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Loan Policies

Rates and Fees

All student loans have an origination fee, which is essentially a loan processing fee. This fee is taken out of the total (gross) loan funds you accept, so the money you actually receive (net) will be less than the funds that you accept. You are still required to pay back the gross amount you accept.

Current interest rates and origination fees for all Direct Loans can be found here.

Requirements

To receive a Direct Student Loan, borrowers must be enrolled in at least 6 program applicable credits. Loans must be accepted through your financial aid portal by the last day in the active loan period. Loans cannot be accepted for previous semesters unless that semester is part of your active loan period.

  • For example, you have a Fall/Winter loan period. You can accept that Fall/Winter loan up until the last day of Winter semester. If your loan period is Winter/Spring and it is currently Winter semester, you cannot accept a loan for the previous Fall semester.

Entrance Counseling

Entrance Counseling is required before your first loan will disburse. It needs to be completed through studentaid.gov, and it is only required once – your entrance counseling does not expire. During Entrance Counseling, you will learn about the following:

  • What a Direct Loan is and how the loan process works
  • Managing your education expenses
  • Other financial resources to consider to help pay for your education
  • Your rights and responsibilities as a borrower

Master Promissory Note (MPN)

The Master Promissory Note (MPN) is a legal document in which you promise to repay your loan(s) and any accrued interest and fees to the U.S. Department of Education. It also explains the terms and conditions of your loan(s). Your MPN needs to be completed through studentaid.gov and it is required before your first loan will disburse. Your MPN will expire if a loan has not been disbursed to you within one year, and it is active for up to 10 years.

Annual Student Loan Acknowledgment

Borrowers of federal student loans are encouraged to complete the Annual Student Loan Acknowledgment each year through studentaid.gov. This acknowledgment is an effort to help you understand how much you owe, how much more you can borrow, and your responsibility to repay your loans.

Loan Limits

Students have annual and lifetime limits to the amount of federal undergraduate student loans they can borrow. The table below illustrates both of these limits for Dependent and Independent Undergraduate students.  

Maximum Amounts of Borrow
YearDependent*Independent*
1st Year$5,500$9,500
2nd Year$6,500$10,500
3rd & 4th Year$7,500$12,500
Aggregate$31,000$57,500

*The total amount includes subsidized and/or unsubsidized loan amounts
For more information on loan limits, visit the Department of Education's Student Loan page.

Borrower Responsibilities

Maintain contact and communication with loan servicers – Borrowers can identify their loan servicers by visiting studentaid.gov. Servicers regularly send messages to communicate with borrowers regarding disbursement notifications, interest bills, enrollment changes, grace period notifications, interest notices, and repayment notifications/obligations.

Borrowers are responsible to inform the servicer if:

  • There is a name change
  • The permanent address changes
  • The Social Security number changes
  • The projected graduation date changes
  • The student withdraws from school
  • The student transfers to another school
  • The student drops below half-time status (below 6 credits)
  • The student desires to apply for a deferment or a forbearance
  • The student is having any difficulty repaying the loan

Borrowers should retain copies of all letters sent to the servicer. Borrowers are also encouraged to log all telephone calls to the servicer by noting dates, the name of the person contacted, and what he/she was told.
Confirm Enrollment Verification with loan servicer – Loan servicers check a student’s enrollment status on the National Student Clearinghouse to see if students are enrolled in at least six credits. The National Student Clearinghouse is not updated until approximately a month into the semester.

If you are not listed as currently enrolled, you will most likely receive notification from your servicer that you are entering repayment. You can print and send to your servicer an Enrollment Verification. You are responsible to inform or correct the loan servicer of any errors or inaccuracies regarding your enrollment status, not the Financial Aid Office.

Repay loans after grace period expires – Borrowers are not required to start repaying their Subsidized and/or Unsubsidized loans until their grace period starts (either six months after graduation or dropping below 6 program applicable credits).

Borrowers with unsubsidized loans can reduce the amount of interest accruing on the loans by beginning repayment earlier.

  • Grace periods begin on the day immediately following the day a borrower stops attending school at least half time (6 program applicable credits) and ends on the day before the repayment period begins.
    • The grace period isn’t “used up” during shorter periods of non-enrollment. For instance, borrowers who miss a semester (4 months) but resume their studies with at least 6 program applicable credits before the six months end will still be eligible for the full six month grace period when they drop below 6 program applicable credits again or graduates.

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. Borrowers can log in to studentaid.gov to identify their loan servicer in order to make arrangements for loan repayment.

Borrowers should receive their Repayment Schedule during the grace period. If you did not receive this, it is your responsibility to contact your servicer. Payments must begin after the six-month grace period has elapsed.

Early Repayments – Borrowers will not be penalized by making early payments on their loans. Additionally, making early payments on a student loan before a grace period ends does not obligate the borrower to continue making payments.

Repayment: What to Expect

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Repayment: What to Expect

Exit Counseling

Borrowers who have received student loans and are nearing graduation or have withdrawn from a semester are required to complete Exit Counseling at studentaid.gov. This counseling reminds you of your responsibilities concerning repaying student loans, the loan servicer’s responsibilities to you, and which repayment options are available.

How to Complete Exit Counseling

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How to Complete Exit Counseling

Loan Deferment Types and Cancellation

If you're having trouble making payments on your federal student loans, watch "How to Manage Your Student Loans" 

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How to Manage Your Student Loans

Loan Deferments

Deferments are the temporary postponement of loan payments under special circumstances. During deferment, the borrower’s monthly principal payments are postponed, and the federal government pays the interest on Federal Subsidized Direct Loans. For a Federal Unsubsidized Direct borrower, monthly payments are postponed but the borrower is responsible for all the interest that accrues. Depending on which deferment the borrower qualifies for, the length of the deferment varies. Borrowers must apply for the deferment in writing by using a form provided by their servicer.

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.

Loan 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.

Religious Missions

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 forbearance for reduced payment.

Loan Consolidation

Loan 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.

Loan Cancellation

There are three provisions for cancellation of Federal Direct Loans:

  • The death of the student
  • The student becomes totally and permanently disabled
  • The school closes and the student is not able to finish their program

Contact your loan servicer if you feel you qualify for Loan Cancellation.

Default

If a borrower fails to make payments for six months or more, their loan will go into default. Defaulting on a loan is a serious matter. When borrowers enter default, they immediately become ineligible for any federal funds at any school. In the event of default, the borrower'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:

  • Reporting the borrower's default to a credit bureau.
  • Reporting the borrower's default to the Internal Revenue Service, causing their federal tax refunds to be withheld and applied toward their loan balance. Many states also withhold state income tax refunds.
  • Garnishing the borrower's wages

If you are having difficulty making your payments, contact your servicer immediately. Your loan servicer's contact information can be found on their dashboard after they log into studentaid.gov.

BYU-Idaho is required to publish the institution’s loan default rate for federal loans. The current institutional default rate is 3.2%.

Questions?

If you have any specific questions about your loans, please contact a financial aid counselor.