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Accepting Federal Loans for financial assistance through schooling can be like walking into unfamiliar territory for a lot of students. There is a lot of information to cover to ensure that students are aware of their responsibilities with the loan, especially when it comes to repayment. The following tabs below contain pertinent information you may want to review and understand before accepting a loan offer.
Borrowers have agreed to many responsibilities and obligations. Borrowers (students and or parents) need to understand the following responsibilities concerning their loan. For more information visit loan servicers
The student is responsible to inform the servicer of the following:
The student should retain copies of all letters sent to the servicer. The student is also encouraged to log all telephone calls to the servicer, noting dates, the name of the person contacted, and what he/she was told.
Borrowers can visit NSLDS.ed.gov to identify their loan servicers in order to make arrangements for loan repayment. BYU-Idaho is not a party in the loan contract and therefore is not involved in mediating loan arrangements, accepting loan or interest payments, or contacting the loan servicer.
Students should receive their Repayment Schedule during the grace period. If students did not receive this, it is their responsibility to contact their servicer. The payments must begin after the 6-month grace period has elapsed.
Students who have received student loans and are nearing graduation are required to complete “Exit Counseling” at NSLDS.ed.gov. This counseling will remind students of what their responsibilities concerning repaying student loans, the loan servicer’s responsibilities to the borrower, and which repayment options are available.
Borrowers will not be penalized by making early repayment on their loans. Making early payments on a student loan before a grace period is expired does not obligate the borrower to continue making payments.
Deferments are provided in the law. They are the temporary postponement of payment under special circumstances. During deferment, the student's monthly principal payments are postponed, and the federal government pays the interest on subsidized Federal Direct Loans. For an Unsubsidized Federal Direct borrower, monthly payments are postponed, but the student is responsible for all the interest that accrues. Depending on which deferment the student qualifies for, the length of the deferment varies. Students must apply for the deferment in writing, using a form provided by the servicer.
Borrowers with outstanding Federal Education Loans disbursed before July 1, 1993. Check with the loan servicer.
New borrowers with Direct or SLS Loans first disbursed on or after July 1, 1993, and at that time did not have an outstanding balance on any Federal Education Loans taken out before July 1, 1993.
The U.S. Department of Education has indicated that a borrower who is serving in a religious proselytizing capacity (missionary service) and is not employed during that period may qualify for a forebearance or reduced payment.
Borrowers with an outstanding balance on a Stafford Loan prior to July 1, 1993, do not qualify for the hardship deferment and must apply for a forbearance.
If students are not eligible for deferment, but are experiencing some financial difficulty, they may apply for a forbearance. A forbearance is a servicer option. Forbearance is the temporary cessation of payments or acceptance of smaller payments than were previously scheduled. The servicer may grant forbearance for principal, interest, or both. Forbearance requires a written agreement between the borrower and servicer. Unlike periods of deferment, the borrower is responsible for repayment of interest which accrues during forbearance.
Consolidation is the combining of existing student loans into one new loan. Generally, this results in lower monthly payments, but higher interest costs.
Married couples are now allowed to consolidate their individual loans if they agree to be held jointly and separately liable for repayment without regard to the amount of the individual indebtedness and any future changes in their marital status.
The interest rate on the unpaid principal balance for Consolidation Loans is the lesser of the weighted average of the interest rates on loans being consolidated, rounded up to the nearest higher one-eighth of 1 percent or 8.25%.
If a student took out their first loan before July 1, 1993, and consolidate it after July 1, 1993, they will be eligible for fewer deferments. For more information about consolidation, students can contact their servicer (Visit NSLDS.ed.gov to identify loan servicers).
If a student fails to make payments for six months or more, their loan will go into default. Defaulting on a loan is a serious matter. When the student enters default, the student will immediately become ineligible for any Title IV funding at any school. In the event of default, the student's guarantee agency purchases the loan from his/her servicer and begins collection activity against him/her until the loan has been repaid. This activity may include, but is not limited to:
If a student is having difficulty making their payments, they need to contact their servicer or guarantee agency immediately. Many problems can be resolved, and there may be deferment or forbearance options available them.
There are three provisions for cancellation of Federal Direct Loans:
Students must be making Satisfactory Academic Progress (SAP) in order to be eligible for loans. Students also must be maintaining a 6 credit minimum to be considered eligible.
|Maximum Amounts of Borrow|
|3rd & 4th Year||$7,500||$12,500|
*The total amount includes subsidized and/or unsubsidized loan amounts
Beginning July 1, 2013, first time borrowers may not receive Direct Subsidized Loans for more than 150% of the published length of the academic program in which they are currently enrolled. For example, a first time borrower in a 4-year degree program would have 6 years of Direct Subsidized Loan eligibility, and a borrower in a 2-year certificate program would have 3 years of Direct Subsidized Loan eligibility. Borrowers that have taken out loans before July 1, 2013 will still be eligible to receive loans under the previously established maximums, or until they reach SAP.
|Current Interest Rates*|
|Direct Parent PLUS||6.41%|
|*Effective 07/01/13 to 06/30/14|
All student loans have an origination fee. This is explained in your MPN and Entrance Counseling. This fee is simply taken out of the loan funds that you accept, so the money that you receive will be less than the funds that you accept.