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0.25% Auto Debit Reward:0.25% interest rate reduction during repayment, when payments are set up for automatic debit from a bank account. See Auto Debit Reward Policy for details.
Academic Year:The time period during which a college or university holds classes.
Accrued Interest:Interest that accumulates on a loan and must be paid back along with the principal borrowed. For subsidized student loans, the government agrees to pay the interest that accrues while a student is in school.
Alternative Loans:Also known as "private loans" or "certified private loans," these are educational loans made by private lenders. Eligibility usually depends on the borrower's credit profile. Interest rates for alternative loans are typically higher than for federal loans because they are not guaranteed, and therefore involve more risk for the lender.
Award Letter:A letter a college sends to an accepted student, outlining the specific types and amounts of financial aid the school is offering the student.

BorrowerA person who takes out a loan in his or her name. Depending on the type of loan, the borrower may be the student, a parent, or another adult.

Cancellation:The practice of forgiving a loan based on certain circumstances. Loans are cancelled in the event that a student dies or is totally and permanently disabled. Cancellation may also be granted to students who choose careers in certain in-demand fields, such as teaching or health care.
Capitalization:The decision to add unpaid interest to the principal balance of an educational loan in return for delaying repayment of the loan. Capitalization increases the overall size of both the loan and the amount of the monthly payments the borrower will be required to make during repayment, but allows them more time before they must begin repaying.
Certification:Your school confirms your eligibility and loan amount to ensure students don't borrow more than needed.
College Scholarhsip Service (CSS) Profile:An application (much more detailed than the FAFSA) distributed by the College Board in the US allowing students to apply for financial aid. It gives members of the College Board a closer review of a student and family finances.
Compound Interest:Interest that is calculated based on the original amount (principal) of the loan plus accrued interest.
Consolidation:The process of combining multiple loans into one. If the new loan has a lower interest rate, then consolidation may reduce the overall cost of borrowing. If the new loan has a longer repayment period, then the borrower's monthly payment amount may be reduced. However, consolidation should be considered carefully as it may eliminate the benefits offered by certain loans.
Consolidation Loan:A loan used to pay off multiple loans, effectively combining them into a single new loan.
Cosigner:A term often used interchangeably with "endorser." A cosigner is a person who applies for the loan together with the primary borrower (usually the student), agreeing to repay the loan if the primary borrower fails to.
Cost of Attendance:Annual cost of attending a specific school, including tuition, fees, room and board, books and supplies, transportation and personal expenses. This amount is determined by your school.
Credit Check:Lenders contact Credit Bureaus (Equifax, Experian, TransUnion) who have tracked your credit history (e.g. credit cards, loans) to determine whether you have been diligent in your repayment of debts.
Credit Rating:A number that represents an evaluation of a borrower's financial history. It is used by lenders to determine a borrower's credit-worthiness or the likelihood that they will repay future loans.

Default:Failure of a borrower to re-pay a loan according to the terms to which they agreed. A federal loan is considered "in default" when payments are more than 270 days late.
Default Fee:Also known as a guarantee or guarantor fee. See Federal Default Fee.
Deferment:A delay in loan repayment permitted by the lender, usually for no longer than three years. Deferments apply to those who go back to school, are unemployed, join the Peace Corps or serve in a war and are only applicable to federal loans.
Dependent Student:You are dependent if you are under 24 years old, are not married, do not have dependents and are not a veteran.
Disbursement:Distribution of loan funds either to the school or the student, it can take the form of a paper check or electronic funds transfer.
Disbursement Schedule:Your school notifies us when your loan installments should arrive.
Disclosure Statement:A statement the lender or its agent sends to the borrower immediately after a loan is approved or disbursed, outlining how much was borrowed and under what terms.

Electronic Funds Transfer (EFT):A means of moving funds from one account to another. EFT allows funds to be transferred quickly and eliminates the need for paper checks. It is often used by lenders to disburse loan funds to schools and by students to make electronic payments on their loans.
Eligible Non-Citizen: Non-citizens Eligible for Federal Stafford Loans and Federal PLUS Loans:
- US permanent residents with an I-151, I-151C, or I-551 card
- Victims of human trafficking with a T visa (T-2, T-3, or T-4, etc.)
- Holders of an I-94 Arrived-Departure Record from US Citizenship & Immigration Services (USCIS) with any of the following designations: "Asylum Granted," "Conditional Entrant" (if issued before April 1, 1980), "Cuban-Haitian Entrant," "Status Pending," "Refugee," "Parolee" (if paroled in the US for at least 1 year with the intention to become a US citizen or permanent resident and evidence not in the US for temporary purposes)
Non-citizens Ineligible for Federal Stafford Loans and Federal PLUS Loans:
- Recipients of Notice of Approval to Apply for Permanent Residence (I-171 or I-464)
- Holders of a student visa (F1 or F2) or exchange visitor visa (J1 or J2)
- Members of international organizations with G visas
Please refer to the Federal Student Aid Web site for the most current information:

