Repayment Information

Loan Repayment

Students are required to repay their loans, even if they do not complete their education, cannot find a job after graduation, leave school or feel dissatisfied with the education they received. The responsibility of repaying student loans cannot be avoided. However, there are many helpful features during the repayment process that can help reduce or postpone payments for a period of time.

Repayment Plans

There are several different repayment plans to help manage loan payments. Students can choose a payment plan that is right for them at that particular time. Please visit “Manage Loans” at https://studentaid.gov/manage-loans/repayment/plans for additional information. Some of the repayment plans include:

• Standard Repayment Plan – A student pays a minimum monthly amount (no less than $50) for 120 payments, or ten years. The monthly amount depends on how much money is borrowed.
  • Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be paid off in the shortest amount of time.
• Graduated Repayment Plan – A student pays a smaller monthly amount in the beginning of the repayment cycle and gradually increases the monthly payment over a ten year period.
• Income Based Repayment – The required monthly payment is capped at an amount that is supposed to be affordable based on family income, family size and total federal loan debt. Students will pay on this plan for up to 25 years.
• Income Contingent Repayment – Each year, the student's monthly payments will be calculated using their (and their spouses, if married) adjusted gross income, family size and total amount of Direct Loans owed. Student will pay on this plan for up to 25 years.
• Consolidation Repayment Plan – Students combine all eligible loans into a new loan. Students can take up to 30 years to pay a consolidation loan which lowers their monthly payments. However, students will pay more interest on the loan because the repayment term is longer.

Where can I find information about the student loans I’ve received?

Visit “My Aid” to view information about all of the federal student loans and other financial aid you have received and to find contact information for the loan servicer for your loans.

Loan Forgiveness

If a student becomes totally and/or permanently disabled, their loan funds will be forgiven. Certain documentation must be filed to receive this forgiveness option. Also, if a student passes away, their loans will be forgiven. A copy of their death certificate is needed and must be submitted to the loan holder. There are other loan forgiveness programs available to students. Some forgiveness programs will completely pay off the student’s debt while others will forgive a portion of the debt. Please visit “Understanding Loan Forgiveness at https://studentaid.gov/manage-loans/forgiveness-cancellation for additional information. Some of the notable programs are:

• Teacher Loan Forgiveness – Student must teach for five consecutive, complete years at an eligible school. Student can receive from $5,000 to $17,500 in loan forgiveness depending on the area of teaching.
• Public Service Loan Forgiveness – Student must make 120 monthly payments while serving in a public service position and continue to be employed in a public service position at the time of forgiveness.
• Child Care Loan Forgiveness – Student working full-time in a child care center that services low-income communities is eligible for loan forgiveness based on the number of years employed at the eligible child care center.

Deferment

A deferment is a period of time in which the student postpones (or stops) making monthly loan payments. Interest on the subsidized loans will be paid by the federal government during the deferment periods. There are several types of deferments available:

• In School – Student enrolled at least half-time in an eligible program. Students have a lifetime of in-school deferments.
• Unemployment – Student must be registered with the local unemployment office. Students have three years of unemployment deferments.
• Military Service – Student is called to active duty during a war or other military operation or national emergency.
• Post-Active Duty – Student who is enrolled and then called to active duty is eligible for 13 months deferment after their active duty service.
• Economic Hardship – Student's income is at or below the poverty level. Students have three years of economic hardship deferments.

Forbearance

A forbearance is a period of time in which the student may postpone or reduce their monthly loan payments. If a student is not eligible for a deferment, loan forbearance is an option. Interest on the loan will continue to accrue during any forbearance period and will NOT be paid by the federal government. Students must contact the holder of their loan to request a forbearance. A student has three years of forbearance options.

Delinquency and Default

A student is considered to be delinquent on their students loans if they are 30 days past due. Once a student is 30 days past due, the holder of the loan will report the delinquency status to all major credit bureaus. The student will be contacted by their holders to offer help in resolving the delinquent status. Deferment and forbearance options will be discussed at this time.

When a student has failed to make payments, the student is considered to be in default if they have not made a payment on their loan for 270 days. Once a student defaults, numerous consequences occur such as:

• The entire unpaid balance of your loan and any interest you owe becomes immediately due.
• You can no longer receive deferment or forbearance, and you lose eligibility for other benefits, such as the ability to choose a repayment plan.
• You lose eligibility for additional federal student aid.
• The default is reported to credit bureaus, damaging your credit rating and affecting your ability to buy a car or house or to get a credit card.
• It may take years to reestablish a good credit record.
• You may not be able to purchase or sell assets such as real estate.
• Your tax refunds and federal benefit payments may be withheld and applied toward repayment of your defaulted loan (this is called “Treasury offset”).
• Your wages may be garnished. This means your employer may be required to withhold a portion of your pay and send it to your loan holder to repay your defaulted loan.
• Your loan holder can take you to court.
• You may be charged court costs, collection fees, attorney’s fees, and other costs associated with the collection process.
• Your school may withhold your academic transcript until your defaulted student loan is satisfied. The academic transcript is the property of the school, and it is the school's decision—not the U.S. Department of Education’s or your loan holder’s—whether to release the transcript to you.

Exit Loan Counseling

Exit loan counseling is a federal requirement. Students must complete exit counseling before leaving school for any of the following reasons:

• Graduation
• Dropping below half-time status
• Completely withdrawing
• Non-enrollment
• Transferring to another school

Student records will remain in a hold status until the exit requirement is completed. Students can complete exit counseling online by clicking on the following link: Student Loan Exit Counseling