Glossary / Key Terms

Amortization Schedule:

Paying off a loan with regular payments, so that the amount owed goes down with each payment. Negative amortization means that even when payments are made, the amount owed will still go up because those payments do 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 cancelled 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:

Non-payment of loans on the 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 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 by, or owned by, the U.S. Department of Education. These loans tend to have more flexible options for repayment than private student loans. Most federal loan types have interest rates set annually by the U.S. Department of Education, Federal Student Aid (FSA).

To find out what type of federal loan you have, login here: https://studentaid.gov/fsa-id/sign-in/landing

Direct Loan:

Money that 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.

FFEL Loan:

The Federal Family Education Loan Program is a former loan program that included the Federal Stafford Loan, Federal PLUS, Federal Supplemental Loans for Students (Federal SLS), 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 (Family Education Loan (FFEL) | Library | Knowledge Center). The last FFEL loan was made in 2010.

Pell Grant:

Money that the U.S. Department of Education paid to a school on a borrower's behalf, which does not require repayment.

Perkins Loan:

money, subsidized or fully paid by the U.S. Department of Education via a school's accounts payable department, which needs to be repaid, usually to the school.

FSA ID:

username and password, created when you filled out FAFSA, that is used to login to studentaid.gov.

Income-Driven Repayment (IDR) Plans:

Repayment schedules, created by the Department of Education, where people repay loans as a percentage of their annual income. To learn more, or apply for an Income Driven Repayment plan (there are several) use your FSA ID to login at: https://studentaid.gov/help-center/answers/article/how-to-apply-for-idr-plan

Student loan:

A student loan, as defined in Oregon Statute 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 too.

Private student loan:

money that banks, at their own risk, paid 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 co-signer and/or a credit score.

Scholarships:

Grants, and other funds paid to a college on a student's behalf, that do not require repayment.

Servicer:

The for profit company, sometimes contracted through the U.S. Department of Education, that accepts and applies loan payments.