Federal Loan Repayment Options, Loan Consolidation, Deferment, and Forbearance
Federal Loan Repayment Options
Repayment of the principal loan balance begins six months after graduation, withdrawal, or less than half-time enrollment. Students may be allowed up to thirty years for repayment in certain circumstances however, repayment is usually based upon a ten-year plan.
The Direct Loan Program offers loan repayment plans designed to meet the needs of almost every borrower. Direct Loans are funded by the federal government through your school and are managed by the Direct Loan Servicing Center, under the supervision of the U.S Department of Education. The Federal Direct Loan Program allows you to choose your repayment plan and to switch your plan if your needs change.
You will receive more information about repayment choices before you leave school and, later from the holder of your loan. You can also get more details about repayment plans from FederalStudentAid.gov. If you don't choose a repayment plan when you first begin repayment, you'll be placed under the Standard Repayment Plan. You can also change plans to suit your financial circumstances.
To find out more about repayment options before receiving a Federal Direct Loan, borrowers may contact St. John Fisher College's Financial Aid Office or the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243). If you currently have a Federal Direct Loan and would like the exact payment amount on your loan, you can find it out online at the website for the Federal Student Loan Servicing Center or you can call the center at 1-800-848-0979.
Standard Repayment
With the standard plan, you'll pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you'll have up to 10 years to repay your loans.
The standard plan is good for you if you can handle higher monthly payments because you'll repay your loans more quickly. Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be repaid in the shortest time. For the same reason - the 10-year limit on repayment - you may pay the least interest.
Graduated Repayment
With this plan your payments start out low and generally increase every two years. There is a fixed repayment period of time not to exceed 10 years. length of your repayment period will be up to ten years. If you expect your income to increase steadily over time, this plan may be right for you.
Extended Repayment
To be eligible for the extended plan, you must have more than $30,000 in Federal Direct Loan debt. The extended repayment plan has a fixed annual or graduated repayment amount to be paid over a period not to exceed 25 years. Fixed payments are the same amount each month you are in repayment, as with the standard plan, while graduated payments start low and increase every two years, as with the graduated plan above.
This is a good plan if you will need to make smaller monthly payments. However, you may pay more in interest because you're taking longer to repay the loans. Remember that the longer your loans are in repayment, the more interest you will pay.
Income Contingent Repayment (ICR)
This plan gives you the flexibility to meet your Federal Direct Loan obligations without causing undue financial hardship. Your monthly payments will be calculated on the based on your annual income (and that of your spouse, if married), your family size, and the total amount of your Federal Direct Loans. Borrowers have 25 years to repay under this plan, the unpaid portion will be forgiven. Visit Repayment at Student Aid on the Web for more information on Direct Loan Income Contingent Repayment Plan. As of July 1, 2009, graduate and professional student PLUS borrowers in the Direct Loan program are eligible to use the ICR program. Direct Loan Parent PLUS Loan borrowers are not eligible for the ICR repayment plan.
Income Based Repayment (IBR)
This repayment option is available to all borrowers who have a partial financial hardship. FFEL and Direct Loan Parent PLUS Loan borrowers or FFEL or Direct Loan Consolidation borrowers are not eligible for this plan.
Under this plan, the required monthly payment amount will be based on your income during any period when you have a partial financial hardship. Your monthly payment amount may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you repay under this plan and meet certain other requirements over a specified period of time, you may qualify for cancellation of any outstanding balance on your loans. Visit Repayment at Student Aid on the Web for more information on Direct Loan Income Based Repayment Plan.
Federal Loan Consolidation
Student and parent borrowers can consolidate (combine) multiple federal student loans with various repayment schedules into one loan: either a FFEL Consolidation Loan or a Direct Consolidation Loan. The result is a single monthly payment instead of multiple monthly payments. With a consolidation loan your monthly payment may be lower, the repayment term may be extended, and you will receive a fixed interest rate. Compare the cost of repaying your unconsolidated loans with the cost of repaying a consolidated loan. Consider whether you may lose any borrower benefits if you consolidate and whether you may lose some discharge and cancellation benefits. Carefully review consolidation options before you apply. Federal loans can be consolidated during the grace period, during repayment, and during periods of deferment or forbearance. The interest rate of federal consolidation loans is a fixed rate for the life of the loan and is based on the weighted average of the interest rates on all of the loans you consolidate, rounded up to the nearest one-eighth of 1 percent. The interest rate will never exceed 8.25%. For more information, contact your lender or go to loanconsolidation.ed.gov.
Loan Deferment
Loan deferment is a period of time during which no payments are required and interest does accrue (accumulate), unless you have a Federal Direct Subsidized Student Loan. To qualify for a deferment, you must meet specific eligibility requirements. The most common loan deferment conditions are enrollment in school at least half-time, inability to find full-time employment (for up to three years) and economic hardship (for up to three years). For information on loan deferments, please contact the Direct Loan Servicing Center at 1-800-848-0979.
Loan Forbearance
If you temporarily can't meet your repayment schedule and you are not eligible for a deferment, you may be granted a forbearance for a limited and specific period of time. Forbearance occurs when your lender agrees to either temporarily reduce or postpone your student loan payments. Interest continues to accrue (accumulate) and you must pay the interest that accrues during any period of forbearance. Generally, lenders can grant forbearance for periods up to 12 months at a time, for a maximum of three years. Documentation will need to be provided to the lender to show why you should be granted forbearance. The lender must send a notice confirming the terms that were agreed to and record them in your file. Contact your lender to apply for forbearance.
Loan Cancellation and Forgiveness
In certain circumstances your loan can be cancelled or forgiven. Please visit the Federal Student Aid website for additional information.
For More Information
Direct Loan Servicing Center
Borrower Services Department
P.O. Box 5609
Greenville, TX 75403-5609
Toll free: 1-800-848-0979
http://www.myedaccount.com
Payment Address:
U.S. Department of Education
Direct Loan Payment Center
P.O. Box 530260
Atlanta, GA 30353-0260
Direct Loan Consolidation:
U.S. Department of Education
Consolidation Department
Loan Consolidation Center
P.O. Box 242800
Louisville, KY 40224-2800
Toll free: 1-800-557-7392
http://loanconsolidation.ed.gov