http://studentaid.ed.gov/PORTALSWebApp/students/english/
aideligibility.jsp
Eligible School:We offer Federal loans at all schools that participate in the Federal Family Education Loan Program (FFELP) – participating schools will display loans as an eligible option in the first step of our online application.
Endorser:A term often used interchangeably with "cosigner." An endorser is a person who applies for the loan together with the primary borrower (usually the student), agreeing to repay the loan if the primary borrower fails to.
Enrollment Status:Designation as a full-time or part-time student. Many loans require a student to be enrolled at least half-time in order to qualify.
Entrance Counseling/Interview:Information (administered either online or in person) that outlines the borrower's responsibilities gives tips and answers questions about borrowing.
Exit Counseling/Interview:Information (administered either online or in person) that outlines the repayment process and other relevant topics, such as consolidation, deferment and forbearance.
Expected Family Contribution:The amount of money a student's family is expected to contribute towards their tuition expenses. It is calculated each year based on the family's income and assets as indicated on their FAFSA application. The EFC is subtracted from the school's cost of attendance (COA) to determine the student's financial need. The greater the financial need, the more financial aid the student is likely to receive. The school will try to meet this need through a financial aid package that combines aid from federal, state, school, and private sources with loans and student employment.

Free Application for Federal Student Aid (FAFSA):A form to be filled out annually by current and anticipating students (and their parents) in the US to determine eligibility for federal student aid (including Stafford and PLUS loans, Pell grants and work-study programs). In addition, many states and schools use information from the FAFSA to award nonfederal aid.
Federal Default Fee:Also known as a guarantee or guarantor fee. A fee guarantors charge to insure federal student loans against default. The fee is charged regardless of whether an individual borrower defaults on their student loan.
Federal Family Education Loan Program (FFELP):The program that enables private lenders like Discover Student Loans to offer and fund federally backed student loans.
Federal Grad PLUS Loan:A type of student loan available to graduate and professional students. Grad PLUS Loans are federally guaranteed and allow students to borrow up to the full cost of attendance (minus other aid). A successful credit evaluation is required in order to qualify.
Federal Methodology (FM):A formula used by the federal government to determine a student's EFC. The formula changes every two to four years.
Federal Origination Fee:A fee the government charges to administer certain types of student loans.
Federal Parent PLUS Loan:A type of loan that parents can use to help fund their dependent's child’s college tuition. Parent PLUS Loans are federally guaranteed and allow parents to borrow up to the full cost of attendance (minus other aid). A successful credit evaluation is required in order to qualify.
Federal Student Aid PIN (FSA PIN):The 4-digit number issued by the US Department of Education to confirm your identity with the US Department of Education and to sign your Master Promissory Note.
Financial Aid:Monetary assistance used to pay college and graduate school costs. There are three main types of financial aid: loans, scholarships and grants, and work study.
Financial Aid Administrator:A school employee responsible for organizing the school's financial aid programs. A financial aid administrator works with lenders and assists students in applying for and receiving financial aid.
Financial Aid Transcript:A record of the financial aid received by a student at any college or university they've attended. Schools require students to present a financial aid transcript when applying for financial aid.
Fixed Interest Rate:An interest rate that is locked in; it stays the same throughout the life of the loan.
Forebearance:Permission by a lender to delay or reduce payments given certain circumstances, such as medical emergencies or unemployment.

Gift Aid:A term often used interchangeably with "scholarships" or "grants," gift aid does not need to be repaid.
GPA (Grade Point Average): A number that represents a student's average grade. GPA is used to determine eligibility for merit-based scholarships.
Grace Period:The period of time before a borrower must begin repaying their loan.
Grad PLUS Loan:See Federal Grad PLUS Loan.
Graduated Repayment:A type of repayment program in which the amount of payments gradually increase over time.
2% Graduation Reward:2% cash reward on the outstanding principal balance at graduation (Certified Private Loans only). See Graduation Reward Policy for details.
Grant:Need-based financial aid that does not need to be repaid.
Guarantee Fee:Also known as a default fee. See Federal Default Fee.
Guarantor:An organization that approves and insures federal student loans for a lender. The guarantor agrees to repay the loan if the borrower defaults, reducing the lender's risk exposure. Guarantors will generally start collection procedures against borrowers who default on their loans.

