University Loan Terminology

Getting a student loan is one of the fastest ways to ensure that one have the financial means to complete their university studies. Yet, this is a rather complex financial matter because as with any loan it will need to be paid back and there are several things to consider. This page aims at offering students a comprehensive glossary with the most important university loan terminology so that they can easily understand what type of loan they are asking for and what are the consequences. Academic year: a period of time used by universities and educational institutions in general to measure a quantity of studies. Usually it implies a fall and spring semester, but it may vary from school to school, or from program to program. Borrower: the person who is responsible with repaying the loan; usually this is the student or his parents. Capitalizing interest: is calculated when the student does not pay the interest in time. It basically implies adding unpaid accumulated interest to the main loan and thus increasing it. Cost of attendance (COA): the total amount of money that a student will need to pay to cover all the expenses during the academic year. It usually includes tuition and fees, on-campus room and board or housing, allowances for books and so on.

Default: inability to repay the loan in the terms that were agreed upon. Defaulting has severe consequences and should be avoided. Deferment: the ability to temporarily postpone paying the loan.

Delinquency: used to describe late or missed payments. Discharge: the release of borrowers from paying the direct loan. Interest: the actual expense of the loan which is paid by the borrower and which represents a percentage from the main loan. Loan: the money that has been borrowed and which must be paid back according to the legally binding contract.