What do all of these student loan terms mean?

Student loan glossary

Unless you’re an accounting or finance major, some of the terms and references related to private student loans, alternative student loan consolidation, and non-federal student loan consolidation might be a little confusing. You’ve heard the terms before, but how they specifically relate to your student loans is what matters.

The following are some of the more common terms of reference you’re going to hear a lot of in the coming years:

Accrual Date: The date when a loan’s interest charges begin to accrue (grow).

Amortization: Payments made over a period of time on a loan’s principal and interest.

Commercial Lender: Commercial institutions that loan money

Consolidation Loan: Allows the borrower to combine a number of existing loans into one loan.

Default: Non-payment or late payment of loan installments or failure to meet the terms and conditions of a loan.

Deferment: When a lender allows a borrower to postpone loan payments.

Forbearance: Temporarily allows a borrower to postpone principal payments on a loan due to financial hardship.

Origination Fee: A fee paid by the borrower to the lender to cover administrative fees for his or her loan

Promissory Note: The legal binding contract the borrower signs. It states the terms, details, and obligations of the borrower to repay the lender.

Servicer: The party paid by the lender to oversee the status of a loan, distribute funds, collect payments, and handle deferments, forbearances, and other related issues.