Your future. Our Mission. Student Financial Assistance Office.

Your future. Our Mission.Student Financial Assistance Office

Repaying Student Loans

– Take inventory your federal student loans– Explore repayment plans available– Understand the basics of consolidation– Learn about deferment and forbearance

Taking Inventory

Where can I obtain information on my federal loans?

• – National Student Loan Data System (NSLDS)http://www.nslds.ed.gov/

Provides loan amounts, loan holders, and loan servicers

What happens to my loans when I leave school?

A FFELP or Direct Stafford loan either:• Will enter a 6-month grace period• Will enter repayment

A Perkins loan either:• Will enter a 9-month grace period• Will enter a 6-month post-deferment grace period

A Grad PLUS loan either:• Will enter a 6-month deferment• Will enter repayment

A federal consolidation loan:• Will enter repayment

A private or alternative loan• Contact the lender

What should I expect from my loan holder/servicer?

• Repayment disclosure notices- Outlines the terms of the loan(s)

borrowed- Provides the repayment options

available- Establishes the first payment due

date

What does my loan holder/servicer expect from me?

- To select a repayment plan- To make timely payments on your

loans- To provide updated contact

information whenever it changes- To contact the loan holder whenever

you are having difficulty managing repayment

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Can I pre-pay on my loans?

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Yes…- If sending in a prepayment, make sure

you inform the lender to apply the prepayment to the principal of the

loan balance

- There is no prepayment penalty

What repayment plans are available? - Standard- Graduated- Extended- Income-sensitive (FFELP only)- Income-contingent (FDLP only)- Income-based

Overview of repayment plans

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How do repayment plans work?

• Standard:

- Lowest total loan cost.

- Regular payments of both principal and interest are due monthly, excluding periods of deferment and forbearance

- Minimum monthly payment is $50 with 10 yr repayment

• Graduated: - Monthly payments are smaller at the start of the repayment

period and gradually increase every two years

- 10-year repayment term- Total amount paid in interest will be greater than under the

standard repayment plan

Repayment Plans con’t

• Extended:

- Lengthens repayment term up to 25 years

- Available to borrowers with more than $30,000 in federal student loans (per program)

- Total interest costs may be higher over life of the loan, although monthly payment amount may be lower

Repayment plans con’t

• Income-sensitive (FFELP):

- Offered only to borrowers under the FFELP

- Monthly payment varies according to gross monthly income

- Monthly payment covers at least monthly accruing interest

- Must reapply annually

- Total interest costs will be higher over the life of your loan than with standard repayment

- Maximum repayment period is 10 years

Repayment plans con’t

• Income-contingent (FDLP):

- Offered only to borrowers under the Direct Loan Program

- Monthly payment based on adjusted gross income, family size, and total Direct Loan debt

- Maximum repayment period is 25 years, and any balance after 25 years (time spent in deferment or forbearance does not count) is forgiven.

What is income-based repayment (IBR)?

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- IBR is designed to help borrowers experiencing a “partial financial hardship”.

- Available to Stafford, Grad PLUS, and certain consolidation borrowers.

How do I apply for IBR?

Contact loan holder/servicer and request an IBR plan- IBR forms available at:

http://studentaid.ed.gov/PORTALSWebApp/students/english/IBRPlan.jsp

- Borrower must:Apply annually (payment amount may fluctuate)

- Provide permission for IRS to disclose AGI "and other tax return information“

- Certify family size

Basics of Consolidation

– Consolidation enables you to bundle one or more federal student loans into a single new loan.

– At time of consolidation, your consolidating loan holder pays off the outstanding balances of the loans you include in the consolidation.

– No fees.

Who can consolidate?

– Any federal student loan borrower, including:

- Borrowers with student loans.- Borrowers with student & parent loans.

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How do I qualify?

– You must be in your grace period or in repayment on each loan being consolidated.

– You can still obtain a Consolidation loan if you are delinquent or in default on one or more of your existing loans.

What loans may be consolidated?

– Federal Family Education Loans– Federal Direct Loans– Federal Perkins Loans– Health Professions Student Loans– Nursing Student Loans– Health Education Assistance Loans

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What loans may not be consolidate?

– Private (alternative) education loans– Other consumer debt**Private consolidation loans

– Do not offer the same advantages(i.e., repayment options, deferments, etc.)as a federal consolidation loan– Interest rate will be credit-based and likelyhigher than a federal consolidation loan

Can I ever “Re-consolidate”?

– Generally, no– You may only reconsolidate if you consolidate an existing Consolidation loan with another loan outside the Consolidation loan

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Factors to consider in consolidating

+ Bring together loans with multiple loan holder for convenience of one payment.

+ Lower loan payments by lengthening repayment period.

+ May be able to lock in a more favorable interest rate.

- May lose some or all of grace period.- May lose certain borrower benefits- May increase total cost of loan if you lengthen

your repayment period, you will pay more interest in the long run.

Loan Deferment

• A deferment is a period of time when payment on a loan is temporarily postponed.

• Interest payment

– Federal government pays the interest during deferments for subsidized loans and for the underlying subsidized loans that were consolidated.

– Borrower is responsible for the interest for unsubsidized Stafford loans, GradPLUS loans, and PLUS loans and for the underlying unsubsidized loans that were consolidated

Types of Deferment

• Enrolled at least half-time at an approved postsecondary school

• Study in an approved graduate fellowship program or an approved rehabilitation training program for the disabled

• Unable to find full-time employment (up to 3 years)• Economic Hardship (up to 3 years)• Engages in service listed under discharge/cancellation

conditions (Perkins only)• Active Military Duty, for loans first disbursed on/after July 1,

2001; while borrower is on active duty during a war or other military option, or national emergency (up to 3 years)

• www.studentloans.gov

Forbearance• A period of time during which the borrower is

permitted to temporarily cease making payments or reduce the amount of the payments.

– Borrower is liable for all interest that accrues on the loan.

– Contact your loan holder• Some deferment types require an application

Helpful Resources

• www.federalstudentaid.ed.gov/students.html• www.studentloans.gov• www.nslds.ed.gov• www.dl.ed.gov• www.loanconsolidation.ed.gov• www.finaid.org• www.tgslc.org/borrowers

Student Financial Assistance Office

• G-1 Parker Hall• 573-341-4282• 1-800-522-0938• [email protected]• sfa.mst.edu