Loan Repayment

  • When do I begin repayment on my Federal Direct Student loan?

    Your loan will enter repayment six months after you graduate or if you drop below a half time status. Typically, a student who is taking 6 or more credits is considered at least half-time. It is important to check the enrollment status requirements at your school to be certain you are enrolled at least half-time.
  • What happens to my Federal Direct loan if I do not attend school at least half-time?

    What happens to my Federal Direct loan if I do not attend school at least half-time? The government pays the interest on a Federal Direct Subsidized Loan as long as you are enrolled in school at least half-time. If you drop below half time status, your six-month grace period will begin. During the grace period, you will not have to make loan payments. Federal Direct Subsidized loans that were first disbursed on or after July 1st, 2012 and before July 1st, 2014 were not eligible for the interest rate subsidy during the 6 month grace period. Effective July 1st, 2014 for Federal Direct Subsidized loans disbursed on or after July 1st, 2014, this interest subsidy has been reinstated. This means that the interest on these loans will start to accrue after the six month grace period, not during. If you resume to over half-time enrollment status within the six month grace period window, your grace period will be reset to six months to begin the next time you fall below a half time status. If you do not resume at least half-time during this period, your loan will go into repayment at the end of the six month grace period. It is important to check the enrollment status requirements at your school to be certain you are enrolled at least half-time.
  • What are my repayment options?

    You may prepay your loan at any time without penalty. You may be able to structure your repayment plan to fit with your financial situation. To inquire about the best payment plan for you, contact your lender or loan servicer. Four common repayment options are: A standard plan whereby you pay a fixed amount each month for ten years. A graduated plan whereby you pay more over time. An extended plan whereby you extend the time it takes to repay a loan. This option is often reserved for students with significant debt loads. An income-based repayment (IBR) plan whereby your monthly payment amount is capped at 15% of your discretionary income. To be eligible for IBR, you must demonstrate partial financial hardship. Borrowers who have not repaid their entire loan balance after 25 years may be eligible for loan forgiveness, which means the federal government will cancel the remaining loan balance. For more information about repayment plans please visit the Department of Education website at:www.studentaid.ed.gov/repay-loans
  • What is an Income-Based Repayment Plan?

    An Income-Based Repayment plan (IBR) is a repayment option for federal student loan borrowers. Under IBR, your student loan payments are intended to be affordable based on your income and family size. IBR caps your monthly payment amount at 15% of your discretionary income. To be eligible for IBR, you must demonstrate partial financial hardship.
  • What is the repayment period under an Income-Based Repayment Plan?

    For borrowers who have outstanding loans with loan periods prior to July 1st 2014, the maximum repayment period under the Income Based Repayment plan (IBR) is 25 years. For new borrowers after July 1st, 2014 who do not have any outstanding loans with periods prior to July 1st, 2014 the maximum repayment period is 20 years. Borrowers who have not repaid their entire loan balance after the maximum repayment period may be eligible for loan forgiveness, which means the federal government will cancel the remaining loan balance. If you are currently in repayment and wish to speak to someone about possibly changing your repayment plan to the IBR plan, contact your current servicer. For more information about repayment plans please visit the Department of Education website at: studentaid.ed.gov/sites/default/files/income-driven-repayment.pdf
  • What percentage of my post-college income should I plan to pay toward my loans?

    As a general rule, it is recommended that you aim to pay at most 10-12% of your pre-tax salary on your loan debt. Everyone's situation is unique, so the important thing is to be prudent about your debt and spend wisely.
  • Do you have any suggestions for what I should be doing now to prepare myself for repaying my loans?

    Make interest payments Try to make interest payments on your Federal direct unsubsidized Loan while you are in-school, during your 6 month grace period and during times of approved deferments and forbearances. Remember any unpaid interest will be capitalized and increase the total cost of your loan. • Prepare a realistic budget and stick to it. • Contact your lender or servicer if you have not received repayment information. If you are unsure who your servicer is go to www.nslds.ed.gov to locate this information. It is your responsibility to make your payments on time. • Open all of your mail Your lender may transfer or sell your loan. It is the responsibility of the lender to notify you if such a transaction occurs. This notification is usually communicated by mail.
  • When should I consolidate my federal loans?

