Financial Aid Overview

Managing Your Student Loan

Your student loan helps you get a college education or technical training. With a loan, however, come responsibilities.

Reporting Changes

Avoid problems by immediately notifying your lender and current school in writing if you:

• Change your address or telephone number. Filing an address change with the post office isn't enough.
• Change your name.
• Transfer to a new school.
• Drop below half-time enrollment, withdraw or graduate.
• Change your anticipated graduation date.

Key Points

• ALWAYS keep copies of all correspondence relating to your loans for future reference.
• You can check your student loan balance online at The National Student Loan Data System.

Take advantage of opportunities that may be available to you through:

• Repayment.
• Deferment.
• Forbearance.
• Consolidation.

Repayment

You should remember that:

• A loan must be repaid even if you are dissatisfied with the education, do not graduate or do not find a job.
• A grace period is the time between when you leave school or drop below half-time study and the time you must begin repaying your loan — usually six months.
• Repayment is your responsibility.
• You should contact your lender to arrange repayment of your loan.
• You should know when your first payment is due.
• You should explore alternative repayment options with your lender.

Four repayment options are available:

• Standard Repayment — Payments are fixed to repay the debt within the maximum repayment period. A minimum payment of $50 applies in most cases.
• Graduated Repayment — Your payments change (usually increase) over the repayment period.
• Income-sensitive Repayment — Available if you provide information on your expected total gross monthly income from all sources. You must provide documentation each year.
• Extended Repayment — Available if you owe no balance on loans made before October 7, 1998, and you owe more than $30,000 in student loans. Payments are fixed over a period of up to 25 years.

You can change your repayment plan once a year.

Deferments

During a deferment, you make no payments. The government pays interest on subsidized loans. You pay the interest on unsubsidized loans. You must request a deferment and document your eligibility. If you show that you are eligible, your lender must give you the deferment.

The most common deferments are:

• In-school or Student Deferment for full-time and half-time study.
• Summer Bridge Deferment Extension when you attended school in the spring and plan to reenroll in the fall.
• Unemployment Deferment hen you are seeking but unable to find a full-time job.
• Graduate Fellowship Deferment for periods of study under an eligible graduate fellowship program.
• Rehabilitation Training Program Deferment while you participate in a qualified rehabilitation training program.
• Temporary Total Disability Deferment when you are temporarily totally disabled or unable to secure or continue employment because you're caring for a dependent or spouse who's temporarily totally disabled.
• Military Deferment while on active duty in the U.S. Armed Forces.
• Economic Hardship Deferment when you earn less than minimum wage or exceed a federal debt-to-income ratio.
• Parental Leave Deferment when you are pregnant or caring for your newborn or newly adopted child.
• Working Mother Deferment while mothers of preschool-age children are entering or reentering the work force.

Forbearance

If you're having trouble making payments, lenders may let you to have a forbearance. You may request a forbearance for:

• A short period of time during which you make no payments.
• An extension of time for making payments.
• A period during which you make smaller payments than scheduled.

Consolidation

If you have different types of federal student loans or federal loans from more than one lender, you might want to consider a Federal Consolidation Loan. Things to consider about consolidating:

• You pay one monthly payment to one lender.
• You may be able to spread your payments over a longer period.
• You'll probably pay more total interest.
• The interest rate is based on the rates on your loans, with the maximum rate usually 8.25%.
• You can consolidate nearly any federal loan, but you cannot consolidate private loans.
• You may not want to consolidate a Perkins Loan because of its low interest rate.
• You can usually still qualify for a deferment or forbearance.

Three payment plans are available:

• Level: You make the same payment each month.
• Graduated: You pay only interest the first two years, then make higher payments to pay off the loan.
• Income-sensitive: Your payments are based on your income but must cover at least the interest.

Don't Default

Defaulting on student loan repayment can have serious consequences:

• You will be denied additional student loans, grants and other aid.
• All national credit bureaus will be notified, severely damaging your credit rating.
• Your wages may be garnished.
• Your federal and state income tax refunds or other monies owed to you may be taken to pay your defaulted loan.
• Collection charges of 25 percent may be added to your loan debt.
• You may be sued.

Avoid the consequences of a defaulted loan by contacting your lender whenever you have a problem or question.

<<< BACK