with you. It's about who you support financially. If you do not financially support anyone, you will just put 1 for yourself.


Federal Family Education Loan (FFEL) program

The Federal Family Education Loan (FFEL) Program was a program that worked with private lenders to provide education loans guaranteed by the federal government. The FFEL Program ended in 2010. All loans are now made through the Direct Loan Program.


Federal Pell Grant program

The Pell Grant is the largest federal grant program offered to undergraduates. It is designed to assist students from low-income households. To qualify for a Pell Grant, a student must demonstrate financial need by completing and submitting the FAFSA® form.


Federal Perkins Loan

A Perkins Loan was available to undergraduate, graduate, and professional students until Sept. 30, 2017; the program has since expired. The Perkins Loan is a subsidized loan, meaning the federal government pays the loan’s interest while the borrower is in school.


Federal Student Aid

Federal student aid is aid from the government in the form of grants, loans, and/or work-study to assist students with college or career school. Students have to complete the FAFSA® form to apply for this aid.


Federal Work Study

Federal Work-Study provides part-time jobs for undergraduate and graduate students with financial need. The program encourages community service work and work related to your field of study. To receive funds, you will need to be awarded work study and secure a job.


Financial Aid

Financial aid is money to help pay for college or career school.


Financial Awareness Counseling

Financial awareness counseling provides tools and information to help you understand your financial aid and assist in managing your finances. Topics include: Understand Your Loans, Manage Your Spending, Plan to Repay, Avoid Default and Make Finances a Priority.



A period of time when your monthly loan payments are temporarily stopped or reduced. Interest will continue to be charged on your loans. Be aware that unpaid interest may be capitalized (added to your loan principal balance) at the end of your forbearance period.



An FSA ID consists of a username and password which gives you access to the U.S. Department of Education’s online systems and can serve as your legal signature when completing electronic documents.


Graduate or Professional Student

A graduate or professional student is a student who is pursuing education opportunities beyond an undergraduate (bachelor's) degree. Graduate and professional programs include master's and doctoral programs such as Ph.D., J.D., and M.D., among others.


Graduated Repayment Plan

The Graduated Repayment Plan starts with lower payments that increase every two years. Under this plan, you make payments for up to 10 years (between 10 and 30 years for consolidation loans).



A grant is a monetary gift for people pursuing higher education. It is often based on financial need and does not need to be repaid (unless, for example, you withdraw from school and owe a refund).


Gross Income

Gross income is your total income before deductions.


Half-Time Enrollment

Half-time enrollment is an enrollment status applied to students who are only enrolled in half of the expected full-time course load. Half-time enrollment can affect the cost of attendance (COA), and each school may have different half-time enrollment specifications.


Independent Student

An independent student is at least 24 years old, married, a graduate/ professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, someone with legal dependents (not a spouse), an emancipated minor, or someone who is or at risk of being homeless.



Interest is a loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender. The expense is calculated as a percentage of the unpaid principal amount of the loan.

Judgment Lien

A judgment lien gives a creditor the legal right to keep property when the owner fails to pay a debt. It can only be granted by a court. A student (or parent in the case of a parent borrower) with a judgment lien will not qualify for federal student aid.



A lender is the organization that made the loan (borrower’s school, bank, credit union, etc.).



Litigation is the act or process of bringing or contesting a legal action in court.



A loan is money borrowed from the federal government or a private source like a bank or financial institution, and must be paid back with interest.


Loan Discharge

Loan discharge is the removal of a borrower’s obligation to repay a loan under certain circumstances including but not limited to death, disability, bankruptcy, fraud, and identity theft.


Loan Forgiveness

Student loan forgiveness is offered to encourage certain types of employment. A loan may be fully or partially forgiven after a certain number of years of qualifying employment.


Master Promissory Note (MPN)

An MPN is a legal document that contains the Borrower’s Rights and Responsibilities and Terms and Conditions for repayment. Direct PLUS and Direct Subsidized / Unsubsidized loans have different MPNs.



Merit-based means that something is based on a student's skill or ability. For example, a merit-based scholarship might be awarded based on a student's high grades.

Ombudsman Group

The Ombudsman Group is dedicated to helping resolve disputes related to the federal student aid programs, including Direct Loans, Federal Family Education Loan (FFEL) Program loans, Perkins Loans, and grant programs.


Partial Financial Hardship

Partial financial hardship is an eligibility requirement under the Income-Based Repayment and Pay As You Earn repayment plans. For more information, go to Repayment Plans.


