Glossary - i

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In-School

The status of a borrower, which is defined as beginning on the date on which the borrower is enrolled on at least a half-time basis and continuing until the borrower terminates enrollment on at least a half-time basis at a participating school.

Income

The amount of money received from employment (salary, wages, and tips), profit from financial instruments (interest, dividends, capital gains), or other sources (welfare, disability, child support, Social Security, and pensions).

Independent Student

A student who is either married, 24 years of age or older, enrolled in a graduate or professional education program, has legal dependents other than a spouse, is an orphan or ward of the court, or a veteran of the U.S. Armed Forces.

Indirect Costs

All the non-tuition-related costs associated with attending college, including room, board, transportation, medical, and personal expenses.

Interest

Interest is an amount charged to the borrower for the privilege of using the lender's money. Interest is usually calculated as a percentage of the principal. The percentage rate may be fixed for the life of the loan, or it may be variable, depending on the terms of the loan. All new Federal Stafford and PLUS loans use variable interest rates that are tied to the rates for federal treasury bills.

Interest Capitalization

Addition of unpaid interest to the principal balance of a loan, which increases the total outstanding balance due.

Interest Subsidy

Interest the federal government pays on certain loans while borrowers are in school, during authorized deferment, or during grace periods.

Interest-Only Payment

A payment that covers only accrued interest owed on a loan and none of the principal balance. Interest-only payments do not prohibit borrowers from making additional or larger payments at any time if the borrower desires.