Glossary

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 appropriate fees are included. The APR on a loan can vary among lenders because of differences in fees, interest rates and other loan terms.

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

Co-signer (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 co-signer is typically a parent or 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. (Formerly known as Promissory Note)

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.

Credit-ready – For TERI loan programs, an applicant is “credit-ready” if s/he:

  • Satisfies certain credit criteria, although an established credit history is not required; and
  • Is a U.S. citizen or permanent resident who has resided in the U.S. for the previous two years.

 

Credit-worthy – For TERI guaranteed loan programs, an applicant is “credit-worthy” if s/he:

  • Has a satisfactory credit, residence, and employment history of at least two years;
  • 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.

Deferment – A period when a borrower, who meets certain criteria, may suspend loan repayment.

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

Disbursement – Occurs when the lender sends the loan funds to the school or borrower.

Disclosure Statement – Statement sent by the lender to the borrower describing the estimated costs of a loan, the interest rate and any additional finance charges.

Electronic Funds Transfer (EFT) – Any transfer of funds that is initiated through electronic means, like a wire transfer from a bank to a school.

Eligible Borrower – An individual who meets all criteria required for loan approval.

Forbearance – A special arrangement between the borrower and lender in which the lender allows the borrower to temporarily stop making payments or to make smaller payments than would otherwise be required.

Guarantor – TERI is the guarantor of education loans made under its loan programs.

Holder – The institution that owns a loan.

Interest Rate – The amount a borrower pays to borrow money.

Interest-only Payment – A payment that covers only interest that accrues on the loan and does not result in reductions in the principal balance.

Lender – The bank, credit union, or other approved entity from which you have obtained your student loan funds.

Loan Limits – The minimum and/or maximum amount of money an applicant may borrow from a lender during a specific time period.

Origination Fee – A fee charged to the borrower by the lender for processing the loan application and originating the loan.

Principal – Amount borrowed plus any capitalized fees. Principal may increase as a result of interest capitalization.

Promissory Note – Promissory Note is a term no longer used. See Credit Agreement.

Repayment Period – The period during which a loan must be repaid.

Satisfactory Academic Progress – Required progress toward a degree (as determined by the school), which often includes maintaining a specific grade point average set forth by the institution. If the student does not show satisfactory academic progress, the loan application can be denied.

Servicer – An organization hired by the lender to manage its loans and handle billing during repayment. Servicers do not own the loans, but merely manage the day-to-day loan processing on the lender’s behalf.