Student Loans


Debt Consolidation




Student Loan Consolidation (Contd...3)


Income Contingent Repayment (ICR) Plan

A repayment plan that bases your monthly payment on your yearly income, family size, and loan amount. As your income rises or falls, so do your payments. After 25 years, any remaining balance on the loan will be forgiven, but you may have to pay taxes on the amount forgiven.

Each year your monthly payment will be based on your family size, annual Adjusted Gross Income (AGI) as reported on your federal tax return, and the total amount of your Direct Loan(s). To participate in the ICR Plan you must authorize the U.S. Internal Revenue Service (IRS) to inform the U.S. Department of Education (Department) of the amount of your income. This information will be used to calculate your repayment amount, which will be adjusted annually to reflect changes in your AGI If you select the ICR Plan, you will be billed for only the
interest amount that accrues on your loan each month until you complete and return the required documentation. We cannot place you on ICR Plan until we receive your completed forms.

Independent Student
An independent student is at least 24 years old, married, a graduate or professional student, a veteran, a member of the armed forces, an orphan, a ward of the court, or someone with legal dependents other than a spouse.
In-School Status
The status of a loan prior to entering the grace or repayment period.

A loan expense charged by the lender and paid by the borrower for the use of borrowed money. The expense is calculated as a

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percentage of the unpaid principal amount (loan amount) borrowed.

Money borrowed from a lending institution or the U.S. Department of Education that must be repaid.

The National Student Loans Data System is a centralized database that stores information on all U.S. Department of Education loans and grants. NSLDS also contains borrowers’ school enrollment information. Borrowers can access this information online using their Department of Education PIN.

Out of School
Borrowers are "out of school" if they are making scheduled payments on their federal education loans (repayment) or they are in a period of grace, deferment, or forbearance.

Payment Amount
The total amount of a borrower's most recent payment.

Payment Date
The date borrower’s payments are received and applied to their loan accounts.

Your PIN serves as your identifier to allow access to personal information in various U.S. Department of Education systems.
Your PIN also acts as your digital signature with some online forms. Use your PIN to electronically sign your online Loan Consolidation Application and Promissory Note, Deferment, or Forbearance forms.
If you do not already have a PIN, you can request one online by selecting the Request a PIN button link located on the left menu bar. The PIN you will receive will be your universal U.S. Department of Education PIN. 

PLUS Loans are available to parents of dependent graduate students and to students enrolled in graduate and professional programs. PLUS loans are unsubsidized loans that accrue interest from the date of disbursement.

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A prepayment is an amount in excess of the amount due on a loan. If borrowers have more than one Direct Loan, they must specify which loan they are prepaying. Like all other Direct Loan payments, a prepayment first will be applied to any outstanding fees and charges, next to outstanding interest, and then to the principal balance of the loan(s). There is never a penalty for prepaying principal or interest on Direct Loan Program loans.

Principal Loan Balance Outstanding (principal balance)
The total principal amount outstanding on a borrower's Direct Loan(s). Principal balance will include the original amount(s) disbursed for the loan(s), any adjustments made to the loan disbursement amount, and any interest capitalized on the account(s).

Promissory Note
The binding legal document that borrowers sign when they obtain loans. Promissory notes define the conditions under which funds are provided and the terms under which borrowers agree to pay back the loan. Promissory notes include information about the interest rate and about deferment and cancellation provisions.

Reasonable and Affordable Payments
Rehabilitating a defaulted loan or making satisfactory payment arrangements requires borrowers to make "reasonable and affordable" payments. The holder of a Direct Loan or FFEL Program loan determines on a case-by-case basis what constitutes a reasonable and affordable payment on defaulted loans. Loan holders consider disposable income and such expenses as housing, utilities, food, medical costs, work related expenses, dependent care, and other Federal education loan debt. Borrowers are then provided with a written statement of

the payment and an opportunity to object to those terms.

Rebate (Direct Loan Up-Front Interest Rebate Program)
The amount of the up-front interest rebate given to Direct Subsidized Loan, Direct Unsubsidized Loan and Direct Plus Loan borrowers beginning with loans made for the 2000 - 2001 program year. The rebate amount is equal to 1.5 percent of the loan amount borrowed. Borrowers must make their first 12 required monthly payments on time or the rebate amount will be added back to the principal balance on their loans.

The total amount of funds returned to the Direct Loan Program as unused for the student's education.

The process of bringing a loan out of default and removing the default notation on a borrower's credit report. To rehabilitate a Direct or FFEL loan, a borrower must make at least nine (9) full payments of an agreed amount within twenty (20) days of their monthly due dates over a ten (10) month period. To rehabilitate a Perkins Loan, a borrower must make twelve (12), on-time, monthly payments of an agreed amount to the Department. Rehabilitation terms and conditions vary for other loan types and can be obtained directly from loan holders.
Repayment (also repayment period)
Making payments on a loan. The "repayment period" is the period during which payments are required to be made.

