Amortization schedule:
Time period in which a borrower pays off a loan with regular payments, so that the amount owed decreases with each payment. Negative amortization means that even when payments are made, the amount owed will still increase because those payments are not enough to cover the interest.
Cancellation/forgiveness/discharge:
Three administrative processes through which the U.S. Department of Education stops requiring repayment on certain student loans. The amount canceled may or may not count as income for that tax year. To learn more about different types of forgiveness, including Borrower Defense to Repayment, Total Disability Discharge, Public Service Loan Forgiveness, and Closed School Discharge, visit https://studentaid.gov/manage-loans/forgiveness-cancellation.
Collection agency:
A for-profit company that is contracted to collect debt from people who have defaulted on their loans.
Default:
Nonpayment of loans on a prescribed schedule. Most federal student loans are considered to be in default after payment is 270 days late.
Deferment/forbearance:
Two administrative processes through which the U.S. Department of Education pauses collection of payment temporarily. For most federal student loans an income-driven repayment plan is a better option. To learn more, visit https://studentaid.gov/manage-loans/lower-payments/get-temporary-relief.
Federal student loan:
Loans either guaranteed or owned by the U.S. Department of Education (ED). These loans tend to have more flexible options for repayment than private student loans. Most federal loan types have interest rates set annually by ED's Federal Student Aid.
To find out what type of federal loan you have, log in at https://studentaid.gov/fsa-id/sign-in/landing.
Direct Loan:
Money the U.S. Department of Education pays a school on a borrower's behalf, which needs to be repaid within a certain time period. Most new federal loans after 2010 are Direct Loans.
Federal Family Education Loan (FFEL):
This is a former loan program that included the Federal Stafford Loan, Federal PLUS, Federal Supplemental Loans for Students, and Federal Consolidation Loan programs. Lenders used their own funds to make loans to enable students or their parents to pay the costs of the students' attendance at eligible institutions. The last FFEL Program loan was made in 2010.
Pell Grant:
Money the U.S. Department of Education paid to a school on the borrower's behalf that does not require repayment.
Perkins Loan:
Money subsidized or fully paid by the U.S. Department of Education through a school's accounts payable department, which needs to be repaid. Most Perkins loans are now serviced by
Educational Computer Systems, Inc. The last Perkins loan was made in 2018.
Federal Student Aid (FSA) identification (ID):
The username and password created when you filled out the Free Application for Federal Student Aid (FAFSA) that is used to log in to studentaid.gov..
Income-driven repayment (IDR) plans:
Repayment schedules, created by the U.S. Department of Education, in which people repay loans as a percentage of their annual income. To learn more or apply for an IDR plan (there are several) use your Federal Student Aid ID to log in at https://studentaid.gov/help-center/answers/article/how-to-apply-for-idr-plan.
Student loan:
A student loan, as defined in Oregon Revised Statutes means “a loan the proceeds of which a borrower uses primarily for personal use to pay education expenses or other school-related expenses" (ORS 725A.500 (11)). While student loans function very similarly to other loan types, the unique way in which some are subsidized by the federal government makes them a little different as well.
Private student loan:
Money that banks and other financial institutions pay at their own risk to a school on a borrower's behalf. Functionally, private student loans are the same as any other unsecured personal loan. Private student loans are the only student loan type that may require a cosigner.
Scholarships:
Grants and other funds paid to a college on a student's behalf that do not require repayment.
Servicer:
A for-profit company, sometimes contracted through the U.S. Department of Education, that accepts and applies loan payments.