This Glossary provides definitions of common terms and provides overviews of many of the programs referenced in this website. You may also Download our Glossary. The download provides a full copy of the entire glossary listings.
There are currently 6 names in this directory beginning with the letter L.
A loan is money borrowed from the federal government or a private source like a bank or financial institution and must be paid back with interest.
Failure to repay a loan according to the terms agreed to in the master promissory note. For most federal student loans, you will default if you have not made a payment in more than 270 days. Borrowers who default on federal education loans lose eligibility for further federal student aid, will have their default reported to national credit bureaus, and may have their wages garnished or tax refunds offset by the government.
A period of time during which a student, under certain conditions, may postpone payment on student loans. During such a period, interest does not accrue on subsidized loans. Unsubsidized loans continue to accrue interest. Examples of reasons that entitle a borrower to deferment include enrollment in postsecondary education on at least a half time basis, unemployment, economic hardship, or qualifying active duty military service.
Cancellation of the balance due on a federal education loan. Reasons for discharge of a loan include the borrower’s death (or the death of the student on whose behalf a parent obtained a Direct PLUS Loan), the borrower’s total and permanent disability, school closure, and certain other conditions as specified in the U.S. Department of Education’s regulations.
A period during which a borrower may temporarily stop making loan payments, temporarily make smaller payments, or extend the time for making payments. A borrower who does not meet the eligibility requirements for a deferment may, at the discretion of the loan holder, receive a forbearance if the borrower does not meet the eligibility requirements for a deferment but is temporarily unable to make loan payments for reasons including, but not limited to, financial hardship or illness.
Loan Grace Period
A period of time that begins after you graduate, leave school, or drop below half time enrollment during which you are not required to make payments on certain federal student loans. Some student loans will accrue interest during the grace period, which will then be added to the principal balance of the loan when repayment begins.