Repayment Plan(s)
The Direct Consolidation Loan Program offers four repayment plans with various term selections:

Standard Repayment Plan - Under this plan, you  pay a fixed amount of at least $50 each month for up to 10 to 30 years, based on your total education indebtedness. This plan may result in lower total interest paid when compared to repayment under one of the graduated plans.

If you have not selected a repayment plan by the time repayment begins, your loan(s) will be placed on the Standard Repayment Plan.

Graduated Repayment Plan - Under this plan, you will pay a minimum payment amount at least equal to the amount of interest accrued monthly for up to 10 to 30 years, based on your total education indebtedness. Your payments start out low, and then increase every two years. Generally, the amount you will repay over the term of your loan will be higher under the Consolidation Graduated Repayment Plan than under the Consolidation Standard Repayment Plan. This plan may be beneficial if your income is low now but is likely to steadily increase.

Extended Repayment Plan - To qualify for this plan, your Direct Loan balance must be greater than $30,000, and you will have up to 25 years to repay your loan(s). Plan options include:

Fixed Monthly Payment Option - You will pay a fixed amount of at least $50 each month for up to 25 years. Repayment under this plan will result in lower total interest paid when compared to graduated plans with similar terms.

Graduated Monthly Payment Option - You will pay a minimum payment amount of at least $50 or the amount of interest accrued monthly, whichever is greater, for up to 25 years. Your payments start out low and then increase every two years. Repayment under this plan may provide lower initial monthly payments, although the total interest paid may be greater when compared to plans with similar terms with fixed payments. This plan may be beneficial if your income is low now but is likely to steadily increase.

**Extended repayment terms are available to Direct Loan borrower with no outstanding principal or interest balances as of October 7, 1998 and with more than $30,000 in Direct Loans.

Income Contingent Repayment (ICR) Plan - payment amount is based on your income (and your spouse's income, if you are married), loan balance and family size, and can vary year-to-year for up to 25 years.

Satisfactory Repayment Arrangements
Borrowers in default on Direct Loan and FFEL Program loans who wish to consolidate their loans in a plan other than the Income Contingent Repayment (ICR) plan must have made satisfactory repayment arrangements with the loan holder(s).


Three consecutive, voluntary, on-time monthly payments on a defaulted Direct Loan or FFEL Program loan constitute satisfactory repayment arrangements. Borrowers must work with their current loan holders to set up reasonable and affordable payments. Borrowers who wish to consolidate defaulted Perkins or health professions loans should contact their loan holders for information on satisfactory repayment arrangements under those programs.

Separation Date
The actual or anticipated date when the borrowers graduate, leave school, or drop to a less than half-time status. The separation date is used to determine the loan's grace period and the date the first loan payment will be due.

An entity designated to track and collect a loan on behalf of a loan holder.

Simple Daily Interest
The method used to calculate interest on student loans.

Status (Loan status)
The present state of your Subsidized, Unsubsidized, PLUS, or Consolidation loan(s).
An account will be either:


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Subsidized Loan
A loan for which a borrower is not responsible for the interest while in an in-school, grace, or deferment status. Subsidized loans include Direct Subsidized , Direct Subsidized Consolidation Loans, Federal Subsidized Stafford Loans and Federal Subsidized Consolidation Loans.

Total Education Indebtedness
Total Education Indebtedness is the sum of a Direct Consolidation Loan, and other eligible education indebtedness, up to an amount equal to the Direct Consolidation Loan. Total Education Indebtedness is used to calculate the number of payments under the Standard and Graduated Repayment Plans (for examples, click here).

Unsubsidized Loan
A loan for which a borrower is fully responsible for paying the interest regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan. Unsubsidized loans include: Direct Unsubsidized Loans, Direct PLUS Loans, Direct Unsubsidized Consolidation Loans, and Federal Unsubsidized Stafford Loans, Federal PLUS Loans, and Federal Unsubsidized Consolidation Loans.

Variable Interest
The rate of interest charged on a loan that changes annually and fluctuates with a stated index.

Verification Certification
The process by which a consolidation lender requests that a loan holder certify a loan's payoff balance.
William D. Ford Federal Direct Loan Program (Direct Loan Program)
The Federal program that provides loans to eligible student and parent borrowers under Title IV of the Higher Education Act. The loan programs include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. Funds are provided directly by the federal government to eligible borrowers through participating schools

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Student Loans

Debt Consolidation



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