Glossary of Loan Related Terms
Aggregate Limit
The maximum amount a student can have outstanding under a certain loan program.
The maximum amount a student can have outstanding under a certain loan program.
Annual Limit
The maximum amount a student can borrow from a certain loan program in a given academic year.
The maximum amount a student can borrow from a certain loan program in a given academic year.
Capitalizing Interest
Adding any interest that accrues to the principal balance of the loan (instead of repaying it immediately).
Adding any interest that accrues to the principal balance of the loan (instead of repaying it immediately).
Certification
UT certifies students' eligibility for loan and sends certification to lenders, either electronically or on paper.
UT certifies students' eligibility for loan and sends certification to lenders, either electronically or on paper.
Consolidation Loan
A loan which combines other loans into a single loan. See consolidation loans for more information.
A loan which combines other loans into a single loan. See consolidation loans for more information.
Co-signer
A person who assumes joint responsibility with the primary borrower for repaying a loan. Federal student loans do not require a co-signer, but many alternative/private loans do.
A person who assumes joint responsibility with the primary borrower for repaying a loan. Federal student loans do not require a co-signer, but many alternative/private loans do.
Cost of Attendance
An estimate of what it costs a student to go to school. This is also the maximum amount that a student can be awarded with any form of financial aid.
An estimate of what it costs a student to go to school. This is also the maximum amount that a student can be awarded with any form of financial aid.
Default
A status your loan enters when you fail to make your payments according to the terms of your promissory note.
A status your loan enters when you fail to make your payments according to the terms of your promissory note.
Disburse
The transfer of loan funds from either the lender to the school, or from the school to the student/parent.
The transfer of loan funds from either the lender to the school, or from the school to the student/parent.
Disbursement Dates
The dates on which UT Austin requests that a lender send funds to the school.
The dates on which UT Austin requests that a lender send funds to the school.
Disclosure Statement
A notice which a lender must send to a borrower before disbursing funds, summarizing loans pending disbursement.
A notice which a lender must send to a borrower before disbursing funds, summarizing loans pending disbursement.
E-FAN
Electronic Financial Aid Notification; the means by which UT Austin tells students what they are awarded, and by which students accept or decline their awards. When your E-FAN is available, our office will notify you by e-mail.
Electronic Financial Aid Notification; the means by which UT Austin tells students what they are awarded, and by which students accept or decline their awards. When your E-FAN is available, our office will notify you by e-mail.
FAFSA
The Free Application for Federal Student Aid, the means by which UT determines your eligibility for loans, grants, and work-study.
The Free Application for Federal Student Aid, the means by which UT determines your eligibility for loans, grants, and work-study.
FFELP
The Federal Family Education Loan Program, the governmentally established program that makes Stafford, Parent PLUS and Graduate PLUS loans possible.
The Federal Family Education Loan Program, the governmentally established program that makes Stafford, Parent PLUS and Graduate PLUS loans possible.
Fixed (Interest Rate)
An interest rate on a loan that stays the same for the life of the loan. The Perkins loan has a fixed interest rate.
An interest rate on a loan that stays the same for the life of the loan. The Perkins loan has a fixed interest rate.
Forbearance
A temporary postponement of repaying the principal on your loan, usually because of economic hardship. Must be applied for with your loan holder.
A temporary postponement of repaying the principal on your loan, usually because of economic hardship. Must be applied for with your loan holder.
Grace Period
The time between when a student drops below half-time enrollment and the time their loans enter repayment status. For Stafford loans, this period is 6 months, and for Perkins loans, 9 months.
The time between when a student drops below half-time enrollment and the time their loans enter repayment status. For Stafford loans, this period is 6 months, and for Perkins loans, 9 months.
Guarantor
A non-profit organization that guarantees that if a borrower defaults, they will pay on the loan. UT Austin's primary guarantor is Texas Guaranteed Student Loan Corporation(TG).
A non-profit organization that guarantees that if a borrower defaults, they will pay on the loan. UT Austin's primary guarantor is Texas Guaranteed Student Loan Corporation(TG).
Guarantor Fees
(See Origination Fees)
Some guarantors charge a 1% fee up front on FFELP loans. For 2004-2005, TG will not charge this fee.
