Common student loan terms defined
Student loans can be confusing, especially if you don't know what the common student loan terms mean. Chase wants to make your life easier by briefly defining some of the most-used student loan terms:*
Capitalized:
This occurs when unpaid interest is added to the principal balance. When interest on a student loan is capitalized, it increases the principal amount due on the student loan. Then, your unpaid interest is earning interest, which increases the amount you need to pay back. If you're responsible for paying the interest on your student loan as it accumulates, make sure you do or you could end up paying more than you expected.
Default:
You are considered in default on a student loan when you fail to repay the loan according to the terms you agreed to when you signed the promissory note. Some student loan programs have more specific loan default rules. If you default on a student loan, it may be reflected on your credit report and may lower your credit score. According to the Federal Trade Commission, your credit report can influence your purchasing power, as well as your opportunity to get a job, rent an apartment or buy insurance.
Deferment:
Deferment is a set time period when no student loan payments are required. Chase Select offers an in-school payment deferment option, which means that no payments are required while in school. Interest continues to accrue during the Chase Select Private Student Loan in-school deferment and will be added to the principal amount of your loan upon entering repayment, which will increase the total amount paid for the loan.
Forbearance:
Forbearance is a reduction or postponement of your student loan payments for a set period of time agreed to by your lender or loan servicer. This is an option when you can't meet your student loan repayment schedule and are not eligible for deferment. Interest still accumulates during forbearance if it is not paid as it accrues, and will be added to the principal amount of your loan, which will increase the total amount paid for the loan.
Grace period:
This is the period of time (usually six months) between your graduation or when you leave school or drop below half-time enrollment and when your student loan payments are due.
Interest:
Interest is the percentage charged to you by your lender for funding your student loan. It's calculated based on your unpaid loan amount, which may include unpaid interest that has been capitalized.
Principal:
The total amount of money that makes up your student loan is known as the principal. Interest is charged on this amount.
To find a student loan that fits your needs, visit ChaseStudentLoans.com.
*Important Information: As you determine the best way to finance your education, you should consider the full range of student financial aid options available. Private loans, like the Chase SelectSM Private Student Loan, can be used when federal loans, grants and other forms of financial aid are not sufficient to cover the full cost of attendance.
This information was current as of 06/30/2010 and is subject to change. Contact Chase for the most up-to-date terms.
