The
federal government uses the Federal Family Education Loan (FFEL) Program and
the Direct Loan (DL) Program to deliver federal loans. Students enrolled at the CU Health
Sciences Center during the 2006-07 academic year
borrowed loans under the FFEL program and students enrolled prior to 2006-07
borrowed loans under the Direct Loan Program.
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When do I start repaying my loans?
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Most
student loans are in an in-school deferment status through graduation or
completion of the program, provided the student is continuously enrolled at
least half-time. After you
graduate, leave school, or drop below half-time enrollment, you have a
“grace period” before you must start repaying your student
loans. Your lender will send you
information on repayment including the date loan repayment begins. Below is a list of some standard grace
periods.
- Stafford Loans
(subsidized & unsubsidized) - 6 months
- Perkins Loans - 9
months
- Parent PLUS Loans -
repayment begins within 60 days of final disbursement
- Graduate PLUS Loans
- no grace period but students may qualify for
- All other loans -
refer to your promissory note
- Standard Repayment
Plan: With the Standard
Repayment Plan, you’ll pay a fixed amount each month until your loan
is paid in full. Your monthly payments will be at least $50, and
you’ll have up to 10 years to repay. The Standard Repayment Plan is
good for you if you can handle higher monthly payments because
you’ll repay your loan more quickly. Your monthly payments will be
higher than under the other plans because your loan will be repaid in the
shortest possible time. Because of the 10-year limit on repayment,
however, you might pay the least amount of interest.
- Graduated Repayment
Plan: Under the FFEL
Graduated Repayment Plan, your payments will be lower at first, then
increase over time. Each payment must at least equal the interest accrued
on the loan between scheduled payments. No scheduled payment amount can be
more than three times greater than any other scheduled payment amount.
You’re generally expected to
repay the loan within 10 years.
- Extended Repayment
Plan: The Extended
Repayment Plan is available to new FFEL borrowers who received their first
loan on or after October 7, 1998 and who have FFELs
totaling more than $30,000. Under the Extended Repayment Plan, your
payments will be fixed or graduated (lower at first and then increased
over time) over a period of up to 25 years.
This may be a good plan
if you think you’ll need to make smaller payments than under the Standard
Repayment Plan. However, you will
end up paying more in interest because you’re taking longer to repay the
loan.
- Income Sensitive
Repayment Plan: The FFEL Income
Sensitive Repayment Plan bases your monthly payment on your yearly income
and your loan amount. As your income increases or decreases, so do your
payments. Each payment must at least equal the interest accrued on the
loan between scheduled
payments, and no scheduled payment
amount can be more than three times greater than any other scheduled
payment amount.
NOTE: The repayment plan information above
applies to the FFEL program. You
may switch repayment plans once a year under the FFEL Program.
Students
may need to postpone payments for a number of reasons including acceptance in a
residency program or experiencing a temporary financial hardship. The following options are available to
eligible students.
Deferments
Deferment is a temporary postponement
of repayment under various, specific circumstances:
- For subsidized FFEL Stafford Loans, subsidized Direct Stafford
Loans, and Federal Perkins Loans you don’t have to pay principal or
interest during deferment.
- For unsubsidized FFEL Stafford Loans, unsubsidized Direct Stafford
Loans, FFEL PLUS Loans, and Direct PLUS Loans, you can postpone paying
principal, but you (or your parents, for Parent PLUS Loans) are
responsible for the interest. You can pay the interest during the
deferment period, or the loan holder can capitalize the interest when the
deferment ends. Remember that capitalization will increase the loan
balance.
In most cases, you are not just
granted a deferment automatically; you must formally request one through the
procedures your loan holder has established. Often, you need to complete a
deferment form. You’ll need to provide documentation showing you’re
qualified for the deferment you’re applying for. Make sure all your
paperwork is in order and make sure the loan holder receives it.
Here’s one of the most important things to remember:
You must continue to make payments on the loan until you’ve been notified
the deferment has been approved. Sometimes borrowers apply for deferment and
don’t hear anything back and assume things are fine. Or, as soon as they
send a deferment form and their paperwork, they think they can immediately stop
payment. Even if the paperwork is received without any problem, it takes a
while to process. So, don’t skip the next payment when it’s due.
First, check with the loan holder. If your deferment has not been processed,
make your payment! You might go into default otherwise. You can’t get any
deferment on a defaulted loan.
Loan Deferment
Summary
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Deferment Condition
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Direct
Loans1,2
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FFELs1,3
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Perkins
Loans
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At
least half time study at a postsecondary school
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YES
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YES
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YES
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Study
in an approved graduate fellowship program or in an approved rehabilitation
training program for the disabled
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YES
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YES
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YES
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Unable
to find full-time employment
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Up to 3 years
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Up to 3 years
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Up to 3 years
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Economic
hardship
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Up to 3 years4
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Up to 3 years4
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Up to 3 years4
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Engages
in service listed under discharge/cancellation conditions
(see pages 23 and 24)
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NO
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NO
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YES5
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1
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2
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Direct
Loan borrowers who have outstanding balances on FFEL Loans disbursed prior to
July 1993, might be eligible for additional deferments, provided the
outstanding balance on the FFEL existed when the borrower received his or her
first Direct Loan.
