School & Education
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Student loan documents and statements use several acronyms and unfamiliar phrases. Here are some that you should be familiar with:
AGI: Adjusted Gross Income
AGI is an individual’s gross income minus any payroll deductions or adjustments. AGI includes wages , salary, and any other sources of income.
Delinquency and Default
A loan becomes delinquent when a borrower misses a loan payment. The loan will be considered delinquent until a payment is made on the loan. If the loan remains in delinquency for a certain period of time, it may enter default.
Default is failure to repay a loan according to the agreed terms in the promissory note. Defaulting on your student loans can have serious consequences, such as additional fees, wage garnishment , and a significant negative impact on your credit.
DOE: Department of Education
FAFSA: Free Application for Federal Student Aid
The FAFSA is how students apply for federal student aid, including federal loans. The FAFSA must be completed each year a student wants to apply for financial aid.
For more information, visit the Federal Student Aid website.
FDLP: William D. Ford Direct Loan Program (Direct Loans)
Federally subsidized loans where the government makes a loan directly to the student.
FFEL or FFELP: Federal Family Education Loan Program
FFEL was a federally subsidized student loan program where the government insured private lenders against defaults. New lending under this program stopped in 2010.
Forbearance
Student loan forbearance is a temporary reduction or postponement of student loan payments that can be requested when you are experiencing financial hardship. During forbearance, interest typically continues to accrue on all types of federal student loans. Borrowers can either:
pay off the interest as it accrues, or
allow the interest to accrue and be capitalized, which means the interest will be added to the principal amount of your loan at the end of forbearance.
GSL: Guaranteed Student Loan
All student loans that are made directly, subsidized, or insured by the federal government. This includes:
- Direct Loans,
- Stafford Loans,
- PLUS Loans, and
- Supplemental Loans for Students (SLS).
IBR: Income Based Repayment
Monthly payments under the IBR program are based on the borrower's income. IBR can be $0 or more on a monthly basis.
If, after 25 years, the borrower has been making appropriate IBR, ICR, or deferment payments, the direct loan is discharged. Under some LRAP programs, borrowers may qualify for forgiveness of the loan balance if they:
- Make payments under the IBR or ICR programs for a given period and
- Show certified employment in certain sectors.
The Federal Student Aid website offers an IBR calculator.
ICR: Income Contingent Repayment
Under the ICR plan, payments are calculated based on factors such as the borrower's discretionary income and the federal poverty level. The Federal Student Aid website offers an ICR calculator.
IDR: Income-Driven Repayment
IDR plans often provide a lower monthly payment compared to other plans because they are based on income and family size instead of your loan amount. Saving on a Valuable Education (SAVE) is an example of an IDR plan. See more information about SAVE below.
IFAP: Information for Financial Aid Professionals
This is a Department of Education website that includes updates to:
- Student loan policies,
- New application forms,
- Definitions, and
- Changes to the law.
Loan forgiveness, cancellation, or discharge
In some situations, you can have your federal student loans forgiven, cancelled, or discharged. Learn more about loan forgiveness, cancellation, and discharge.
LRAP: Loan Repayment Assistance Program
Federal LRAPs are designed to encourage graduates to enter and continue public service employment. Public service jobs include:
- Employment by the government,
- Serving in the military,
- Teaching in a low-income school district, or
- Serving as a public defender .
For example, teachers may qualify for forgiveness of up to $17,500 of their FFEL or Direct Loans. The Federal Student Aid website has a list of LRAPs for different professions.
A reliable list for law graduates to search can be found at Equal Justice Works.
TEACH Grant
Offered to students planning to teach in a high-need field. Must also be in a school serving low-income students. They must also agree to the TEACH Grant Agreement to Serve. When a grantee fails to meet program requirements, the grant amount is converted into a loan.
PLUS Loan
Eligible parents, graduate students, and professional students can borrow under the PLUS Loan program to help cover the cost of education. The maximum PLUS loan amount you can receive is the cost of attendance, as determined by the school, minus any other financial aid received. PLUS Loans are now referred to as part of the Direct Loan program.
Unlike FFEL or Perkins Loans, monthly payments on parent PLUS loans are not automatically deferred while the student is enrolled in school. But you can ask for a deferment. If you do this, the accumulated interest is capitalized, or added to the principal, because it is not subject to interest benefits.
Subsidized/Unsubsidized Stafford Loans
These have been disbursed under the Direct Loan program. They are known as Direct Subsidized and Direct Unsubsidized Loans. Students with financial need receive a subsidized loan. This means that interest is paid by the federal government. The student must be in school at least half-time, during grace periods, and deferment.
You do not have to be in need to get an unsubsidized loan. Unsubsidized loans capitalize interest. This means that interest builds while the student is still in school. Unsubsidized Stafford loans do not qualify for interest benefits. But they do qualify for special allowance.
