Don’t know much about student loans? There are some terms that you might have trouble with if you’re unfamiliar with loan lingo. You need to make sure that you know all the requirements for your loans, and that will be hard to do if you don’t even know the meaning of the words you’re reading. This short list, a glossary of sorts, should help you muddle your way through paying for college with a bit less stress.
Federal Student Loan: a loan from the U.S. government
Private loans: money loaned by private companies to students.
Borrower: you--you’re the one getting the money and you’re the one who is paying it back.
Co-signer: of the loan is whoever is helping you out with the loan. They’re who a bank can get the money from if you don’t pay up.
PLUS Loan: “Parent Loans for Undergraduate Students,” a loan issued to parents for their student’s education
Interest: money that you pay on top of the loan debt that you owe. This is how banks make money.
Unsubsidized loans: loans that gather interest while you’re in college.
Subsidized loans: loans don’t gather interest until you graduate.
Tip: if you have to choose between the two of them, choose the subsidized loan. You’ll pay less interest on it, so it will be cheaper in the long run.
Student Loan Forgiveness: when the federal government gives you a break on your loan and says that you don’t owe any more money to them. Normally you will make loan payments for a set amount of time, and then your loan may be forgiven.
FAFSA: “Free application for federal student aid”, this is the paperwork you fill out to be considered for federal student aid, such as loans or the Pell Grant.
Forbearance: special permission to delay loan repayment. Typically granted for students pursuing public service projects such as the Peace Corps or AmeriCorps.
Deferment: See forbearance.