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3
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Applies to
loans first disbursed on or after July 1, 1993, to borrowers who have no
outstanding FFELs or Federal Supplemental Loans for
Students (Federal SLS Program) on the date they signed their promissory note.
(Note that the Federal SLS Program was repealed
beginning with the 1994-1995 award year.)
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4
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Many Peace
Corps volunteers will qualify for a deferment based on economic hardship.
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5
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More
information on teaching service deferments can be found on the Internet at http://www.studentaid.ed.gov.
At the site, Click on “Repaying,” then click on
“Cancellation and Deferment Options for Teachers.”
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Forbearance
If
you find you can’t meet your repayment schedule but you’re not
eligible for a deferment, you might be granted forbearance for a limited and
specified period. During forbearance, your payments are temporarily postponed
or reduced. Unlike deferment, whether your loans are subsidized or
unsubsidized, you’ll be charged interest during forbearance. If you don’t
pay the interest as it accrues, it will be capitalized.
As is true with deferment, you are not just granted forbearance automatically;
you must formally request one from your loan holder. You might have to provide
documentation to support your request. You might be granted forbearance if you
are
- unable to pay due to poor health or other unforeseen
personal problems.
- serving in a medical or dental
internship or residency.
- serving in a position under the
National Community Service Trust Act of 1993 (forbearance can be granted
for this reason for a Direct or FFEL Stafford Loan, but not for a PLUS
Loan).
- obligated to make payments on certain
federal student loans that are equal to or greater than 20 percent of your
monthly gross income.
NOTE: This is
not a complete list of conditions that might qualify you for forbearance.
For more information, contact your loan holder.
Unlike deferment, which you are entitled to receive, the loan holder does not
have to grant forbearance except in certain mandatory circumstances (check with
your loan holder for details). In most cases, however, lenders are willing to
work with you if you show you’re willing but temporarily unable to repay
your debt.
Mandatory Forbearance
There
are certain instances when forbearance is
mandatory. Contact your lender or
loan servicing agent for more information on the mandatory forbearance
benefit. Examples include borrowers
who:
- are in a medical or
dental internship or residency
- have student loan
payments that are 20 percent or more than their monthly income
- have
payments being made for them by the Department of Defense
Why should I consolidate
my loans?
Consolidation
allows you to simplify the repayment process by combining several types of
federal education loans into one loan, so you make just one payment a month.
Also, your monthly payment might be lower than what you would pay if you did
not consolidate.
Students
that borrowed loans at UCDHSC prior to the 2006-07 academic year
are eligible to consolidate through either the FFEL Program or the Direct Loan
Program. All other students must
consolidate through the FFEL Program.
Who should I consolidate
with?
Many
students and parents are overwhelmed by the mailings, phone calls and e-mails
they receive regarding consolidation.
Here are some things to consider before choosing a consolidation company:
How
long has the company been processing consolidation loans?
Are
the borrower benefits and incentives competitive?
Do
you lose any benefits if you are late on a payment? If so, are you able to regain the
benefit?
We
have looked at student loan consolidation programs offered by several companies
and found College Invest (www.collegeinvest.org)
to have some of the best borrower benefits and incentives in the industry. They are familiar with the needs of health
professions students and have helped take a lot of the frustration and
confusion out of the loan consolidation process for our students. You can contact Tony Widinski
at 720-264-8541 for more information about the consolidation process.
Which loans are eligible
for consolidation?
The
following federal education loans are eligible to be included in a federal
consolidation loan:
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Federal Subsidized and Unsubsidized Stafford Loans (FFEL and Direct)
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Federal Parent PLUS Loans (FFEL and
Direct)
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Federal Graduate PLUS Loans (FFEL and
Direct)
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Federal Consolidation Loans (FFEL and
Direct)
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Federal Perkins Loans
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Health Professions Student Loans
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Loans for Disadvantaged Students
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Nursing Student Loans
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Guaranteed Student Loans
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Federal Insured Student Loans
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Federal Supplemental Loans for Students
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Auxiliary Loans to Assist Students
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National Direct Student Loans
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National Defense Student Loans
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Health Education Assistance Loans
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What will my monthly payment be?
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To
estimate your monthly payment, you will need to know specific information about
your loans and you will need a loan repayment calculator. You can go to www.nslds.ed.gov to access your loan
information for federal Stafford loans and
Perkins Loans. There are numerous
online loan calculators available to assist students in estimating their
monthly payments. We recommend the FinAid Calculator (http://finaid.org/calculators/).
- College
Invest: www.collegeinvest.org –
Tony Widinski (720-264-8541) can assist HSC
students with loan consolidation questions and strategies. Be sure to state you are a student
at UCHSC.
- NSLDS: www.nslds.ed.gov
– National Student Loan Data System (NSLDS) is the US Dept of
Education’s central database for student aid and contains data on
Title IV loans and Pell grants
