Easy To Understand Glossary of Loan Terms
Loan Terms Part 4

Income-Sensitive Repayment: This repayment schedule is based on the borrower’s income. Payments must cover the interest which will accrue daily. In case of emergency this is a good option.
Note: Any day that you are not paying on your loan is another day that it increases in cost.

Independent Student: A student must meet one or more of the following criteria to determine eligibility (criteria established by the Higher Education Act of 1965):
Must be 24 years old on or before December 31 of award year and/or
Must be an orphan of the court and/or
Must be a veteran of the U.S military and/or
Must be a graduate or professional student and/or
Must be married and/or
Have dependents (children) other than a spouse.

Insurance Fee: A fee deducted from all student loans which is used to insure (pay) defaulted loans.

Lender: The financial institution that provides the funding for student loans. These institutions include commercial banks, federal savings banks, savings and loans, and credit unions.

Loan Disclosure Statement: Statement of loan account issued to the borrower when the loan is first disbursed and again when repayment begins. On the first statement look for information about the principal (amount borrowed before fees, interest, etc.), the guaranty and insurance fees, and the interest rate. Also look for the first payment due date and the number, amount, and frequency of payments.

Loan Forgiveness: Under certain circumstances the Federal Government can “forgive” or write off a student loan debt. One of the following circumstances must have occurred for the student’s loan to be forgiven include:
The borrower's school closes while he/she is attending,
The borrower becomes permanently disabled, or
The borrower becomes deceased.
Documentation of the situation is required and eligibility is determined by the guarantor.

Loan Status: An information field on the Loan Detail screen of PPSLC's Online Account Access. Some examples of loans status would be In-School, Repayment, Deferment, Forbearance and Paid in Full.

Master Promissory Note (MPN): A promissory note under which the borrower may receive loans for either a single period of enrollment or multiple periods of enrollment. Currently, not all schools are eligible to use the multi-year feature of the MPN. Borrowers attending these schools must still complete a new MPN for each new loan.