borrower

Person legally responsible for repaying a loan and who has signed the promissory note.

cancellation

The release of borrowers from their obligations to repay all or a portion of their federal loans. Borrowers must meet certain requirements to be eligible for cancellation. Institutional loans do not qualify for cancellation.

capitalized
interest

Unpaid, accumulated interest that is added to the loan principal. Because the principal increases, so does the total cost of the loan.

consolidation

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

default

Failure to repay a loan in accordance with the terms of the promissory note.

deferment

The temporary postponement of loan payments; during this time, the borrower does not have to pay either principal or interest.

delinquency

Failure to make payments when due, as specified in the promissory note and in the selected repayment plan. Delinquency can lead to default.

Equal Credit Opportunity Act (ECOA)

Federal Law which prohibits creditors from discriminating against credit applicants on the basis of sex, marital status, race, color, religion, age, and/or receipt of public assistance.

Equifax

One of three national credit reporting agencies, headquartered in Atlanta, GA. The other two are Experian and TransUnion.

Experian

One of three national credit reporting agencies, headquartered in Costa Mesa, CA. The other two are Equifax and TransUnion.

Fair Credit Reporting Act (FCRA)

Federal legislation governing the accuracy, fairness, and privacy of information in the files of consumer reporting agencies.

forbearance

Temporary postponement or reduction of payments because of the borrower's financial difficulties. A forbearance also may be an extension of the repayment period. All borrowers are charged interest during forbearance.

grace period

A period of time between when the borrower graduates or drops below half-time status and when repayment begins. For a Federal Perkins Loan, the grace period is nine months. For the Nursing and Institutional Loans, the grace period is six months. A Loan Consolidation usually has no grace period.

Institutional loan

A loan that was funded and awarded by Catholic University and it is serviced by University Accounting Service.

interest

A loan expense charged a borrower for the use of borrowed money. Interest is calculated as a percentage of the principal of the loan, which includes the original amount borrowed and any capitalized interest. Accrued interest is interest that accumulates on the unpaid principal balance of a loan

lender

The organization that made the loan initially; the lender could be the borrower's school (for Federal Perkins, Institutional, and Nursing Loans).

loan holder

The organization that currently "owns" the loan and to which the borrower owes repayment. Many banks sell loans, so the initial lender and the current holder could be different

loan principal

The total sum of money borrowed. Loan principal includes the original amount borrowed plus any interest that has been capitalized

Nursing Loans

Low-interest (5 percent) loans made under the Nursing Loan Program to undergraduate students. Because the school is the lender, students repay the school that made the Nursing Loan or to the agent the school hires to service the loan. A student must demonstrate financial need to qualify for one of these loans.

Perkins Loans

Low-interest (5 percent) loans made under the Federal Perkins Loan Program to undergraduate and graduate students. Because the school is the lender, students repay the school that made the Federal Perkins Loan or to the agent the school hires to service the loan. A student must demonstrate financial need to qualify for one of these loans.

prepayment

Any amount the borrower pays before it is required to be paid under the terms of the loan's promissory note. There is never a penalty for prepaying principal or interest on U.S. Department of Education and/or CUA's Institutional loans.

promissory note

A binding legal contract between a loan holder and a borrower. The promissory note contains the loan terms and conditions, including how and when the loan must be repaid. By signing this note, the borrower agrees to repay the loan.

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.

servicer

An agency a school or lender employs to service (collect) a student loan account. Often, the borrower will deal with the loan servicer when there are questions about repayment. Servicers also approve deferments and forbearances on the lender's behalf.

TransUnion

One of three national credit reporting agencies headquartered in Woodlyn, PA. The other two are Equifax and Experian.

Truth in Lending Act

Title I of the Consumer Protection Act. Requires that most categories of lenders disclose the annual interest rate , the total dollar cost and other terms of loans.

University Accounting Service

The agency that services Federal Perkins, Institutional, and Nursing Loans for The Catholic University of America.