Student loan terms, in plain English.

Capitalization adds unpaid accrued interest to principal; later interest then accrues on the higher principal balance, which can increase the total cost of a loan. Edfinancial: interest and capitalization

For federal loans, whether and when interest can capitalize depends on the applicable loan and repayment rules; Edfinancial lists certain events, including the end of some grace, deferment, or forbearance periods. Edfinancial: interest and capitalization

For private loans, the loan agreement and lender terms determine how unpaid interest is capitalized. Edfinancial: interest and capitalizationSallie Mae: private student loans

Under IBR, the federal government may cover 100% of remaining monthly interest for the first three consecutive years when a borrower has qualifying subsidized loans and the IBR payment does not cover all interest due. Edfinancial: Income-Based Repayment

IDR is a group of federal repayment plans that set monthly payments using factors such as income and family size or dependents, rather than only the amount owed. Edfinancial: IDR information centerFederal Student Aid: current IDR FAQsFederal Student Aid: repayment comparison

Edfinancial also describes IDR payments as depending on federal student loan debt and the plan for which the loan qualifies. Edfinancial: IDR information centerSallie Mae: private student loans

Which plans a borrower can use depends on federal loan type and when the loans were first disbursed; check current eligibility against the loan record before relying on a plan description. Federal Student Aid: current IDR FAQsFederal Student Aid: repayment comparison

The current Federal Student Aid guidance says borrowers whose loans were all disbursed on or after July 1, 2026, have RAP as their only IDR plan; Direct Parent PLUS loans and consolidations that repaid them are not RAP-eligible. Federal Student Aid: current IDR FAQs

IBR is available to Direct and FFEL borrowers; the supplied research snapshot lists Direct Subsidized and Unsubsidized Loans, Subsidized and Unsubsidized Federal Stafford Loans, PLUS loans made to students, and Direct or FFEL consolidation loans that did not repay Parent PLUS loans as eligible loan classes. Edfinancial: Income-Based Repayment

The same IBR source excludes Direct Parent PLUS loans, defaulted loans, and consolidation loans that repaid a Parent PLUS loan; current eligibility can also depend on loan type and disbursement date. Edfinancial: Income-Based RepaymentFederal Student Aid: current IDR FAQs

Edfinancial describes IBR payments as 10% or 15% of discretionary income, depending on when the borrower first received loans, capped at the amount due under the 10-year Standard Repayment Plan. Edfinancial: Income-Based Repayment

That IBR source defines discretionary income as adjusted gross income (AGI) minus 150% of the poverty-line amount for the borrower’s family size and state. Edfinancial: Income-Based Repayment

Federal Student Aid says IDR discharge may be available after a plan’s required repayment period when its conditions are met; the estimate or timeline is not a promise of discharge. Federal Student Aid: current IDR FAQsFederal Student Aid: repayment comparison

Private lenders are not required by law to offer income-driven repayment plans, so a private loan’s repayment options depend on its lender and contract. Sallie Mae: private student loans

The research snapshot says IDR payments are recertified annually and reports an IBR payment amount as valid for 12 months; Federal Student Aid currently requires annual recertification and shows each borrower’s own recertification date in their account. Edfinancial: Income-Based RepaymentFederal Student Aid: current IDR FAQs

The snapshot says borrowers may switch repayment plans; current Federal Student Aid forms describe changing to another plan for which the borrower is eligible, subject to current program rules. MOHELA: repayment optionsFederal Student Aid: IDR request form

The snapshot reports IBR forgiveness after 20 or 25 years, PAYE after 20 years, ICR after 25 years, and a 30-year term for a plan it labels “Revised Anticipated Payment (RAP).” Edfinancial: Income-Based RepaymentFederal Student Aid: repayment comparisonEdfinancial: IDR information center

Federal Student Aid currently calls RAP the Repayment Assistance Plan and lists a 30-year repayment period; it lists IBR at 20 years for new borrowers or 25 years otherwise, PAYE at 20 years, and ICR at 25 years when those plans apply. Federal Student Aid: current IDR FAQs

Federal Student Aid says PAYE and ICR will be retired no later than July 1, 2028, and that loan dates and types affect current plan eligibility. Federal Student Aid: current IDR FAQs

The research snapshot describes remaining-balance discharge as requiring the equivalent of 20–30 years of qualifying monthly payments and at least that much elapsed time; current discharge rules depend on the plan and qualifying history, so the range is not a guarantee. Edfinancial: IDR information centerFederal Student Aid: repayment comparisonFederal Student Aid: current IDR FAQs

