Tools Library


Tools Library

Terms and Definitions

ACH: Automated Clearing House

The Automated Clearing House (ACH) Network is a highly reliable, efficient nationwide, batch-oriented, electronic funds transfer system governed by the National Automated Clearing House Association (NACHA) Operating Rules, which provide for the inter-bank clearing of electronic payments for participating depository financial institutions. The Federal Reserve and Electronic Payments Network act as ACH Operators, central clearing facilities through which financial institutions transmit or receive ACH entries.

Account Number

A Cornell ID number will identify borrowers in the student loan billing system. Borrowers must include his or her ID number on all correspondence sent to ECSI.


The date on which interest charges on an educational loan begin to accumulate (or accrue). Cornell loan interest accrues monthly, other lenders have a daily interest accrual.

Automatic Withdrawal Plan

The option to have loan payments deducted from a checking account electronically via ECSI, instead of having to mail payment.


The person who has signed and agreed to the terms in the promissory note and is responsible for repaying the loan.


Students who qualify for cancellation of their student loans (see your promissory note for specific eligibility requirements) must submit a completed cancellation form with the necessary verification to the ECSI for postponement of payments. Partial cancellation is granted annually, after the borrower has completed one full year of service as outlined in the promissory note. Once a year of service has been completed, the borrower must submit a cancellation form verifying the completed a year of service in order for the appropriate percentage of outstanding principal balance to be canceled.


Combining several federal student loans into one loan with a single lender. The consolidation lender pays off the balances on the other loans, giving the borrower the convenience of one monthly payment. Consolidating may or may not be advantageous. Borrowers should consider interest rates and deferments.

Credit Reporting

Student loans are reported monthly to all four national credit bureaus. Just as late payments are reported, a late deferment or special arrangement form that is late will also result in being reported late.


A condition caused when a borrower fails to meet his or her responsibilities in loan repayment. This appears on a borrower's credit file for up to seven years. To avoid default, borrowers must stay in contact with lender(s), and maintain special arrangements when regular payment cannot be made.


A delay in loan repayment granted to borrowers engaged in certain qualifying activities (e.g., schooling, military service). By submitting a deferment form, payments on student loans may be postponed for up to a year. Deferment provisions for each type of loan are listed in the promissory notes. The provisions vary not only according to the loan program, but also according to the date when the loan note was signed. Borrowers may have two or more loans under the same program with different deferment provisions.


A condition caused by late or missed loan payments, deferment forms, and special payment arrangements, as specified in the terms of the promissory note.

Economic Hardship/Hardship Deferment

A condition that occurs when a borrower is under-employed, or monthly gross income is below the poverty line. With some loans, the borrower may be required to pay the monthly interest.

Exit Interview

An online information session for borrowers that is required by Federal Regulations to explain to the borrower the rights and responsibilities for the student loans he or she received.


A special, temporary signed payment arrangement for an amount other than the regular monthly payment. Typically used when a borrower doesn't qualify for a deferment.


Certain programs require a borrower to be enrolled full-time as a regular student. A "regular" student is one who is enrolled for the purpose of obtaining a degree. For undergraduate students, this is at least 12 credits, for graduate students, it is at least nine credits.

Grace Period

The time between leaving school and the date a borrower must begin repayment of a student loan. The period begins when a borrower is no longer enrolled as a student, whether or not he or she has graduated. Borrowers will receive a notice during the grace period that indicates the due date of the first payment. On some university loans, interest accrues during the grace period (please consult the loan note). Interest on those loans is billed during the grace period.


The agency or institution that ensures, up to permissible limits, against any loss to lenders in the event of default.


At least six credits for undergraduate students and five credits for graduate students.

Interest Rate

The annual percentage of the loan amount that is charged for its use. This rate appears on the loan note and in repayment information.


An institution that provides the money to be borrowed through a student loan program.

Loan Fund

The source of the money used to issue a student loan. Some loan funds have more than one loan type based on when the loan was issued, and what interest rate will apply during repayment. Each loan type is identified on a billing statement by the name of the loan fund.

Loan Servicer

A company or institution that administers the loan and collects loan payments. May be either the loan holder or an agent acting on behalf of the holder. Cornell's loan service provider is ECSI.

National Student Clearinghouse

A national database that lenders, loan service providers, guaranty agencies, schools, and students can access to verify student enrollment and degree information.

Payments in Advance

Payments made against future installments that are applied to an account as if each were received on its due date. Payments in advance must be made in multiples of the normal monthly installment amount and must be accompanied by a letter from the borrower specifying which payments are being made. If we do not receive specific instructions in writing telling us to apply payments as payments in advance, they will be applied as prepayments and another payment will be due the following month.

For more information about installments, see "Repayment Schedule," below.

Permanent Total Disability

To be considered totally and permanently disabled, the borrower must be unable to engage in any substantially gainful activity because of a medically determinable impairment that is expected to continue for a long and indefinite period of time, or that will result in death.


A period of time during which the borrower is not billed for accruing loan principal and interest, which would be eligible for deferment or cancellation at the end of the eligible academic/employment/service year.


Accelerated repayments of the principal of the loan, typically made to realize a savings on interest. There are no penalties for prepaying. If a loan is repaid in full before the expiration of its grace period, no interest is charged (except on certain university loans). Payments in excess of regularly scheduled amounts are applied to the principal balance as prepayments. Unless the prepayment repays the loan in full, the next payment will be due the next month.

Principal Balance

The outstanding amount of the loan on which the lender charges interest. As the loan is repaid, a portion of each payment is used to satisfy interest that has accrued, and the remainder of the payment is applied to the outstanding principal balance.

Promissory Note

A legal contract requiring a borrower to repay a loan. When a borrower signs a promissory note, the borrower agrees to repay the amount borrowed under the terms outlined in the promissory note. Repayment follows the grace period or deferment period that begins after a borrower leaves school or drops below half-time status, even if the degree program is not finished.

Repayment Schedule

A statement provided by the lender or loan service provider that lists the amount borrowed, the monthly payments, the amount due to principal and interest, and the date payments are due.

Temporary Total Disability

A borrower is temporarily, totally disabled if he or she, by reason of injury or illness, cannot be expected to attend an eligible institution or to be gainfully employed during a reasonable period of recovery form such injury or illness. A spouse is temporarily, totally disabled if he or she, by reason of illness or injury, cannot be expected to be gainfully employed and requires continuous nursing or other similar services during a reasonable period of recovery from such illness.