Independent Student:You are independent if you are at least 24 years old, are married, have dependents or are a veteran.
Institutional loan:A loan offered to a student by their school.
Interest:The price charged for borrowing money. Because lenders charge interest on loans, the amount the borrower must repay is greater than the principal amount borrowed.
Interest Rate:The specific rate a lender charges the borrower for their loan. It is expressed as a percentage per year of the amount borrowed. The borrower must repay both the loan interest and principal.

Lender:A person or organization that loans money.
Loan Principal:The loan amount, not including interest or additional fees. In the case of student loans, it is the amount that can be applied towards educational costs.

Master Promissory Note (MPN):for Federal Stafford Loans & Federal PLUS Loans – A single promissory note used for multiple loan requests and outlines the borrower’s rights and responsibilities. Borrowers who sign MPNs for federal loans can reapply for subsequent loans without signing additional MPNs each year.
Merit Aid:Financial aid awarded to students based on academic, artistic or athletic achievement.

Need Analysis:The process of determining a student's financial aid need based on information provided in their FAFSA, such as tax information and income.
Need-based Aid:Financial aid that is awarded to students based on financial need.
NSLDS (National Student Loan Data System):A centralized network that stores information on federal student loans from schools, guaranty programs and other Department of Education programs, such as the Pell Grant. It enables students to access, from a single location, information about all of the federal aid they've received.

Origination Fee:See Federal Origination Fee.

Parent Loan:A loan that can be taken out by a parent to help pay for their child’s education. Parent Loans usually require a credit check and generally do not provide a grace period. Parent PLUS Loans are one of the most widely used types of parent loan.
Parent PLUS Loan:See Federal Parent PLUS Loan.
Pell Grant:A type of federally sponsored grant available to students based on financial need. The amount of the grant varies based on need.
Perkins Loan:A type of subsidized loan offered through colleges and universities to students with financial need. Perkins Loans have a fixed interest rate of 5% and a 9-month grace period. The loan amount is determined by the school. Interest does not accrue on the loan during periods when the borrower is enrolled at least half-time or during eligible deferment periods.
Private Loan:Also known as an alternative loan, these are loans made through private lenders. Eligibility usually depends on the borrower's credit profile. Typically, the interest rates for private loans are higher than federal loans because private loans are not guaranteed and therefore carry more risk for the lender.
Promissory Note:for Certified Private Loans – A legal contract that requires the borrower to repay a loan. The promissory note must be signed with each new loan.

Repayment Term:The period of time during which the borrower repays the loan. Repayment terms for student loans generally range from 10 to 25 years.

Scholarship: Money that is awarded to students in recognition of their achievements and does not need to be repaid. The About Financial Aid section of this web site contains information about various types of financial aid, including scholarships.
School Certification:Your school confirms your eligibility and the loan amount to ensure you don't borrow too much and can graduate with less debt.
School Disbursement:Your school schedules when the funds arrive, so you won't accrue interest before tuition is due. It applies the funds to your student account and forwards any remaining funds directly to you (e.g. for rent, books).
Self-Certification Form:For Certified Private Loans – Informs borrowers of the cost of attendance, estimated financial assistance, and potential debt burden. Borrowers must complete and return it to their lender as part of the application process.
SEOG (Supplemental Educational Opportunity Grant):A federally sponsored grant of up to $4,000 awarded to certain Pell Grant recipients who demonstrate exceptional need.
Servicer:A company that handles the administrative tasks associated with a loan after disbursement, such as collecting loan payments and answering borrowers' questions about loans and repayment.
Student Aid Report (SAR):A report generated by the federal government that outlines a student's EFC and how much federal aid they are eligible for based on their FAFSA. The SAR may also be useful in establishing financial need when applying for need-based scholarships.
Student Loan:Financial aid that must be repaid.
Subsidized Federal Stafford Loan:For students with financial need, the government pays the interest on this loan while you are in school at least half-time

Tuition:The cost of instruction at a specific school. Tuition does not include room and board, textbooks, supplies and certain other fees a school may charge for attendance.

Unsubsidized Federal Stafford Loan: For students with or without financial need, the interest accrues while you are in school, and if you choose not to pay this interest, it is added to your loan balance. Your eligibility and portion of each loan type is determined after you submit your Free Application for Federal Student Aid (FAFSA) at fafsa.ed.gov. With either type of Stafford loan, you are not required to make payments until 6 months after you graduate or enroll in school less than half-time.

Variable Interest Rate:An interest rate that changes periodically (monthly, quarterly, semi-annually or annually depending on the lender) over the life of the loan.
Verification:The process of reviewing and confirming the accuracy of a borrower's financial status. When applying for financial aid, a borrower may be asked to provide proof of their financial status, such as W-2 forms or pay stubs.

Work Study:Part-time employment programs made available to students through schools and federal or state sponsorship. It allows students to earn money that can be used to help pay for education costs and personal expenses.

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