Managing Your Loan

 

Please review the following guidelines to help you manage your Federal Student Loans.

Borrower’s Rights
Entrance & Exit Interview and Loan Counseling
Understanding Your Repayment Options
- Deferment
- Forbearance
- Consolidation
Trouble with Loan Payments
Defaulting on Your Loan(s)
Public Service Loan Forgiveness

 Borrower' Rights

When a student takes on a student loan he/she has certain rights and responsibilities.

  • The borrower has the right to receive the following information before the first loan disbursement

    • the full amount of the loan
    • the interest rate
    • when the student must start repaying the loan
    • the effect borrowing will have on the student's eligibility for other types of financial aid
    • a complete list of any charges the student must pay (loan fees) and information on how those charges are collected
    • the yearly and total amounts the student can borrow
    • the maximum repayment periods and the minimum repayment amount
    • an explanation of default and its consequences
    • an explanation of available options for consolidating or refinancing the student loan
    • a statement that the student can prepay the loan at any time without penalty
  • The borrower has the right to receive the following information before leaving school

    • the amount of the student's total debt (principal and estimated interest), what the student's interest rate is, and the total interest charges on the loan(s)
    • a loan repayment schedule that lets the student know when his/her first payment is due, the number and frequency of payments, and the amount of each payment
    • if the student has FFEL Program Loans, the name of the lender or agency that holds the student's loan(s), where to send the student's payments, and where to write or call if the student has questions
    • the fees the student should expect during the repayment period, such as late charges and collection or litigation costs if delinquent or in default
    • an explanation of available options for consolidating or refinancing the student's loan- a statement that the student can repay his/her loan without penalty at any time
  • The borrower has a responsibility to

    • understand that by signing the promissory note, the student is agreeing to repay the loan according to the terms of the note;
    • make payments on the student loan even if the student does not receive a bill or repayment notice;
    • if the student applies for a deferment or forbearance, he/she must still continue to make payments until notification that the request has been granted;
    • notify the appropriate representative (institution, agency, or lender) that manages the student's loan when the student graduates, withdraws from school, or drops below half-time status; changes his/her name, address, or Social Security Number, or transfers to another institution;
    • Receive entrance counseling before being given the first loan disbursement, and to receive exit counseling before leaving school.

If you want additional information about your rights and responsibilities, the terms of loan repayment (including loan repayment schedules), the necessity of loan repayment and required loan exit counseling can use the link for the Department of Education.

Entrance and Exit Interview/Loan Counseling

  • The Department of Education requires that any student receiving a Federal Family Education Loan be notified concerning their loan and obligations
  • The university counsels each student regarding loan indebtedness and gives each student an entrance test and emails or mails an exit interview regarding the loan to make sure the student understands the total amount borrowed and the borrower rights and responsibilities regarding repayment
  • The student must complete exit counseling at studentloans.gov prior to withdrawal or graduation
  • The purpose of this session is to inform the student of their tentative total loans received while in attendance at the college, refunds that may be made, and to provide the student with an estimated payment schedule
  • If the student is unable to complete exit counseling via studentloans.gov, contact loan counseling

Understand Your Repayment Options

Along with your contact name and information for your loans, you should also note your repayment requirements. If you have problems repaying your loans, you have 3 options – deferment, forbearance and consolidation.

  • Deferment
    • A deferment is a postponement of your loan payments. For most Federal Student Aid (FSA) loans, it is a period of time during which no payments are required and interest does not accrue (accumulate)
    • Students receiving unsubsidized Stafford Loans must make interest payments or may allow the interest to be added to the principal. This means that students may have to pay more on their loan over time
    • One of the ways to get a deferment is through an In-School Deferment. In-school deferment occurs when you are approved to postpone loan payments while you are attending classes
  • In order to receive an in-school deferment:
    • You must select an academic year selecting deferment purposes only
    • You will need to be enrolled in our semester format for a minimum of six credits each semester as an undergraduate student or at least three credits as a graduate student
    • When you are ready to begin the federal student aid application process, go to the federal aid application page to review the steps
    • You must submit either a lender specific deferment form from your prior lender, or complete a direct loan in-school deferment form. If you are not sure who your lender is, you can go to the National Student Loan Data System for Students and by using your PIN number you can access information about your loans and your lender
    • You must submit your deferment forms to our registrar's office at registrar@apus.edu
    • You can access an online direct loan deferment form. (You will need Adobe Acrobat Reader 5.0 or higher. There is an option for a free download.) If you borrowed from a FFEL (Federal Family Education Loan) Program lender, you must contact your lender to request a deferment form
  • Additional Deferments
    • The College Cost Reduction and Access Act (CCRAA), enacted on September 27, 2007, Modified the Military Service Deferment
    • Created the Active Duty Student Deferment
    • Changed the poverty line standard for the Economic Hardship Deferment for borrowers in the Federal Family Education Loan, Direct Loan and Federal Perkins Loan programs (if you borrowed a Perkins Loan at a previous institution)
    • For a complete listing of deferments, you can access the Loan Deferment Summary Chart
  • Forbearance
    • Forbearance occurs when your lender or loan-servicing agency agrees in writing to either temporarily reduce or postpone your student loan payments
    • If you are not able to meet your repayment schedule (and not eligible for a deferment), your lender might grant you forbearance for a specific limited period of time
    • Interest continues to accrue (accumulate), however, and you are responsible for paying it, no matter what kind of loan you have
    • If you wish to ask about forbearance, you should contact your lender if you borrowed previously from another lender
    • If you need forbearance for a direct loan, you can contact the direct loan servicing center at 800-848-0979, or view additional information online about direct loans
  • Consolidation
    • Loan consolidation is another way to decrease the amount you are paying on your FSA loans
    • If you consolidate, you combine one or more eligible loans into one loan with one repayment schedule
    • The following can be the benefits of loan consolidation:
      • Your monthly payment might be lower
      • You can take a longer time to repay (up to 30 years)
      • You will receive a fixed interest rate on your Direct or FFEL Consolidation Loan
    • With FSA loans, you can consolidate via a Federal Family Education Loan (FFEL) Consolidation or a Direct Consolidation Loan resulting in one monthly payment
    • To apply for a Direct Consolidation Loan, contact the Loan Origination Center’s Consolidation Department at 1-800-557-7392
    • Or, you can view additional information online about direct consolidation loans
    • To apply for a FFEL program loan consolidation, you can contact the consolidation department of a participating lender for an application
    • If the same FFEL loan holder holds all the loans you (or your parents) want to consolidate, usually you must obtain your consolidation loan from that holder

