Glossary of Student Loan Related Terms

Late Charges

Charges that the lender may require the borrower to pay if the borrower fails to pay all or a portion of a required installment payment within a certain number of days after it is due.

LEAP

Leveraging Educational Assistance Partnership (formerly SSIG)

Legal Guardian

An individual appointed by a court to be the guardian of a person and specifically required by the court to use his or her financial resources for the support of that person.

Lender

A bank, credit union, savings and loan association, or other financial institution that provides funds to the student or parent for an educational loan. Note: Some schools now participate in the Federal Direct Loan Program and no longer use a private lender, since loan funds are provided by the US Government.

Leveraging

if a school offers a talented student extra financial aid, regardless of need, the student is more likely to enroll. Leveraging is the controversial practice of figuring out how much it will take to attract such students and customizing aid offers to optimize the quality of the incoming class.

LIBOR

London Interbank Offered Rate. LIBOR is a financial index used as a basis for determining many private loan interest rates.

Line of Credit

Pre-approved loan that lets you borrow money up to a pre-set credit limit, usually by writing checks. A line of credit doesn't cost you anything until you write a check. Then you begin repayment just like a regular loan.

Loan

A type of financial aid which must be repaid, with interest. The federal student loan programs (FFELP and FDSLP) are a good method of financing the costs of your college education. These loans are better than most consumer loans because they have lower interest rates and do not require a credit check or collateral. The Stafford Loans and Perkins Loans also provide a variety of deferment options and extended repayment terms.

Loan Forgiveness

The federal government cancels all or part of an educational loan because the borrower meets certain criteria (e.g., is performing military or volunteer service).

Loan Interviews

Students with educational loans are required to meet with a financial aid administrator before they receive their first loan disbursement and again before they graduate or otherwise leave school. During these counseling sessions, called entrance and exit interviews, the FAA reviews the repayment terms of the loan and the repayment schedule with the student.

Loan Name (Loan Program Name)

The name of the actual federal or private loan borrowed, such as FSL, EXCEL, or PLUS.

Loan Origination

All of the steps required to initiate a loan from the time of application to final approval and disbursement.

Loan Period

A period of time as defined by the school for which the loan is requested (i.e., September to May, January to May).

Loan Proceeds

The funds disbursed by a lender for a borrower to a school, to an agent or directly to the borrower by issuance of a check, master check, or by electronic funds transfer. The loan proceeds disbursed do not include the origination and guarantee fees.

Loan Type

The group category to which specific loan programs belong. Types include federal (F), private (P) and consolidated (C)