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Borrower's Guide
Loans are guaranteed because there is risk involved for your lender. The guarantee is to the lender to ensure they are reimbursed for the loan amount. If the borrower doesn't pay the loan, the guaranty agency is required by the Federal Government to act as a collector to bring the borrower current on payments.
How Much Should I Borrow? Be sure you can pay back what you borrow. DON'T borrow more than you need. If you don't borrow the entire amount you are offered at the beginning of the school year and find you need more money later, you can go back to your financial aid officer and borrow the remainder, up to the loan limit for your academic year.
What is Repayment? This is when your loan payments begin. Borrowers are automatically set up on the standard repayment schedule which has a federal minimum monthly payment of $50. However, you may request a different repayment schedule.
Who Pays the Interest? For the Federal Subsidized Stafford loan, the Federal Government pays the interest while you are in school at least half-time and during your six-month grace period. For the Unsubsidized Stafford loan, you pay your own interest while in school and during the grace period. Repayment of principal and interest are your responsibility at the end of the six-month grace period for both types of loans.
What if I Can't Make a Payment? A deferment or forbearance may be available. These are not automatic. You must qualify for and request them. If for any reason you find yourself having difficulty paying your student loan, call your lender to see if you qualify.
What is Default? If you miss a payment you are considered delinquent. If you miss nine
consecutive payments you go into default.
Is There a Penalty if I Pay Off My Loan Early? There is no penalty for paying a student loan off early. You are required to make at least the minimum monthly payment each month unless you make other arrangements with your lender. If payment is made in an amount larger than the required monthly payment, the additional amount paid will be applied to the next month(s) payment(s).
What Information Should I Keep in My Records? It is a good idea to keep records of all promissory notes, phone calls, and correspondence with your lender.
What Information do I Need to Tell My Lender? Contact your lender immediately if you don't enroll as planned; graduate; change schools or go below half-time status; or change your name, address or social security number.
What do I Need to Know About Choosing a Lender? Once you choose a lender, stay with the same lender throughout all of your schooling. Each time you take out a loan, use the same lender (and lender code) even if that lender refers the loan to another bank for servicing. Remember, the rollover will take place automatically.
What if I Have Taken Out Loans with Different Lenders? If you have more than one lender, you will have more than one student loan payment. You may at some point wish to consolidate all of the loans into one. Consolidation may have a higher interest rate and you could lose certain deferment options. Repayment on a consolidation loan is 25 years.
What Governmental Factors Affect Student Loans? The Federal Government regulates the student loan programs. Therefore, it is a good idea to stay informed of congressional changes to the student financial aid programs. Congressional changes may affect the availability or structure of a program for both new and current borrowers.
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