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Glossary – Student Loan Industry Terms and Definitions

Adjusted Gross Income (AGI)  -Your or your family’s wages, salaries, interest, dividends, etc., minus certain deductions from income as reported on a federal income tax return. Commonly referred to as AGI. 

Borrower Defense to Repayment: A federal student loan discharge program that cancels the debt of borrowers who were defrauded by their colleges. 

Cancellation: The complete discharge of a borrower’s federal student loan debt, typically due to specific circumstances such as death or total and permanent disability. 

Consolidation: The process of combining multiple federal student loans into a single loan, with a new interest rate based on the weighted average of the original loans. 

Default: The failure to repay a loan according to the terms agreed to by the borrower and lender. For federal student loans, default occurs when a borrower misses 9 consecutive monthly payments. 

Deferment: A period during which the borrower is allowed to temporarily postpone loan payments. Interest may or may not continue to accrue during deferment, depending on the loan type. 

Delinquency: The status of a loan when a borrower has missed one or more payments. 

Department of Education (ED): The federal agency responsible for administering federal student aid programs, including the William D. Ford Federal Direct Loan Program and the Federal Family Education Loan (FFEL) Program. 

Direct Loan: A type of federal student loan made directly by the U.S. Department of Education to the borrower. 

Forbearance: A temporary suspension of loan payments during which interest continues to accrue. 

Income-Driven Repayment Plan (IDR): A type of federal student loan repayment plan that sets monthly payments based on the borrower’s income and family size. 

Loan Servicer: A company that handles the billing and other services on behalf of a lender. The U.S. Department of Education contracts with several loan servicers to manage its Direct Loan Program. 

Public Service Loan Forgiveness (PSLF): A federal program that forgives the remaining balance of Direct Loans for eligible borrowers who work full-time in public service jobs and make 120 qualifying payments under a qualifying repayment plan. 

Teacher Loan Forgiveness: A federal program that provides up to $17,500 in loan forgiveness for eligible teachers who teach full-time for five complete and consecutive academic years in certain elementary and secondary schools and educational service agencies that serve low-income families. 

Total and Permanent Disability Discharge (TPD): A federal student loan discharge program for borrowers who are unable to work and earn money due to a disability that is expected to last for an indefinite or extended period of time or result in death. 

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