Boston University Medical Campus
Student Financial Services

Glossary G-Z

GLOSSARY G-Z

Grace Period – The period after a borrower leaves school (or attends less than half time) and before the time the borrower is obliged to begin repayment. Some loan programs have no grace period; others may not require repayment to begin for several months.

Gross Income – Income before deductions.

Guarantee/Insurance Fee – An insurance premium on a loan, used to guarantee student loan programs against losses caused by defaults. The amount charged is usually deducted from the disbursement of the principal.

Guarantee Agency – An organization which acts as an agent for the federal government to administer and insure federal loans.

Institutional Methodology (IM) – A method of determining ability to pay for education from the student’s and parents’ current income and/or by drawing from assets and used to determine eligibility for institutional and campus-based federal financial assistance.

Interest – A fee charged to use borrowed money, computed as a percentage of the principal for a given period of time.

Lender – An individual or financial institution which provides money on the condition that the money be returned, usually with an interest charge.

Loan Disclosure Statement – A document which shows the amount of a loan, where, when and what repayments must be made, the interest rate, and the cost of borrowing that loan.

Need Analysis – The determination of expected student and family contribution toward the cost of education and the consequent amount of financial assistance a student will “need.”

New Borrower – One who does not have an outstanding loan obligation under a specified loan program.

Origination Fee – A fee charged by a lender to offset the administrative costs of processing a loan and deducted from the principal at disbursement or added to the principal for repayment.

Prime Rate – A fluctuating interest rate which banks charge to their customers

Principal – The original total sum of money borrowed

Promissory Note – A contract that legally binds a lender and a borrower. The note details all the terms and conditions of the loan, including amount of principal, interest rate, and repayment obligations.

Secondary Market – An organization, which purchases loans from a lender, thus allowing the lender to replenish capital to make new loans.

Servicer – A company employed by a lender or secondary market to perform the administrative tasks associated with a loan such as providing disclosure statements or collecting payments on a loan.

Simple Interest – Interest computed only on the original loan amount.

Subsidized Loan – A loan on which interest is paid by the government while a borrower is in school or in an authorized deferment or grace period.

Title IV – Department of Education federal student aid programs including College Work-Study, Federal Stafford Loans (subsidized and unsubsidized), Supplemental Loans to Students (SLS), and Federal Direct Loans for graduate students.

Title VII – Department of Health and Human Services Health Professions student aid programs including Scholarships for Disadvantaged Students (SDS), Health Professions Student Loans (HPSL), and Primary Care Loans (PCL).

Variable Interest – Rates of interest that change periodically during the life of the loan.

Verification – Confirmation of data previously submitted to the financial aid office by the student and/or family, often required before federal funds may be made available to the student.

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