Glossary beginning with D

d
Default

A loan is in default when the borrower fails to pay several regular installments on time (i.e., payments overdue by 180 days) or otherwise fails to meet the terms and conditions of the loan. If the student defaults on a loan, then the university, the holder of the loan, the state, and the federal government can take legal action to recover the money. This may include garnishing your wages and withholding income tax refunds. Defaulting on a government loan will make the student ineligible for future federal financial aid, unless a satisfactory repayment schedule is arranged, and can affect their credit rating.

Deferment

occurs when a borrower is allowed to postpone repaying the loan. If the student has a subsidized loan, the federal government pays the interest charges during the deferment period. If they have an unsubsidized loan, they are responsible for the interest that accrues during the deferment period. The student can still postpone paying the interest charges by capitalizing the interest, which increases the size of the loan. Most federal loan programs allow students to defer their loans while they are in school at least halftime. If they do not qualify for a deferment, they may be able to get a Forbearance. Students cannot get a deferment if their loan is in default.

Delinquent

If the borrower fails to make a payment on time, the borrower is considered delinquent and late fees may be charged. If the borrower misses several payments, the loan goes into Default.

Dependency Status

An independent student is one who is at least 24 years old during that academic year, is legally married, is a graduate or professional student, has a legal dependent other than a spouse, is a veteran of the US Armed Forces, is currently serving on active duty in the US Armed Forces for purposes other than training, has children, is an orphan, was in foster care, were a dependent or ward of the court, are or were an emancipated minor, are or were in legal guardianship, or have been determined to be homeless. All other students are considered dependent which means parental information must be provided on the FAFSA. If the financial aid administrator believes that a student is not an independent student, they can require them to provide proof of independent status to qualify. Their decision of the student’s status is generally not subject to appeal. A parent refusing to provide support for their child’s education is not sufficient for the child to be declared independent.

If you believe you have special circumstances, please contact your financial aid administrator for information about the appeal process. They may be able to do an override of your dependency status on the FAFSA, if warranted by involuntary dissolution of the family or other very unusual situations. Typical dependency override situations include abuse, abandonment and/or neglect in the family structure. The student will need to provide proof of their situation and document by professional references.

Students do not qualify for independent status just because their parents have decided to not claim them as an exemption on their tax returns or are refusing to provide support for their college education.

Dependent

See Dependency Status.

Direct Lending

The William D. Ford Federal Direct Loan Program is a new federal program where the school becomes the lending agency and manages the funds directly, with the federal government providing the loan funds. Not all schools currently participate in this program. Benefits of the program include a faster turn-around time and less bureaucracy than the old "bank loan" program. The terms for Direct Loans are the same as for the Stafford Loan program. For more information about Direct Loans, contact the Direct Loan Servicing Center at 1-800-848-0979.

Disbursement

Disbursement is the release of loan funds to the school for delivery to the borrower. The payment will be made co-payable to the student and the school. Loan funds are first credited to the student's account for payment of tuition and fees. Any excess funds are then paid to the student in cash or by check for the purpose of paying for other educational expenses.

Discharge

To discharge a loan is to release the borrower from his or her obligation to repay the loan.

Disclosure Statement

Lenders are required to provide the borrower with a disclosure statement before issuing a loan. The disclosure statement provides the borrower with information about the actual cost of the loan, including the interest rate, origination, insurance, and loan fees, and any other kinds of finance charges.

Doctorate

One of several degrees granted by graduate schools.