Starting Repayments

When you prepare to repay your student loan(s), it is important for you to know some essential information. This information would include:

• A promissory note is a contract signed by the borrowing student before obtaining the loan that contains all the agreed regulations, terms and conditions
• Borrowers should always directly contact their billing servicer if their contact information changes or if they need of any type of assistance

To get a better understanding about repayment of long-term student loans, please read the following questions, asked frequently from students, concerning the repayment period of the student loan:

What is principal and interest?

Principal is the amount you borrowed. Interest is a fee charged to you for use of the loan money, calculated as a percentage of the principal of the loan and paid over a specified time.

What is a grace period?

A grace period is a stated amount of time when you are not expected to make payments. A grace period begins when your enrollment falls below half-time status, you leave school or graduate. The grace period for a Stafford Loan is six months. A Perkins Loan has a nine-month grace period.

What is the difference between subsidized and unsubsidized loans?

• With subsidized (need-based) loans, the federal government pays the interest that increases when you are enrolled at half-time level or higher in qualified courses, during your grace period, or during authorized deferment periods.
• With unsubsidized (non need-based) loans you, the borrower, are responsible for payment of interest while attending school, during your grace period, and during authorized deferment periods.
• Capitalization occurs if you choose not to pay the interest that is accruing on an unsubsidized loan during such periods. When capitalizing, the unpaid interest is added to the loan principal, increasing your total outstanding balance.

Repayment Options

• 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.
• Extended Repayment: To be eligible for the extended plan, you must have more than $30,000 in Direct Loan debt and you must not have an outstanding balance on a Direct Loan as of October 7, 1998. Under the extended plan you have 25 years for repayment and two payment options: fixed or graduated. Fixed payments are the same amount each month, as with the standard plan, while graduated payments start low and increase every two years.
• Graduated Repayment: With this plan your payments start out low and increase every two years. The 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. Your monthly payment will never be less than the amount of interest that accrues between payments. Although your monthly payment will gradually increase, no single payment under this plan will be more than three times greater than any other payment.
• Income-based Repayment: Under this plan the required monthly payment will be based on your income during any period when you have a partial financial hardship. Your monthly payment may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you meet certain requirements over a specified period of time, you may qualify for cancellation of any outstanding balance of your loans.
• Income Contingent Repayment (Direct Lending only and does not apply to PLUS loans)This plan gives you the flexibility to meet your Direct Loan obligations without causing undue financial hardship. Each year, your monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans. Under the ICR plan you will pay each month the lesser of:
  1. the amount you would pay if you repaid your loan in 12 years multiplied by an income percentage factor that varies with your annual income, or
  2. 20% of your monthly discretionary income.
  If your payments are not large enough to cover the interest that has accumulated on your loans, the unpaid amount will be capitalized once each year. However, capitalization will not exceed 10 percent of the original amount you owed when you entered repayment. Interest will continue to accumulate but will no longer be capitalized.
  
  The maximum repayment period is 25 years. If you haven't fully repaid your loans after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged. You may, however, have to pay taxes on the amount that is discharged.

What is a billing servicer, and how do I contact them?

A billing servicer processes student loan bills, payments, deferments, and provides other administrative services. To find your billing servicer, please visit www.nslds.ed.gov.

How do I contact the Direct Loan Program or find additional information?

To receive a Personal Identification Number (PIN) required signing your FAFSA or Master Promissory Note (MPN): www.studentloans.gov.

For Direct Loan Entrance Counseling (new borrowers at UCCS):
www.studentloans.gov

To access and sign your Master Promissory Note (Stafford and PLUS loans):
www.studentloans.gov
1-800-557-7394

Federal PLUS Loan Credit Appeals and Endorser Applications:
www.studentloans.gov
1-800-557-7394

To access your personal account information:
www.studentloans.gov
1-800-557-7394

For more customized estimates, use the Direct Loan Servicing Center's online repayment calculator at
www.dl.ed.gov
1-800-848-0979

Are Perkins and Stafford Loan repayment statements together in one bill?

No, you will receive a separate bill for each of these loan programs. The Perkins Loan is campus-based and administered at UCCS by Loan-Disbursement office. Stafford Loans are Loan Servicer-based and administered by Loan Department of UCCS. Your Loan Servicer will bill you for your Stafford Loans.

What if my grace period expires before I go on to graduate school?

When your grace period expires, payment is due. In order to suspend your payments, the school where you obtained your Perkins Loan(s), as well as the Loan Servicer that administers your Stafford Loan(s), must receive verification of your enrollment.

What do I do if I can't make my loan payments?

You may request forbearance, an unemployment deferment, or an economic hardship deferment to obtain a temporary cessation of your payments. Contact the holder of your loan(s). The loan holder will determine your eligibility.

How do I file a student deferment?

Procedures for filing a student deferment for campus-based loans differ from procedures for Loan Servicer-based loans. For campus-based loans, acquire a deferment form from the school where you obtained the loan; for Loan Servicer-based loans, please contact your Loan Servicer.

Note for more information about how to file a deferment and forbearance please go to www.dl.ed.gov or www.studentloans.gov

Is there a penalty for prepayment of my student loans?

Your federal student loans may be prepaid or paid-in-full at any time without penalty. You may decide to shorten the length period of your loan payments by making extra payments or paying more than the minimum amount billed. By taking these actions, you will also decrease the total loan finance charge. (NOTE: Private loans may have different terms and conditions; please refer to your promissory note or contact your Loan Servicer for clarification/details.)

What is loan consolidation?

Consolidation combines multiple educational loans into one new loan. The new loan will have a new interest rate, new terms and conditions. Consolidation may be beneficial to some borrowers, but it may not be advantageous for others. For example, Perkins Loan borrowers lose important cancellation rights by consolidating. Consolidation is usually limited to larger loan amounts and may extend the loan repayment period. Extending the repayment period may increase your total fee charge, apart of lower interest rate and monthly payment. Be aware of all loan requirements before consolidating your educational loans.

For more information about loan consolidation under the Federal Direct Loan Program:
www.loanconsolidation.ed.gov
1-800-557-7392

Are you having trouble making payments?

If you're having difficulties making payments on your loans, contact the Direct Loan Servicing Center as soon as possible. The Direct Loan Servicing Center staff will work with you to determine the best option for you. Options include:

• Changing repayment plans
• Deferment, if you meet the eligibility requirements. A deferment allows you to temporarily stop making payments on your loan.
• Forbearance, if you don't meet the eligibility requirements for a deferment but you are temporarily unable to make your loan payments. Forbearance allows you to temporarily stop making payments, or extend the time for making payments.