Some guarantors charge a 1% fee up front on FFELP loans. For 2004-2005, TG will not charge this fee.
Lender
The organization that provides loan funds for borrowers.
The organization that provides loan funds for borrowers.
Loan Entrance Counseling
An informational session that students must complete before borrowing under the Stafford or Perkins loan programs. The session can be completed on-line and informs borrowers of their rights and responsibilities.
An informational session that students must complete before borrowing under the Stafford or Perkins loan programs. The session can be completed on-line and informs borrowers of their rights and responsibilities.
Loan Exit Counseling
An informational session that students must complete if they have had Stafford or Perkins loans and drop below half-time enrollment. The session can be completed on-line and informs borrowers about their responsibilities as they enter their grace and repayment periods.
An informational session that students must complete if they have had Stafford or Perkins loans and drop below half-time enrollment. The session can be completed on-line and informs borrowers about their responsibilities as they enter their grace and repayment periods.
Loan Holder
The company which possesses your promissory note and to which you must repay your student loan(s). Your loans may be sold from one holder to another.
The company which possesses your promissory note and to which you must repay your student loan(s). Your loans may be sold from one holder to another.
Loan Period
The time frame for which a loan is certified, usually from the first class day to the last class day. No loans can be certified for a loan period which has ended.
The time frame for which a loan is certified, usually from the first class day to the last class day. No loans can be certified for a loan period which has ended.
Loans By Web
A web site run by TG where borrowers can activate their loan awards. UT Austin uses the Loans by Web site for our Parent PLUS borrowers.
A web site run by TG where borrowers can activate their loan awards. UT Austin uses the Loans by Web site for our Parent PLUS borrowers.
Master Promissory Note (MPN)
(See Promissory Note.)
A promissory note that is valid for more than one loan period. Stafford, Parent PLUS and Graduate PLUS Master Promissory Notes are valid for one borrower with one lender for up to 10 years.
A promissory note that is valid for more than one loan period. Stafford, Parent PLUS and Graduate PLUS Master Promissory Notes are valid for one borrower with one lender for up to 10 years.
Need-based Loan
Subsidized loans are need-based loans; need is determined from the data submitted on the FAFSA.
Subsidized loans are need-based loans; need is determined from the data submitted on the FAFSA.
Origination Fees
A fee which a lender charges upon issuance of a loan; a standard origination fee is 3% on Stafford loans.
A fee which a lender charges upon issuance of a loan; a standard origination fee is 3% on Stafford loans.
Principal (of a Loan)
The amount of the loan that is outstanding; the amount based on which interest accrues.
The amount of the loan that is outstanding; the amount based on which interest accrues.
Promissory Note
The legal agreement between a borrower and a lender that the borrower will repay their loan. All educational loans require a promissory note to be signed.
The legal agreement between a borrower and a lender that the borrower will repay their loan. All educational loans require a promissory note to be signed.
Repayment Incentives
Discounts that your loan holder offers during your repayment. It is common for lenders to give discounts for electronic and consecutive on-time payments.
Discounts that your loan holder offers during your repayment. It is common for lenders to give discounts for electronic and consecutive on-time payments.
Repayment Plans
Ways of arranging your monthly payments with your loan holder. See Repayment Plans and Incentives.
Ways of arranging your monthly payments with your loan holder. See Repayment Plans and Incentives.
Secondary Market
A company that purchases loans from a lender, thereby becoming the holder of the loan.
A company that purchases loans from a lender, thereby becoming the holder of the loan.
Servicer
A company that manages customer service on behalf of a lender. Servicers may process loan applications and payments, collect on delinquent accounts, or answer phone calls.
A company that manages customer service on behalf of a lender. Servicers may process loan applications and payments, collect on delinquent accounts, or answer phone calls.
Subsidized Loan
A loan for which the federal government pays the interest while the student is in school and in their grace period.
A loan for which the federal government pays the interest while the student is in school and in their grace period.
Unsubsidized Loan
A loan for which the student is responsible for all the interest that accrues.
A loan for which the student is responsible for all the interest that accrues.
Variable (Interest Rate)
An interest rate on a loan that changes from year to year. Stafford and Parent PLUS loans have variable interest rates.
An interest rate on a loan that changes from year to year. Stafford and Parent PLUS loans have variable interest rates.