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They All Asked For You

Loan Repayment and Responsibilities

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Federal Family Education Loan Program (FFELP) Largest source of long-term, low-interest

loans for undergraduate, graduate and professional students, and parents of dependent students

Subsidized Stafford Loan Unsubsidized Stafford Loan Parental Loans for Undergraduate Students

(PLUS) Consolidation Loans

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Subsidized Stafford Loan Loan is need-based Student must be enrolled at least half-

time Federal government pays all interest

while: Borrower is in school During the grace period During periods of deferment

Interest rate is variable, capped at 8.25% Repayment begins 6 months after leaving

school 10 year repayment period

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Unsubsidized Stafford Loan Loan is not need-based Loan may replace all or part of the

student’s EFC Must have completed the FAFSA Student must be enrolled at least half-

time Borrower is responsible for interest at all

times Interest rate is variable, capped at 8.25% Repayment begins 6 months after leaving

school 10 year repayment period

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Plus Loans

Parent may borrow up to the Cost of Attendance less other financial aid received by the student

Must not have an adverse credit history Interest rate is annually variable, capped

at 9% Repayment begins 60 days after the loan

is fully disbursed Borrower has 10 years to repay Borrower must be the parent of a

dependent undergraduate student

Loan Limits

Dependent Undergraduate StudentsBorrower’s Academic Level Combined Subsidized & Unsubsidized

Freshman $3,500

Sophomore $4,500

Remaining Undergraduate $5,500

Independent Students or Dependent Students Whose Parents Are Denied Plus Loans

Borrower’s Academic Level Subsidized Unsubsidized Total

Freshman $3,500 $4,000 $7,500

Sophomore $4,500 $4,000 $8,500

Remaining Undergraduate $5,500 $5,000 $10,500

Graduate or Professional $8,500 $10,000 $18,500

Loan Limits

 

Total Cumulative Loan Limits

Dependent Student $23,000

Independent Undergraduate $46,000

Graduate Student $138,000

PLUS Loans No Federal Limit 

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Players in the Game School

Your school must certify your eligibility to receive a student loan

Lender A lender provides funds up to the amount

approved by the school You may select any participating lender

Servicer A lender may contract with a servicer to

administer your loan The servicer may be responsible for

disbursement, processing of payments, deferments and forbearances

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Players in the Game Guarantor

Provides insurance to the lender that your loan will be repaid

You may select your guarantor Secondary Market

A secondary market is a company which purchases student loans from a lender making funds available to the lender to make new loans to other students

If your loan is sold to a secondary market: It will not change the conditions of the loan You will be notified in writing You will direct any future correspondence to the

new holder

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Master Promissory Note The MPN is a legal document which you

sign to indicate your willingness to repay a student loan

The MPN will contain your Rights and Responsibilities as a borrower

The MPN may be used as a single year note or a multi-year note If your school uses the MPN as a single year note, you

must sign a new MPN for each new loan you borrow If your school uses the multi-year feature of the MPN,

you may receive multiple loans without signing a new MPN

You may be required to sign a new MPN if you change schools

You will be required to sign a new MPN if you change lenders

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Loan Facts

You may reduce or cancel your loan prior to disbursement

You may prepay your loan without penalty

You must maintain Satisfactory Academic Progress (SAP) as defined by the school to continue receiving loans

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Keeping in Touch

You must inform your lender if: You change your name Your address changes Your phone number changes You withdraw from school You drop below half-time enrollment You graduate You change employment You have a change in status which will affect

your loan status You are having difficulty repaying your loan

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Grace Period

You will have a grace period of six months before your loan goes into repayment

The grace period begins the day after you graduate, withdraw from school or drop below half-time status

You can only receive one grace period per loan

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Repayment

You are required to repay your student loans even if: You do not complete your education You do not find a job in your field of study You do not find employment upon completion

of your education The education you received did not meet your

expectations

Investigate electronic repayment options Some lenders/servicers offer interest rate

reductions for this option

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Repayment Options Standard Repayment

Requires minimum monthly repayment of $50 per loan

Graduated Repayment Smaller initial payments Payments will increase over time

Income-Sensitive Repayment Payments are annually adjusted based on

income Extended Repayment

For borrowers with more than $30,000 in loans Maximum repayment period is 25 years Payments may be graduated or fixed annually

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Loan Consolidation Available after you complete your

education

Allows you to combine loans from different lenders into a single loan

Allows you to reduce your monthly payments and extend your repayment period

The interest rate on the consolidation loan may be higher or lower than the interest rates of the individual loans

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Deferment

You may request a deferment: If you are enrolled at least half-time at an

eligible institution For up to three years if you are seeking but

unable to find full-time employment For up to three years if you have an economic

hardship

You must provide a completed Deferment Request form and evidence verifying your eligibility for deferment to your lender

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Forbearance A forbearance can allow you to temporarily

reduce or suspend making payments You are responsible for all interest which

accrues during the forbearance period Interest may be paid as it accrues, or Interest may be capitalized

Your lender may grant a forbearance if: You experience economic hardship You are affected by a local or national

emergency, or natural disaster You are affected by a military mobilization You are serving in a position which may qualify

you for loan forgiveness or partial repayment of your loan

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Discharge and Cancellation Your loan may be discharged if:

You die You are totally and permanently disabled You are unable to complete your education

because the school closed, falsely certified a loan, or fraudulently completed a loan application in your name

Bankruptcy generally does not result in the cancellation of a student loan

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Other Discharge/Repayment Options Loan Discharge/Forgiveness Program for

Teachers working in a low-income school

AmeriCorp service

Certain branches of the armed forces may repay a portion of your loans

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Consequences of Default

A loan is considered to be defaulted if you fail to make payments for 270 days

Defaulting on your student loan can result in: Damage to your credit rating Wage garnishment Denial of professional licenses Withholding of federal and state tax refunds Liability for collection costs and legal fees Referral of account to a collection agency Denial of access to student transcripts Loss of eligibility for future student financial aid