Plain-language definitions
Student-loan terms without the marketing fog.
Use these definitions to read comparison tables and disclosures. The final contract controls a particular loan.
- Annual percentage rate (APR)
- A standardized expression of borrowing cost that can include interest and certain fees. Compare APRs for the same amount, timing, and term.
- Capitalization
- Adding unpaid interest to principal. Future interest can then accrue on the larger balance.
- Cosigner
- A person who is legally responsible for the debt with the primary borrower.
- Cosigner release
- A conditional process for removing a cosigner after required payments and a new eligibility review. It is not automatic.
- Cost of attendance
- A school-defined annual budget that can include tuition, fees, housing, food, books, transportation, and specified personal expenses.
- Deferment
- An authorized payment pause. Interest treatment and availability depend on the loan.
- Disbursement
- Delivery of loan funds, commonly to the school, according to certification and schedule rules.
- Federal student loan
- A loan made under a federal program and governed by federal rules and protections.
- Fixed rate
- A rate that generally does not change during the loan term, subject to the contract and any conditional discount.
- Forbearance
- An approved temporary reduction or pause in payments. Interest can continue and eligibility is conditional.
- Grace period
- A period after leaving school or dropping below required enrollment before scheduled repayment begins.
- Hard credit inquiry
- A credit inquiry associated with an application that may affect a credit score.
- Loan term
- The scheduled repayment period. A longer term can reduce the monthly payment while increasing total interest.
- Net price
- College cost after grants and scholarships, calculated for a defined population and period; not necessarily one student’s price.
- Origination fee
- A fee charged to make a loan. It may be deducted from proceeds or added to the financed amount.
- Prequalification
- An initial estimate based on provided information. It is not approval or a final offer.
- Private student loan
- Education credit offered by a private lender or program under its contract and underwriting rules.
- School certification
- A school’s confirmation of enrollment and eligible loan amount before disbursement.
- Soft credit inquiry
- A credit inquiry described as not affecting a credit score. Later application steps may use a hard inquiry.
- Variable rate
- A rate that can change based on an index, margin, and adjustment rules in the contract.