Pay As You Earn (PAYE) Plan

The Pay As You Earn Plan is a repayment plan with monthly payments that are generally equal to 10% of your discretionary income, but never more than the 10-year Standard Repayment amount.


PLUS Credit Counseling

PLUS credit counseling helps graduate/professional students and parents of eligible dependent undergraduate students understand the obligations associated with borrowing a PLUS loan and assists them in making careful decisions about taking on student loan debt.



Principal refers to the sum of money lent, on which interest is paid.


Public Service Loan Forgiveness (PSLF) Help Tool

This tool will help you understand the following about the Public Service Loan Forgiveness (PSLF) program: what is required to participate, if an employer qualifies, which loans qualify, which forms to submit, and other actions to take to receive PSLF.


Public Service Loan Forgiveness (PSLF) Program

The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 (10 years) qualifying monthly payments under a qualifying repayment plan, while working full-time for a qualifying employer.


Regular Student

A regular student is one who is enrolled or accepted for enrollment at an institution for the purpose of obtaining a degree, certificate, or other recognized education credential. To be eligible for federal student aid, you must generally be a regular student.


Rehabilitated Loan

Loan rehabilitation is one method of getting your student loan out of default. To begin the rehabilitation process, you must contact your loan holder. If you’re not sure who your loan holder is, log in to your account to get your loan holder’s contact information.



Repayment is paying back money you borrowed by making scheduled payments to a loan holder or servicer.


Revised Pay As You Earn (REPAYE) Plan

The REPAYE Plan is a repayment plan with monthly payments that are generally equal to 10% of your discretionary income.


Room and Board

Room and board is generally the cost of housing and food while attending college or career school.


Satisfactory Academic Progress

Satisfactory academic progress is the process a school uses to determine if a student is meeting all of his or her educational requirements and is on target to graduate on time with a degree or certificate. This process may vary across schools.



Scholarships are gifts that don’t have to be repaid and are designed to help students pay for an undergraduate degree. They can be a one-time gift or are renewable, depending on the scholarship.


School Closure

A school closure is an institution that no longer provides educational services to students.


Service Obligation

A Service Obligation signing is an agreement to teach full-time, in a high-need field, at an elementary/secondary school/educational service agency for low-income students, and for at min 4/8 academic years following their ending of the grant assisted study.


Standard Repayment Plan

The Standard Repayment Plan is the basic repayment plan for the William D. Ford Federal Direct Loan (Direct Loan) and Federal Family Education Loan (FFEL) Programs. Payments are fixed and made for up to 10 years (10–30 years for Consolidation Loans).


Student Fraud

Student Fraud is any situation where an individual falsifies information in order to qualify for student aid. Examples of student fraud include using false information on the FAFSA, such as income or marital status, or reporting an invalid high school diploma.


Student Loan Debt Burden

Student loan debt burden is the percentage of a borrower’s monthly income that is dedicated to his or her student loan payments. The smaller this percentage, the lower the debt burden.



The TEACH Grant funds students who are completing/plan to complete coursework that is required to be a teacher, and who agree to teach full-time in a high-need field at an educational service agency or school for low-income students for at least four years.


TEACH Grant Initial and Subsequent Counseling

The TEACH Grant Initial and Subsequent Counseling process acquaints the student to the TEACH Grant program and the TEACH Grant service obligation.


Total and Permanent Disability (TPD) Discharge

A total and permanent disability discharge relieves you from having to repay your federal student loan(s) and/or complete your Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation. Learn more about TPD discharge.



Tuition is the amount of money you owe for receiving instruction, materials, and/or supplies, or for the rental or purchase of equipment, for a course of study at your institution.


Undergraduate Student

An undergraduate student is a student who is enrolled in an undergraduate course of study at a college/university or career school that usually doesn't exceed four years and leads to an undergraduate degree or certificate.


Unsubsidized Loan

An unsubsidized loan borrowed through the Direct Loan Program offers students a low, fixed interest rate and flexible repayment terms. It is not based on financial need. The borrower is responsible for paying all the accumulated interest, until the loan balance is paid off.


Untaxed Income

Untaxed income is income you don't pay taxes on, such as Supplemental Security Income, child support, or federal or public assistance.


William D. Ford Federal Direct Loan Program

The Direct Loan Program is the federal student loan program under which eligible students and parents borrow directly from the U.S. Department of Education at participating schools. Loans include Direct Subsidized, Direct Unsubsidized, Direct PLUS, and Direct Consolidation Loans.



A withholding is an amount of money that an employer takes out of your wages and pays to the government. If too little is withheld, you will owe additional taxes. If too much is withheld, you receive a refund.

Glossary definitions and terms are from the Department of Education's website.