Cosigner: A person who agrees to be legally responsible for repaying a loan if the borrower fails to do so. Cosigners are often used for private student loans to help borrowers qualify for better interest rates or loan terms.

Consolidation: The process of combining multiple federal student loans into one loan with one monthly payment. This may simplify repayment but could result in paying more interest over time.

Default: Failure to repay a loan according to the terms agreed upon in the promissory note. Consequences of default can include negative credit reporting, wage garnishment, and loss of eligibility for future federal student aid.

Default Rehabilitation: The process of getting a federal student loan out of default by making a series of on-time, qualifying monthly payments. Successful rehabilitation removes the default from the borrower’s credit history.

Deferment: A period during which repayment of the principal and interest of a loan is temporarily delayed. Interest does not accrue on subsidized loans during deferment.

Delinquency: Failure to make a loan payment on time. Delinquent loans can lead to late fees, negative credit reporting, and eventual default if payments are not brought up to date.

Exit Counseling: Information provided to federal student loan borrowers before they leave school or drop below half-time enrollment. Exit counseling explains loan repayment options, rights, and responsibilities.

Financial Hardship: A condition in which a borrower is unable to make payments on their student loans due to financial difficulties. Borrowers experiencing financial hardship may be eligible for deferment, forbearance, or an income-driven repayment plan.

Forbearance: A period during which the borrower is allowed to temporarily stop making payments, have payments reduced, or extend the time for making payments. Interest continues to accrue on subsidized and unsubsidized loans.

Forgiveness: The cancellation of all or part of a student loan balance if the borrower meets certain requirements, such as working in public service or making payments through an income-driven repayment plan for a specified period of time.

Garnishment: A legal process that allows a portion of a borrower's wages or federal benefit payments to be withheld and applied towards repayment of a defaulted loan.

Grace Period: A period of time after graduation, leaving school, or dropping below half-time enrollment when a borrower is not required to make payments on their federal student loans. Interest may or may not accrue during this period, depending on the type of loan.

Income-Driven Repayment (IDR) Plan: Repayment plans that base the monthly payment amount on the borrower’s income and family size. Examples include Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE).

Interest: The cost of borrowing money, typically calculated as a percentage of the loan principal.

Interest Capitalization: The process of adding unpaid interest to the principal balance of a loan. This increases the total amount to be repaid because interest is then calculated on the higher, capitalized principal.

Loan Consolidation: A process to combine multiple federal student loans into one new loan with a single monthly payment. This can simplify repayment but may result in a longer repayment term and more interest paid over time.

Loan Rehabilitation: A process to bring a defaulted loan back into good standing by making a series of agreed-upon payments.

Prepayment: Paying off all or part of a loan before it is due. Some loans may have prepayment penalties, while others do not.

Principal: The original amount of money borrowed through a loan, excluding any interest or fees.

Loan Discharge: The cancellation of a borrower’s obligation to repay all or a portion of their federal student loan debt due to specific circumstances, such as total and permanent disability, closure of the school, or false certification of eligibility.

Loan Rehabilitation: A process to bring a defaulted loan back into good standing by making a series of agreed-upon payments.

Loan Servicer: The company responsible for managing the repayment of the loan on behalf of the lender. They handle billing, payment processing, and customer service.

Origination Fee: A fee charged by the lender or servicer for processing a new student loan. This fee is typically deducted from the loan disbursement amount.

Repayment Plan: An agreement between the borrower and the loan servicer that specifies the amount and schedule of loan payments.

Standard Repayment Plan: A repayment plan where the borrower pays a fixed amount each month over a set period of time, usually 10 years.

Servicing Transfer: The transfer of a borrower’s federal student loan from one loan servicer to another. Borrowers are notified when their loans are transferred, and they should continue making payments as instructed during the transfer process.

Subsidized Loan: A type of federal student loan where the government pays the interest that accrues while the borrower is in school at least half-time, during the grace period, and during periods of deferment.

Unsubsidized Loan: A type of federal student loan where the borrower is responsible for paying all accrued interest, including during periods of deferment and forbearance.

These are some of the key terms you may encounter when navigating student loan repayment. Understanding them can help borrowers manage their loans more effectively and make informed decisions.