Loan Repayment FAQs & Information
When do I start repaying?
Grace periods are day-specific. Your grace period begins on the day immediately following the day you stop attending school at least half-time and ends on the day before the repayment period begins.
The interest on Subsidized loans is paid by the federal government during your grace period. On Unsubsidized and Grad PLUS loans, you are responsible for the interest, and the unpaid interest is capitalized (added to the loan principle) at the time of repayment.
Repayment begins on the day after your grace period ends; your first payment is due within 60 days. You should receive communication from your loan servicer during your grace period. If not, contact your loan servicer directly.
Determing your loan servicer (lender)
The Ensuring Continued Access to Student Loans Act (ECASLA) was signed into law in May of 2008 authorizing servicers to sell their student loan portfolios to the Department of Education in order to create ongoing liquidity and availability of funds for students. Therefore, you may acquire a new servicer for your loan. You will be notified about your loan servicer, and you will receive communication from your new servicer about any changes. Current servicers for the Department of Education are:
Trouble Making Your Payments
Deferment – Temporary postponement of payments, if you meet the qualifying criteria.
Forbearance – Temporary postponement of payments granted at the discretion of the lender or servicer. There are also forbearances that allow you to temporarily reduce your payments.
Interest-Only Repayment – This plan allows you to temporarily pay just the interest that accrues on your loan.
Change repayment plans – Ask if you can increase the term of your loan to lower your payments. You can always pay more each month once you are back on your feet (or switch back to the Standard Repayment Plan at that time.
Remember that you do have options. Don’t become delinquent on your payments because you don’t know what to do. Default should never be an option. Stay in touch with your lender and ask for help if you need it.
Deferments & forbearances
In-School Deferment – Can be granted if you are enrolled at least half-time at an eligible school. Contact your Loan Servicer.
Economic Hardship Deferment – Can be granted during periods of economic hardship.
Unemployment Deferment – Can be granted to borrowers who are actively seeking but unable to find employment.
Active Military Deferment – Can be granted during active military service.
Forbearance – Can be requested if you do not qualify for a deferment and are having temporary financial difficulty. Low-Pay Forbearances are also available for borrowers who wish to temporarily lower their payments without becoming delinquent.
Contact your borrower for details regarding forbearance.
Federal student loan deferment instructions
1. Go to your loan servicer website to apply for deferment. If you do not know who services your student loan(s), proceed to http://www.nslds.ed.gov. (See #4 below for information on accessing NSLDS.) You will need RMUoHP’s school code to complete your deferment; the code is G41932.
2. Submit the deferment form to the University Registrar at email@example.com for enrollment verification and signature.
3. Submit the signed form to the applicable loan servicer. Make sure you maintain a copy of the completed form in your personal records.
4. About three weeks after the paperwork has been submitted to your servicer, go to http://www.nslds.ed.gov. This is a central site from which you can view the status of ALL of your student loans.
5. Click on Financial Aid Review. It is recommended that you access the page from a browser that supports 128-bit encryption (e.g., Internet Explorer 9) for the security of the personal information you’ll enter in the next step.
6. The site will ask you to enter the following in order to retrieve your loan information: SSN, first two letters of your last name, birthdate, and PIN you received from the Department of Education.
7. Check the box(es) for EACH student loan you have to check on the status of the deferment.
8. For any that do not show as currently in deferment, you will need to follow up directly with your loan servicer regarding what they still need. They may need you to re-send the paperwork (again, as referenced in #2 above, make sure to keep a copy).
9. You will want to continually check on your loans to make sure they are still in deferment by performing the above steps at least once a semester. Students are responsible for confirming the status of student loan deferment request(s).
Reasons to avoid loan default
Significantly increased costs owed for collection and late fees.
Your loans may be assigned to a collection agency.
Your wages can be garnished.
Your federal and state income tax refunds can be seized.
Any federal benefits you receive (such as Social Security) can be intercepted.
You can be sued.
You won’t be able to receive any more federal financial aid.
You can lose your professional license.
Your credit will be seriously damaged.
You won’t be eligible for a deferment.
As you can see, these consequences are best avoided.
Avoiding loan default
If you are having trouble, speak with your lender or servicer to see if you qualify for a deferment or forbearance.
If you are back in school at least half time, contact your lender. If you think your loan should be deferred and you are receiving correspondence from your lender, open it! You may need to inform them that you are back in school to get your loan deferred.
You are not required to consolidate. The final determination about whether or not to consolidate is yours.
Some cases in which you may want to consider consolidation
If you want to use the Income Contingent Repayment Plan or think you may qualify for Public Service Loan Forgiveness, your loans must be in the Direct Loan Program. Consolidating all of your loans into the Direct Loan Program will satisfy that requirement.
If you borrowed before 7/1/06, you may have some variable rate Stafford loans. Consolidating those loans would give them a fixed interest rate.
Some cases in which you might NOT want to consolidate
If you include a Perkins loan in your consolidation, that loan will become an unsubsidized loan and will lose any special cancellation benefits tied to the Perkins loan.
If you wish to consolidate, you can choose any lender who participates or the Department of Education (Direct Loan Program).
You have several repayment options available to you with Federal Student Loans. Your servicer will automatically set up your loan on the standard repayment plan. If you prefer another repayment plan, simply call your servicer to discuss your options. You also have the option to change your repayment plan on an annual basis. In addition, many servicers offer discounts for borrowers who set up auto-pay. Federal Loans currently offer 0.25% interest rate reduction. The repayment plans offered for Federal Student Loans are summarized below. Visit the Repayment Estimator through the Federal Student Aid site to estimate your repayment options.
*These payment plans are not available on all loans. Verify options with your loan servicer.
Repayment term cannot exceed 10 years, excluding in-school, grace, and deferment or forbearance periods.
No single payment may be more than three times greater than any other payment.
Repayment term is generally 10 years.
Payment must cover at least the interest due.
Repayment term cannot exceed 25 years.
Income-Based Repayment (IBR)
Payments are 15% of your discretionary income. Discretionary income equals your Adjusted Gross Income minus 150% of the Federal Poverty Rate.
Payments are adjusted annually based on your Adjusted Gross Income and family size.
Payments can be as low as zero.
If, after 25 years of payments, there is still a principal or interest balance on your loan, this remaining amount can be forgiven. For individuals who qualify for Public Service Loan Forgiveness, the forgiveness can occur after 10 years of payments.
Income-Contingent Repayment (direct loans only)
Payments are 20% of your discretionary income. Discretionary income equals your Adjusted Gross Income minus 150% of the Federal Poverty Rate.
Payments are adjusted annually based on your Adjusted Gross Income and family size.
If, after 25 years of payments, there is a remaining principal or interest balance on your loan, this remaining amount can be forgiven. You may, however, have to pay taxes on the amount that is discharged.
Nothing on this website should be construed as authoritative financial advice. Your circumstances are unique, and you may want to consult a financial advisor. The author of this website is not a financial advisor.