6 Useful Terms to Know for Taking Student Loans


Do you want to opt for a student loan? If your answer is yes, you must make a study of the common terms used in the procedure. Otherwise, you may fall prey to the deceitful practices of some of the unethical people in the field.

Let us take a look at some such terms.

# Academic Years

This describes the academic work you are expected to complete every year and the time you are supposed to complete, as per the policies of your school or college, as well as the educational programs you enroll in.



Half years do not include the summer sessions and usually, fall within a year’s (12-month) span. For those schools that come, with a year-round program; a 9-month span forms the academic year.

# Adjusted Gross Income (AGI)

When the collective salary of your family’s and your salaries, wages, dividends, interest, etc., is deducted from income, it is called the Adjusted Gross Income (AGI). The income is shown on a federal income tax return.

# Adverse Credit History

The gist of your financial aptitude, which comprises of your capability to repay loans in the future and your bill paying records, is referred to as the adverse credit history. In order to make sure that you are eligible for a PLUS loan, you need to get rid of your negative credit history. If you say yes for any of the below-mentioned conditions, you may have an adverse record.

  • You surrender your personal property for avoiding repossession in the last 5 years
  • Bankruptcy discharge in the previous 5 years
  • Foreclosure in the past 5 years
  • Foreclosure processes have begun
  • Collateral repossession in the past 5 years
  • Passing on your actual property (if it is under a mortgage by deed) to your lender for getting rid of foreclosure (deed in exchange of foreclosure)
  • Collection accounts not paid
  • Account is illegal for the last 90 days
  • Wage garnishment in the past 5 years
  • Federal student loans are written off/charged off
  • Contract or lease ended by default
  • Loan defaulting, in spite of claim being paid
  • State/ County/ Federal tax lien in the last 5 years

# Award Amount

The award amount is basically the financial aid that a school should pay, as per the student’s loan eligibility & current grant, EFC (Expected Family Contribution), enrollment and the cost of attendance of the school.

If you wish to know how much award amount you ought to get, you may visit http://libertylending.com/ or call the experts to know about the details.

# Award Year

The year at school when a candidate receives financial support for education is the award year. In most cases, this occurs on 1st July for a 1 year (12 months) period and lasts until 30th June of the next year.

# Capitalization

When the unpaid interest is added to the principal loan balance, it is known as capitalization. It happens when you cannot pay the interest due to still being in school, deferment, the grace period or forbearance. As a result of capitalization, the total repayment amount increases.

An idea of the aforementioned terms can help you gain an insight into the student loan procedure. They will also help in protecting you from immoral loan providers.