How a loan account is structured
- Separate principal, interest, fees, and terms
- Identify account-level and loan-level data
Principal is the unpaid amount borrowed, adjusted by principal payments, reversals, disbursements, and any permitted capitalization. Accrued interest is interest earned under the loan terms but not yet paid or capitalized. Fees, where permitted, are separate charges. Loan terms include the rate, repayment period, payment requirements, due dates, and rights established by the note and governing program. One borrower account can contain multiple loans. Each loan can have its own type, rate, principal, accrued interest, status, and promissory-note relationship. Account totals are useful summaries, but servicing decisions often must be made at loan level.
A borrower account totals $21,350: Loan A has $10,000 principal and $350 accrued interest; Loan B has $11,000 principal and no accrued interest. A $21,350 account balance does not mean the two loans share one rate or status.
Accurate service begins by identifying which balance, term, loan type, and borrower obligation a question concerns.