10 Student Loan Terms Explained

Student Loans 101

When it comes to paying for college, student loans are a crucial part of the financial equation for millions of Americans who might not be able to afford tuition on their own. According to the College Board, tuition and fees for public four-year colleges in the 2011-2012 academic year cost $8,244 for in-state students and $12,526 for out-of-state students on average, and private nonprofit four-year colleges cost $28,500 on average in tuition and fees this academic year. Multiply these numbers by four and you’ll get an idea of just how much damage earning that diploma can do to your bank account. Understanding the ins and outs of student loans isn’t always easy, though, especially because of all the jargon associated with them. And if you’re confused by these terms, you’re not alone: The Consumer Financial Protection Bureau recently issued a press release reporting the feedback it received on its “Financial Aid Shopping Sheet” prototype, a financial aid disclosure form intended to make the costs and risks of student loans clear before students have enrolled. The CFPB found that an “overwhelming number” of people requested a section to review key terms – which indicates that the public is in need of more clarity when it comes to student loan terminology. With that in mind, MainStreet spoke to financial experts to help define 10 student loan terms we think every borrower should know in language the average person can understand. We also tell you where you can expect to see these terms come up along the student loan process. Read on for the full list. Photo Credit: Getty Images