    The answer to this question depends on your situation, interest rates, and the types of loans you have. To make an informed decision about consolidation, you should educate yourself about the pros and cons of doing so. Be aware that consolidation can help you manage your loans by giving you a single payment. It can also lower the amount you owe each month. However, you may also wind up paying more in interest in the long-run. If, on the other hand, you have high variable interest loans, and can consolidate to a lower, fixed interest loan, you will be able to save yourself money through lower interest payments. The key is to figure out what makes the most sense in your specific situation. To determine if this is a good idea, discuss the option with your financial aid administrator or your loan servicer.
  • What are my Stafford or Federal Direct Subsidized and/or Unsubsidized loan cancellation options?

    Your Stafford or Federal Direct Subsidized and/or Unsubsidized loan may be cancelled in the case of death or permanent disability. Documentation of your death or disability must be submitted to your lender.
  • What is Loan Forgiveness?

    In certain circumstances you may be eligible to apply for loan forgiveness. Loan forgiveness means that the federal government will cancel all or part of your Federal Direct Subsidized and/or Unsubsidized loan for: Performing volunteer work; Serving in the military Teaching or practicing medicine in certain types of communities; or, Meeting other criteria specified by the forgiveness program. To see if you are eligible for loan forgiveness, visit: www.studentaid.ed.gov/repay-loans/forgiveness-cancellation
  • What is Public Service Loan Forgiveness?

    If you borrowed a Direct Loan, or have consolidated your loans into a Direct Consolidation Loan, you may be eligible for Public Service Loan Forgiveness. Under this program, if you are employed full time in certain public service jobs and have made 120 payments on your student loan, any remaining debt you have on your loan may be forgiven. Only payments made on or after October 1, 2007 count toward the required 120 monthly payments. For more information on the Public Service Loan Forgiveness program, visit: www.studentaid.ed.gov/sites/default/files/public-service-loan-forgiveness.pdf
  • What happens if I default on a loan?

    Defaulting on a loan has very serious negative consequences. The following are some of the consequences you may face. Your loan may become due and you will have to pay off the entire amount. Your loan may be turned over to a collection agency and you may be responsible for collection costs. You will be ineligible for any more Financial Aid. Your credit score will be negatively affected. The IRS will be notified to intercept any refunds. Your wages may be garnished. You may be susceptible to litigation. You will lose the right to defer your loan payments. Your college may withhold academic transcripts. If you have difficulty making your loan payments, it is important to contact your servicer to discuss options to avoid potentially negative consequences which will adversely affect you.
  • If I default on a student loan, how can I fix it?

    If you are in default on a student loan, you are jeopardizing your financial health. Default will negatively affect your credit history, meaning you will pay more for credit in the future, and may be denied credit. It is important that you contact your loan servicer to discuss possible options. Keep a records of who you speak to including the date and time, the nature of your conversation, and any necessary action items. The servicer may be able to work with you to develop a more flexible payment plan to help you get out of default as quickly as is practically possible.
  • Are my parents responsible for paying back my student loans?

    No. Parents are not typically responsible for paying back educational loans taken out by their children. Students themselves are responsible for paying back their educational loans. Parents are responsible for paying back PLUS Loans which are loans the parents take out in their own name, and any loans they co-sign for students under 18 years old.
  • Can I get federal financial aid if I am in default on a student loan?

    No. If you are in default on a student loan, you are ineligible to receive federal financial aid.
  • Where can I find information about my loans?

    The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s central database for federal student aid records. NSLDS is available to answer questions about federal student loans and/or Pell Grants. Go to www.nslds.ed.gov for information on your loan amounts, outstanding balances, loan statuses, servicer information and disbursements. You may also contact the Federal Student Aid Information Center toll-free at (800) 4-FED-AID.
  • What happens to my loan if I move or change schools?

    As a Federal Loan borrower, it is your responsibility to notify your school and/or servicer of certain changes. You must notify your financial aid office if you: • Reduce your enrollment status to less than half time • Withdraw from school • Stop attending classes • Fail to re-enroll for any term • Change your expected graduation date • Change your name, local address, permanent address, or email address You must notify your school and/or servicer if you: • Change your address or telephone number • Change your name (for example, maiden name to married name) • Withdraw from school or begin attending less than half time • Transfer from one school to another • Change employer or employer’s address or telephone number changes • Have any other change in status that would affect your loan (for example, the loss of eligibility for an unemployment deferment by obtaining a job) Remember: It is your responsibility to repay your loan(s) on-time and to communicate any change in status to your financial aid office and servicer.