Glossary of Terms

Consolidation: The combination of several types of federal education loans into one new loan. Consolidation simplifies loan repayment.

Deferment: The temporary postponement of loan payments; during this time, the borrower doesn’t have to pay either principal or interest.

Repayment Schedule: A statement the loan holder provides the borrower that lists the amount borrowed, the amount of monthly payments, and the date payments are due.

Subsidized: A federal student loan made on the basis of the borrower’s financial need and other specific eligibility requirements. The federal government pays the interest on these loans while borrowers are enrolled at least half time, during the grace period, or during authorized periods of deferment.

Unsubsidized: A federal student loan made to a borrower meeting specific eligibility requirements, but not based on financial need. The borrower is responsible for paying all interest that accrues throughout the life of an unsubsidized loan. During in-school status, deferment, and forbearance periods, the borrower may choose to pay the interest charged on the loan or allow the interest to be capitalized (added to the loan principal).