Easy To Understand Glossary of Loan Terms (Loan Terms Part 5)
Original Loan Amount: An information field on the Loan Detail screen of PPSLC's Online Account Access. This field shows the loan amount that was originally guaranteed by our guarantor (Texas Guaranteed Student Loan Corporation).
Origination Fee: A fee deducted from the principal loan before disbursement and paid to the federal government to offset the interest cost on Subsidized Stafford loans. PLUS loan borrowers are charged a 3% origination fee.
PLUS Loan: A PLUS loan is a federally insured loan which parents borrow on the behalf of a dependent (can still be deducted on taxes) undergraduate students.
The PLUS loan is not based on need. The applicant must be determined creditworthy based on Federal regulations and/or lender criteria.
Parents may borrow up to the cost of education, minus any other financial aid received. PLUS loans may be used to replace the expected family contribution.
Graduate/Professional students may also borrow a PLUS loan to pay for their own education up to the cost of education minus any other financial aid received.
Prepayment: Paying all or part of a loan before it is due. FFELP borrowers can prepay any portion of their loan at any time with no penalty. Check with your lender to obtain any information on prepayment penalties.
Principal Balance: The outstanding amount of the loan, less interest. This is the amount of money that you have borrowed. This is the amount on which the lender charges interest. Each payment is distributed, a portion used to satisfy current accrued interest; the remainder of the payment is used to reduce the outstanding principal balance.
Promissory Note: The binding legal document a student signs for the student loan. It lists the borrower's rights and responsibilities, and the terms and conditions of the loan. This document should be SAVED!
Repayment: The time during which a borrower actively pays back an education loan. In most cases the maximum repayment term for Stafford loans is 10 years.