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.