The process of applying for student loans, using them and eventually paying them back can be a decades-long class that teaches you a plethora of difficult lessons about personal finance. One of your first quizzes is something of a vocabulary test when you’re trying to wrap your head around what the terms mean.
MainStreet defines some of the lingo for you:
* Subsidized Loan — A need-based type of loan that’s backed by the government, not requiring you to start paying it back until after graduation.
* Default Rate — The percentage of borrowers who have stopped making payments on their loans. Hopefully you won’t someday add to this rate’s increase.
* Grants — Money that you don’t have to pay back. The more grant money you get, the less you’ll have to borrow.
* Expected Family Contribution — A formula schools use to determine how much you and your family should be able to cough up to cover the cost of school. If your expected contribution is high, the amount of financial aid you’ll qualify for will be lower.
* Borrower grace Period — Federal student loans allow you some breathing room after graduation before you have to start paying them back. You can apply for a grace period if you lose your job or face a severe drop in work hours.
Check the source article for more terms and definitions.
10 Student Loan Terms Explained [MainStreet] (Thanks, Kristin!)