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| O-R | • Origination Fee - A fee the borrower pays to the lender for originating a student loan. These fees are most often associated with Stafford, PLUS and Federal Direct Student loans. 3% of the loan's principal balance is the maximum origination fee for these federal loans.
• Parent PLUS Loan - A federally guaranteed loan program that allows parents to borrow funds to help pay educational expenses. Parent PLUS Loan program does require the borrower to pass a simple credit check. The interest rate of the loan is variable, but new loans have a maximum interest rate of 9%.
• Past Due - Status that occurs if a monthly bill is still unpaid after its due date.
• Pell Grant - A need-based financial aid program funded by the federal government. The amount of the award depends on the student's enrollment level (full time, three-quarter time, etc.) and the cost of attendance.
• Perkins Loan - A low-interest federal loan program administered by a college or university, rather than a lender.
• Prepayment - Act of paying off a loan ahead of schedule.
• Prime Rate - The rate at which banks borrow money from each other. It is used as an index by variable-rate loan programs.
• Principal - The loan amount that must be repaid on maturity and the basis of how interest is charged.
• Private Loan - Also called alternative loans, private loans are non-government loans offered by banks, credit unions and other lenders. Private loans are not based on financial need, but rather on your creditworthiness and ability to repay. They can be used for a wide range of education purposes, including tuition, books, living expenses and computers, and are designed to supplement any federal aid that students receive.
• Promissory Note - The binding legal document you sign when you get a student loan. Promissory note lists the conditions under which you are borrowing and the terms under which you agree to pay back the loan. The document will include information about your interest rate and about deferment and cancellation provisions. It's highly recommended to read and save this document because you will need to refer to it later when you begin repaying your loan.
• Repayment Period - The time period when interest accrues on loans and principal payments need to be made. As for FFELP Loans, their repayment period excludes any period of authorized deferment or forbearance; however, interest will continue to accrue for both PLUS and unsubsidized Stafford Loans.
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