Trouble with Loan Payments

  • If you're having trouble with loan payments, don't wait—contact your loan servicer immediately
  • If you don't know which organization(s) are servicing your loan(s), you can research your account information at www.nslds.ed.gov/nslds_SA/
  • If you have already contacted your loan servicer(s) and you still are unable to resolve an issue, you might wish to contact the FSA Office of the Ombudsman, which could help you and the loan servicer communicate better
  • The FSA Ombudsman can be reached online by visiting the FSA Ombudsman's website or by phone at 877-557-2575. Note that the Ombudsman's office will not relieve you of your responsibility to repay your student loan
  • Income-Based Repayment (IBR) is a new payment option for federal student loans. It can help borrowers keep their loan payments affordable with payment caps based on their income and family size. For most eligible borrowers, IBR loan payments will be less than 10 percent of their income - and even smaller for borrowers with low earnings.

Defaulting on Your Loan(s)

  • Do NOT default on your loan(s)
  • Once you accept Federal Student Aid, you are responsible for repaying your loan just as if it were a loan for a home or a car. If you do not pay on your loan, it will go into default which could have financial consequences
  • If your financial circumstances become difficult, you must research your options to determine the best way to continue taking responsibility for the money you have borrowed to fund your education
  • It is very difficult to have federal student loans discharged in bankruptcy and you cannot cancel your student loans if you did not get the education you expected, the job you expected, or did not complete your education, unless you leave school for a reason that qualifies you for a discharge of your loan
  • Default occurs if you fail to make a payment for 270 days (if you repay monthly) or 330 days (if your payments are due less frequently)
  • Defaulting on your loan has severe consequences:

    • Your lender or agency that holds your loan, the state, and the federal government may all take action to recover the money
    • They all may notify national credit bureaus of your default which will negatively affect your credit rating for a long time
    • The Internal Revenue Service can withhold your U.S. individual income tax refund and apply it to the amount you owe on your FSA loans
    • The agency holding your loan may ask your employer to deduct payments from your paycheck
    • If you default on your FSA loan, you are liable for loan collection expenses
    • Students who default on FSA loans are not entitled to receive additional federal student aid if they return to school
    • Legal action may also be taken against you for defaulting on a Federal Student Aid loan
  • American Public University System has partnered with ECMC Solutions, a professional student loan counseling company

    • The ECMC Solutions will assist students with questions and repayment options available in the student loan program
    • This is a free service for all students and alumni in federal loan repayment or who are in need of deferment/forbearance assistance
    • If you have questions, comments, or concerns about repaying your student loan, ECMC Solutions has expert student loan advisors that are ready and willing to assist
    • Unlike private student loans, the Federal Student Loan Program provides various repayment options and alternative ways to postpone payment
    • We encourage you to utilize this service and call ECMC Solutions for more information
    • ECMC Solutions can be reached at 877-331-3262. ECMC Solutions invites you to visit their website

 Public Service Loan Forgiveness

  • The Public Service Loan Forgiveness Program was created to encourage individuals to enter and continue to work full-time in public service jobs
  • Under this program, you may qualify for forgiveness of the remaining balance due on your eligible federal student loans after you have made 120 payments on loans under certain repayment plans while employed full time by certain public service employers
  • Only non-defaulted loans made under the William D. Ford Direct Loan Program are eligible for loan forgiveness. The Direct Loan Program includes the following types of loans:

    • Federal Direct Stafford/Ford Loans (Direct Subsidized Loans)
    • Federal Direct Unsubsidized Stafford / Ford Loans (Direct Unsubsidized Loans)
    • Federal Direct PLUS Loans (Direct PLUS Loans)- for parents and graduate or professional students
    • Federal Direct Consolidation Loans (Direct Consolidation Loans) 
  • Although loan forgiveness under this program is available only for loans made and repaid under the Direct Loan Program, loans made under other federal student loan programs may qualify for forgiveness if they are consolidated into a Direct Consolidation Loan
  • Therefore, only payments made on the Direct Consolidation Loan will count toward the required 120 monthly payments
  • The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans:
  • Go to the Public Service Loan Forgiveness fact sheet for more information on the terms and conditions of the program and to understand what types of public service jobs qualify
Need Help with Financial / Tuition Assistance?

- Watch brief videos with answers to many of your financial assistance questions on Financial Aid TV
- Attend an online Financial Aid Orientation session with the experts
- For additional assistance, contact our Financial Aid Help Desk:  877-372-3535 | Send an e-mail
 

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