Gap - A period during the servicing of a loan in repayment when due diligence activities are required by regulations but no due diligence activities (collection activities) are performed. For a loan serviced under regulations published December 18, 1992, a gap greater than 45 days (greater than 60 days in the case of a transfer) results in the loss of the loan's guarantee. Previously, the term "gap" was defined in Appendix D of 34 CFR 682, and was applicable to loans serviced under due diligence provisions published November 10, 1986. For loans serviced under these "old" due diligence provisions, a gap in due diligence activities did not result in a loss of the loan's guarantee unless the lender had committed a violation of at least one due diligence requirement.

Grace Period - The time period after graduation during which the borrower is not required to begin repaying a student loan; six months on Stafford loans and nine months on Perkins loans; no grace period on PLUS loans.

Grade Level - A student's academic class level, as provided by a school official on the student's application and promissory note. Undergraduate students are 01 (freshman/first year) through 05 (fifth year/other undergraduate); graduate and professional students are A (first year) through D (fourth year and beyond).

Graduate or Professional Student - A student who, is enrolled in a program or course above the baccalaureate level at an institution of higher education, or enrolled in a program leading to a first professional degree. Has completed the equivalent of at least three years of full-time study at an institution of higher education, either before entrance into the program or as part of the program itself and is not receiving Title IV aid as an undergraduate student for the same period of enrollment.

Graduated Repayment Schedule - A repayment schedule under which the amount of the borrower's installment payment is scheduled to change (usually by increasing in two or more increments) during the course of the repayment period. The Graduated Repayment Schedule cannot exceed 10 years, excluding in-school, grace, deferment, or forbearance periods.

Grants - Financial aid awards that do not have to be repaid, available through the federal government, state agencies and colleges.

Guarantee - A conditional legal obligation, as defined in an agreement by and between a guarantor and a lender, for the guarantor to reimburse the lender for some portion of a FFELP loan that is not repaid by the borrower due to default, death, disability, bankruptcy, borrower ineligibility, false certification of borrower eligibility, or school closure.

Guarantee Disclosure - The form used by the guarantor that serves as evidence that the loan identified on the form has been insured (guaranteed) against loss due to the borrower's default, death, disability, bankruptcy, false certification of the loan's application, or closing of the school while the borrower was enrolled. The form also provides relevant financial data, including the loan amount, interest rate, guarantee fee, origination fee (if applicable), and projected maturity date. Some lenders use their own forms; others use a guarantor's form.

Guarantee Fee - A fee charged by a guarantor for each loan it guarantees. In most cases, the lender reduces the amount of the loan proceeds by this amount, and the fee is remitted to the guarantor. The Higher Education Act limits this fee to no more than one percent of the principal.

Guarantor (or Guaranty Agency) - A state or private nonprofit organization that has an agreement with the U.S. Secretary of Education to administer a loan guarantee program under the Higher Education Act.

Guaranty Agency - See Guarantor