Important Loan Information

As with any loan, make sure you fully understand the interest rates, repayment terms, and tax implications. Find out whether interest charges are variable or fixed, whether the loan has forgiveness or deferment provisions, whether you can consolidate the loan with other loans, and whether it carries prepayment penalties.

Borrow only what you need. Remember that loans must be repaid even if you do not finish school. Your education is a substantial investment. It’s one of the most important decisions you can make for your future. Take time to learn all of your financial aid options before you make any decision.

Repayment

When taking out a financial aid loan it is important to remember that it must eventually be repaid. After graduating or dropping below half-time enrollment, repayment will usually be deferred for 6 months. There are several different types of repayment plans, and choosing the one that best fits your financial situation is important.

Standard Repayment Plan
Fixed annual repayment amount paid over fixed period of time not to exceed 10 years.

Graduated Repayment Plan
Payments start at a lower amount and increase generally every 2 years. Payments are make over a fixed period not to exceed 10 years.

Extended Repayment Plan
Fixed annual or graduated repayment amount to be paid over a period not to exceed 25 years. Must have more than $30,000 in loan debt.

Income-Sensitive Plan
Monthly payment is based on annual income with maximum repayment period of 10 years.

For more information on repayment, click here: www.studentaid.ed.gov

Deferment

Deferment is a period of time when no payments are required, however your interest will continue to accrue on unsubsidized loans.

To qualify for deferment you must be enrolled in school at least half-time, or prove an inability to find full-time employment and/or economic hardship.

Forbearance

Forbearance is a period of time during which payments are temporarily reduced or postponed. During forbearance interest will continue to accrue on both subsidized and unsubsidized loans.

IMPORTANT: Borrowers must contact their lender to apply for deferment or forbearance.

Default

Default is the worst-case scenario in financial aid loan repayment. Default occurs when an installment payment is missed, or if the borrower fails to comply with the terms of the promissory note.

Loans will go into default if you become 270 days delinquent (for monthly payments) or 330 days delinquent (on longer term payment plans).

If you default:

• The entire loan balance can become immediately due
• You can lose deferment options
• You can lose eligibility for additional Federal Student Aid
• Your account may be turned over to a collection agency and incur additional fees
• Your account will be reported to national credit bureaus and damage your credit rating
• Your income tax refunds may be withheld
• Your wages can be garnished
• You may be unable to obtain a professional license

IMPORTANT: If you are at risk of default contact your lender immediately to discuss your options.