Common Loan Terminology

Capitalization – This occurs when accrued interest is added onto the principal amount of your loan, increasing the overall amount that you will need to pay back.  Theoretically, this equals to interest being paid on interest.

Deferment – A postponement of payment on a loan.  Depending on the type of loan, interest may or may not accrue during this period.  Ex. Students enrolled at least half-time in a qualifying degree program are not required to make any loan payments while attending school. This is called In-School Deferment.

Forbearance – A temporary postponement of payment of a loan. In order to qualify, you must provide documentation and meet the eligibility requirements. You will not be required to make any payments during forbearance, however, interest will continue accruing on your loans. Forbearance availability and options vary by loan type.

Entrance Counseling: If you are receiving Federal loans, you must complete entrance counseling online at https://studentaid.gov to ensure that you understand the responsibilities and obligations you are assuming when accepting these loans.

Origination Fee: A fee charged by a lender when a student loan is created or originated. This fee is charged up-front and comes directly off the awarded amount of the loan.  For federal loans, this fee is charged each time a loan disburses to your student account.

Interest rate: the percentage at which interest is calculated on your loan.

Lender: the organization that made the loan initially (US. Dept. of Education, Tufts University, or Private Lender).

Loan Servicer: is the company contracted by your lender to oversee the loan repayment process. This means they collect all loan payments, sends interest statements, and provides customer service on behalf of your lender. To find out your Federal loan servicer, go to https://studentaid.gov. For Students who borrowed Tufts Loan, HPSL or LDS, the Loan Servicer is https://www.uasconnect.com/.

Master Promissory Note: or MPN is the legally binding contract that you sign where you promise to pay back the loan you have borrowed and any accrued interest.

Grace Period: A period after graduation or after you leave school or drop below half-time enrollment where you are not required to make payments on your loans.