.jpg.aspx?width=75&height=75) Find out how you can manage your existing private student loans as well as federal Perkins, Stafford and PLUS loans.
Types of Student Loans
Federal Perkins Loan
- Campus-based federal loan (available at certain schools).
- Interest rate fixed at 5% APR.
- 9 months grace period once you leave school or are less than half time student.
- Installments for 10 years.
- Your college may outsource administration of your loan to a third party. Visit the financial aid office for contact information.
|
Federal Stafford Loan
- Offered at most institutions of higher learning.
- Stafford loans offered by banks, private lenders or federal government.
- Stafford loans may be sold to or administered by a third party or the federal government.
- 6 months grace period once you leave school or are less than half time student.
- Interest rates are variable for loans disbursed between July 1, 1998 and June 30, 2006. Rates are adjusted annually on July 1.
- Interest rates are fixed on loans disbursed after July 1, 2006.
- See the latest interest rates on student loans by Sallie Mae.
|
Federal Parent PLUS Loans
- Parents may apply on behalf of undergraduate students.
- Loans disbursed after July 1, 2006 have fixed interest rate.
- May be eligible for forbearance option to delay payments while a full-time student or for 6 months after they leave school.
- Interest may be paid quarterly or capitalized.
|
Subsidized and Unsubsidized Stafford Loans
- Federal government pays all accruing interest during deferment periods on subsidized loans.
- Borrower is responsible for all accrued interest which has been added to the loan balance for unsubsidized loans.
- You may obtain unsubsidized loans to make up the difference for school costs not covered by subsidized loans.
|
Federal Graduate PLUS Loans
- Graduate students attending at least half-time may apply.
- Interest rate is fixed.
- Same terms apply as Federal Parent PLUS Loans.
|
Private Student Loans
- Not as flexible as loans backed or subsidized by federal government.
- Interest rates vary by lender and tend to be higher than federal student loans.
- Must gain lender approval for forbearance or deferral if they return to school. It is not automatic.
|
The types of student loans that you obtain can determine the flexibility in repayment that you may have.
Student Loan Repayment Options
Loan Consolidation
- Federal Perkins Loans, Stafford and Grad PLUS loans may be consolidated into a single loan.
- The weighted average of all loans being consolidated determines the interest rate. That rate is rounded up to the nearest 1/8% and with a maximum rate of 8.25%.
- Borrowers must be in grace period or repayment to consolidate.
- You may consolidate once more following a previous consolidation if you have taken on additional federal student loans.
- The federal Direct Loan program is the primary option for a consolidation loan. Private lenders have largely pulled back from the student loan consolidation market.
|
Repayment Terms
- Standard: Monthly installments over a 10 year period.
- Extended: Monthly installments over a 25 year period as long as loan balances exceed $30,000.
- Graduated: Monthly payments are as low as interest only during first 2-4 years, then increase to allow for repayment over the remaining loan term.
- Income Sensitive: Monthly payments may be limited to 4-25% of gross income, as long as all of the accrued interest is covered. You must meet eligibility requirements annually to extend these terms.
- Income Based Repayment: Available for bona fide financial hardship situations. Can extend repayment up to 25 years depending on household side and discretionary income. Remaining loan balances may be forgiven after 25 years.
|
Deferment and Forbearance
- Payments on Stafford, Perkins or Grad PLUS loans may be postponed for reasons including internship, unemployment, economic hardship, national service, military deployment or if you are still in school at least half-time.
- You are entitled to deferments with Stafford, Perkins and Grad PLUS loans, but you have to contact the lender to request it.
- Interest on unsubsidized Stafford loans will continue to be added to the loan balance or it may be paid quarterly. The federal government pays interest on Perkins loans and subsidized Stafford loans while the loans are in deferment.
- A forbearance may be granted at the lender's discretion if your financial situation necessitates a suspension of payments for a limited period of time. The interest will still accrue and will be added to the loan balance.
|
Loan Cancellation/Discharge
- Cancellation or discharge of student loans may occur upon death or total and permanent disability. Also, if a school closes prior to completion of education or if the loan was falsely certified, the loans may be negated.
- Student loans are generally not eligible for discharge through bankruptcy. Only a judge can grant an exception in case of undue hardship to the borrower.
- More information on loan cancellation and discharge is available through the Collections Guide for Defaulted Student Loans.
|
Loan Forgiveness
- Certain situations allow for the forgiveness of student loans. Students that complete an eligible term through military service, volunteering and other public service may have their loans forgiven. There are opportunities through teaching or practicing medicine in underserved populations where a student's loans may be forgiven.
- See which opportunities allow for forgiveness of student loans.
|
Assistance with Student Loans
- You must contact the lender for all private student loans. You may need to pull a credit report to see who you still owe.
- Federal student loans are listed at the National Student Loan Data System. Call 1(800) 4-FED-AID for help accessing the system. Your PIN will be the same as the one from your FAFSA.
|
Student Loan Ombudsman
If you need additional help with outstanding student loans or are disputing one or more of your student loans, you may contact the Federal Student Loan Ombudsman for assistance. This is available only in regards to federal student loans. Call 1(877)557-2575.
|