Interest Rate
A loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender. The expense is calculated as a percentage of the unpaid principal amount of the loan.
Loan Servicer
The Department of Education (ED) is the loan holder for all direct loans. This means they are the organization that holds the promissory note and "owns" your loan. Most loan holders use a loan servicer to assist with managing the repayment of the loans they hold. A loan servicer collects loan payments, responds to your questions about the loan account, and performs other administrative tasks associated with maintaining a federal student loan. Your loan servicer may be the same as your loan holder, or it may be the company that works on behalf of the loan holder.
Deferment
A deferment is a temporary pause to your student loan payments for specific situations such as active duty military service and reenrollment in school. You can receive a deferment on Federal student loans for certain defined periods. The U.S. Department of Education (ED) has published a list of the reasons qualifying for a deferment.
Direct Loan program
The William D. Ford Federal Direct Loan (Direct Loan) Program: Under this program, loans are made by the U.S Department of Education (ED).
FFEL Program
The Federal Family Education Loan (FFEL) Program: Under this program, now discontinued, loans were made by banks or other financial institutions. No new FFEL Program loans have been made since July 1, 2010, but you may have an FFEL if you were attending school before that date.
Federal Perkins Loan Program
Under this program, loans are made by schools.
Default
"To default" means you did not make your payments on your student loan as scheduled according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan.
Forbearance
Forbearance is a temporary postponement or reduction of your student loan payments because you are experiencing financial difficulty. The borrower may alternatively request an extension of time allowed for making payments or the acceptance of smaller payments than were previously scheduled. Unlike deferment, interest continues to accrue during any period of forbearance. The borrower may pay interest as it accrues during periods of forbearance, but the borrower is not required to do so.