Default
To default on a loan is to miss several scheduled payments in a row, usually three or more before default technically occurs. If a borrower defaults on a student loan, the school, the government, and the lender will have the right to pursue legal action against the borrower. These actions include wage garnishment, withholding of income tax refunds, ineligibility for government employment, and court judgments.
Deferment
The deferment period is the time period after you‘ve taken out the student loan, but before you‘re required to start making payments on it. Normally, as long as you‘re in school at least half time, you can defer repayment until several months after graduation. However, if your loan is unsubsidized, interest will begin accruing immediately. The interest will be added to your principal which must be repaid.
Delinquent
Being late with a payment by more than the grace period will cause a borrower to be considered delinquent, which will hurt their credit rating, and they will probably be charged late fees. If a borrower misses several payments, it will cause the loan to go into default.
Dependency Status
Whether or not a student is financially independent and self supporting, or depends on parents or guardians for financial support.
Dependent
A child or step child who receives at least half of their financial support from a parent or guardian.
Direct Loans
Student loans that come directly from the government, instead of simply being guaranteed by the government. Direct loans mean that the federal government actually loans the student the money and administers the program, as opposed to loans through third parties where the colleges and lenders administer the loans.
Disbursement
Disbursement is when the loan money is actually given to the school for use by the student. Loans are made out in the name of both parties, the school and the student. Fees, tuition, room and board are paid first, and if there’s any surplus, the school will write a check to the student for the difference. Loans above $500 are disbursed in two installments.
Discharge
This means the same thing as Cancellation-if a loan is discharged, the borrower is no longer obligated to repay the loan.
Disclosure Statement
It is a form that all lenders must provide to borrowers before issuance of a loan, and it includes all the terms and conditions, such as amount, interest rate, bank fees, repayment information, etc.
Discretionary Net Worth
This is the portion of a family’s net worth that they’re expected to contribute to paying for their child’s college. The amount ranges greatly by income. Such families which have incomes below $50,000 which is earned from employment aren’t expected to contribute any of their net worth. Families having essential income and assets can be expected to contribute well over ten thousand dollars a year, depending on other factors.
Doctorate
The highest degree granted by college and university graduate schools. For example, the MD (medical doctor), JD (juris doctor, for lawyers), and PhD (doctor of philosophy) in various programs.
Due Diligence
The federal government guarantees lenders that the student loans they make will be repaid. But a creditor can’t simply report to the government that a borrower has quit paying, and expect the government to pay up. Lenders must first make good faith efforts to contact the borrower and attempt to collect payment. This is due diligence.
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