Common Definitions


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Loan Rehabilitation

The process of rehabilitation a loan out of default status & removing the default notation from a borrower’s credit report. To restore a Direct or a FFEL Loan, the borrower must make a minimum of 9 monthly payments of an agreed amount within 20 days of their monthly due dates over a 10-month period. To restore a Perkins Loan, a borrower must make nine on-time, consecutive monthly payments of an agreed-upon amount. Rehabilitation terms and conditions vary for other loan types and can be obtained directly from loan holders.

Loan Servicer

A company that collects payments on a loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a lender.  If you’re unsure of who your federal student loan servicer is, call us now at 844-323-3328  and one of our specialist will be able to obtain this information for you. We will need your FAFSA PIN number which was issued to you when you applied for your federal student loans. If you do not remember your FAFSA PIN # we can obtain this information for you as well.

Master Promissory Note

A legal agreement that each borrower must execute once approved for federal student loan. The MPN can be used to make one or more loans for one or more academic years (up to 10 years). It lists the terms and conditions under which you agree to repay the loan and explains your rights and responsibilities as a borrower.  It’s important to read and save your MPN because you’ll need to refer to it later when you begin repaying your loan or at other times when you need information about provisions of the loan, such as deferments or forbearances.


A loan available to graduate students and parents of dependent undergraduate students, for which the borrower is fully responsible for paying the interest regardless of the loan status.

Principal Balance

The total sum of money borrowed plus any interest that has been capitalized. This is the amount due and owing to satisfy the payoff of the underlying obligation.

Subsidized Loan

A loan based on financial need for which the federal government pays the interest that accrues while the borrower is in an in-school, grace, or deferment status. For Direct Subsidized Loans first disbursed between July 1, 2012, and July 1, 2014, the borrower will be responsible for paying any interest that accrues during the grace period. If the interest is not paid during the grace period, the interest will be added to the loan’s principal balance.

Unsubsidized Loan

A loan for which the borrower is fully responsible for paying the interest. This interest is paid regardless of the loan status. Interest on unsubsidized loans accrues from the date of disbursement and continues throughout the life of the loan.

Interest Rates

A loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender.  The expense is calculated as a percentage of the unpaid principal amount of the loan. Interest will be equivalent to the percentage at which interest is calculated on your loan(s).