Interest is the cost charged for borrowing; Edfinancial says most federal student loans use simple interest, calculated on principal rather than on previously accrued interest. Edfinancial: interest and capitalizationSallie Mae: private student loans

For the federal simple-interest method described by Edfinancial, the daily estimate is (Current Principal Balance × Interest Rate) ÷ 365.25 = Daily Interest. Edfinancial: interest and capitalization

Interest may accrue while a payment is not due, including in-school, grace, deferment, or forbearance periods; subsidies and loan-specific rules can change who is responsible for that interest. Edfinancial: interest and capitalizationSallie Mae: private student loans

Private loan rates may be fixed or variable, and the rate and interest treatment during deferment depend on the lender’s offer and loan agreement. Sallie Mae: private student loansSallie Mae: student loan refinancingSallie Mae: when repayment starts

Principal is the current amount of loan balance on which interest is calculated; it changes as principal is repaid or unpaid interest is capitalized. Edfinancial: interest and capitalizationSallie Mae: private student loans

Interest can accrue while no payment is required, so the amount owed may grow even when a borrower is not making payments; the effect depends on loan type and applicable subsidies or lender terms. Edfinancial: interest and capitalizationSallie Mae: private student loansSallie Mae: when repayment starts

PSLF may forgive a remaining balance on eligible Direct Loans after 120 qualifying monthly payments while the borrower works full time for an eligible public-service employer; private loans are not PSLF-eligible. Federal Student Aid: source-dated PSLF borrower letterFederal Student Aid: current PSLF guidanceSallie Mae: when repayment starts

The source-dated borrower letter says qualifying loans are Direct Loans and gives federal, state, or local government employers and 501(c)(3) tax-exempt nonprofits as examples; check the current Federal Student Aid employer search for a specific employer. Federal Student Aid: source-dated PSLF borrower letterFederal Student Aid: current PSLF guidance

That borrower letter defines PSLF full time as meeting the employer’s full-time definition with an annual average of at least 30 hours per week. Federal Student Aid: source-dated PSLF borrower letterFederal Student Aid: current PSLF guidance

The older letter describes an on-time payment as received within 15 days after its scheduled due date and a full payment as at least the scheduled amount; current Federal Student Aid guidance generally requires the full amount on or before the due date, with specific rules for RAP loans disbursed on or after July 1, 2026. Federal Student Aid: source-dated PSLF borrower letterFederal Student Aid: current PSLF guidance

The older letter recommends employment certification each year or when changing jobs to track progress, while explaining that periodic submission is not required; Federal Student Aid currently uses its PSLF form and Help Tool to confirm qualifying employment and payment counts. Federal Student Aid: source-dated PSLF borrower letterFederal Student Aid: current PSLF guidance

These requirements are conditional and may change; reaching 120 payments alone does not guarantee forgiveness unless all current loan, payment, employer, and application requirements are met. Federal Student Aid: source-dated PSLF borrower letterFederal Student Aid: current PSLF guidance

The supplied research snapshot reports Sallie Mae’s statement that the federal government does not refinance its own loans; this is a private-servicer description, not an official Federal Student Aid definition of federal refinancing. Sallie Mae: student loan refinancingFederal Student Aid: Direct Consolidation

Federal Direct Consolidation combines eligible federal loans into a new federal Direct Consolidation Loan; CFPB describes this separately from replacing debt with a private loan. Federal Student Aid: Direct ConsolidationCFPB: consolidate or refinance?

Private refinancing replaces one or more existing loans with a new private loan from a lender; a private lender may consider federal or private debt, but the new loan is governed by private terms. CFPB: consolidate or refinance?Sallie Mae: student loan refinancingSallie Mae: private student loans

A private refinance offer does not guarantee a lower rate or monthly payment; the offer and total cost depend on lender approval, rate, fees, and repayment term. CFPB: consolidate or refinance?Sallie Mae: student loan refinancingSallie Mae: when repayment starts

Replacing federal debt with a private loan can remove federal repayment choices, IDR options, and forgiveness protections, and CFPB warns that the change cannot be reversed. CFPB: consolidate or refinance?Sallie Mae: student loan refinancingSallie Mae: private student loans

The research snapshot did not find an official federal definition of refinancing, so this glossary keeps Federal Direct Consolidation separate from a private refinance and does not treat them as interchangeable. Federal Student Aid: Direct ConsolidationCFPB: consolidate or refinance?