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Credit Repair Education     |      Personal Loans Education      |      Debt Reduction Education



Debt Reduction Education

1 - Your Debt2 - Your Budget3 - Reducing Your Debt4 - Debt Consolidation5 - Federal Student Loans6 - Avoiding Debt7 - Resources





  1. Acceleration Clause - A provision in a loan agreement that allows a lender to demand payment in full when the borrower does not meet the terms of the agreement.
  2. Accrued Interest - Interest that accumulates over time on a loan that's owed.
  3. Annual Percentage Rate (APR) - The credit cost expressed in a yearly rate.  The Federal Truth in Lending Act requires that all credit card offers state the APR so that consumers understand the cost of using the credit card and so they can compare rates.
  4. Balloon Payment - The final payment on a loan that is substantially larger than previous payments.
  5. Borrower - Person responsible for repaying a loan who has signed and agreed to the terms in the promissory note.
  6. Cash Advance - Cash obtained from a credit card.
  7. Capitalization - Adding unpaid interest to the loan principal. Capitalization increases the principal amount of the loan and its total cost.
  8. Closed-End Credit - A loan that must be repaid by making fixed payments over a specified period of time.
  9. Collection Agency - A company that collects past due debt for other companies or individuals.  Collection Agencies are normally paid by receiving a percentage of money they collect for their clients.
  10. Collateral - Assets used as security for a secured debt.  If the debt isn't paid the creditor can take the collateral as payment.
  11. Cosigner - Someone who signs a loan agreement so if the main borrower doesn't pay back the loan, the cosigner is equally responsible.
  12. Credit Agreement - A contractual agreement between a lender and a borrower that details the amount loaned, the interest rate and terms of payment.
  13. Default - Failure to repay a loan according to the terms of the promissory note. This failure must persist for 270 days.
  14. Deferment - A postponement of payment on a loan that is allowed under certain conditions and during which interest does not accrue for subsidized loans.
  15. Dependent student - A student who does not meet any of the criteria for an independent student (see below).
  16. Disbursement - A payment of loan money to the student or parent borrower.
  17. Discharge - The release of a borrower from the obligation to repay his or her loan.
  18. Direct Loan Program - The William D. Ford Federal Direct Loan Program provides loans to student and parent borrowers directly through the U.S. Department of Education rather than through a bank or other lender.
  19. Direct Loan Servicing Center - The U.S. Department of Education's agent contracted to collect Direct Loans and handle deferments, repayment options, and consolidation.
  20. Direct Subsidized Stafford Loan - A loan for students with financial need as determined by federal regulations. No interest is charged while you are in school at least half-time, during your grace period, and during deferment periods.
  21. Direct Unsubsidized Stafford Loan - A student loan that is not based on financial need. Interest is charged during all periods.
  22. Expected Family Contribution (EFC) - The EFC is a measure of the financial strength of a student's family. The U.S. Department of Education calculates a student's EFC based on information provided on the Free Application for Federal Student Aid (FAFSA).
  23. Forbearance - A postponement of payment on a loan, typically if the borrower doesn't qualify for a deferment and is unable to make payments for a reason such as poor health. Interest continues to accrue during forbearance.
  24. Grace period - A six-month period before the first payment must be made on a subsidized or unsubsidized Stafford loan. The grace period begins the day after the borrower ceases to be enrolled at least half time.
  25. Independent student - A student who is at least 24 years old, married, a graduate or professional student, a veteran or on active duty in the military for other than training or state purposes, an orphan, a ward of the court, or who has legal dependents other than a spouse.
  26. Interest - An expense of borrowing money that is calculated as a percentage of the amount borrowed.
  27. Loan - Money borrowed that must be repaid.
  28. Loan fee - An expense of borrowing deducted proportionately from each loan disbursement.
  29. Principal balance - The amount owed on a loan, which includes any capitalized interest.
  30. Promissory note - A legally binding contract between a lender and a borrower. The promissory note contains the terms and conditions of the loan, including how and when the loan must be repaid.
  31. Repayment period - The period during which a borrower is obligated to make payments on his or her loan(s).
  32. Repayment schedule - A statement provided by the Direct Loan Servicing Center to the borrower that lists the amount borrowed, the amount of monthly payments, and the date payments are due.
  33. Variable interest - Rate of interest on a loan that is tied to a stated index and changes annually every July 1 as the index changes.


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