Accrued Interest
Interest that accumulates on the unpaid principal balance of a loan.

Annual Percentage Rate (APR)
The effective interest rate when all finance charges and upfront fees are included. The APR on a loan may vary among lenders because of differences in upfront fees, interest rates and other loan terms.

Capitalization or Capitalized Interest
Occurs when accrued unpaid interest is added to the principal balance of a loan.

Cosigner (or co-applicant, or co-borrower)
Any individual, other than the primary borrower, who signs your loan documents and thereby agrees to be equally responsible for the repayment of that loan. The cosigner is typically a parent or other relative.

Consolidation
Occurs when you refinance one or more education loans into one new loan with a new repayment term and interest rate.

Credit Agreement (or Loan Documents)
Contract between a borrower and a lender that includes the terms and conditions under which the borrower promises to repay the loan.

Credit Bureau
An agency that collects and distributes credit and personal information to creditors. A credit report from a bureau might include payment history on loans and other credit accounts (such as credit cards), balances of accounts, and length and place of employment.

Creditready
For most loan programs, an applicant is “creditready” if s/he:
• Has good or no credit history; and
• Is a U.S. citizen or permanent resident who has resided in the U.S. for the previous two years.

Creditworthy
For most loan programs, an applicant is “creditworthy” if s/he:
• Has a satisfactory residence and employment history of at least 2 years;
• Has a satisfactory credit history of at least 21 months;
• Has proof of current income (if self employed, has been in business for at least two years); and
• Is a U.S. citizen or permanent resident who has resided in the U.S. for the previous two years.

Default (also, Delinquency)
Failure to meet the terms and conditions of a loan, including failure to make required payments on time.

Deferment
A period when a borrower, who meets certain criteria, is not required to make payments.

Delinquency (also, Default)
Failure to make required loan payments on time.


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