It is important to understand that student loans are real loans that must be repaid with interest.
Before you borrow, take time to consider the long term (10-30 year) financial commitment you are making each time you accept loan funds.
Know What You Owe
It is important to understand that student loans are real loans that must be repaid with interest.
Missouri Western State University
Student Loan Repayment Coordinator
Information Every Borrower Should Know
How much have I borrowed and who is servicing my loan?
The U.S. Department of Education's National Student Loan Data System (NSLDS) provides information on your federal loans including loan types, disbursed amounts, outstanding principal and interest, and the total amount of all your loans. You can find out who your loan servicers are using NSLDS. To access NSLDS, go to www.nslds.ed.gov and select "Financial Aid Review."
How much will my payments be under the Standard Repayment Plan?
Under the standard repayment 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. 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 amount of time. However, you will likely pay the least amount of interest over the life of the loan.
What annual salary will I need to manage my loan payments?
It is recommended that your student loan payment be less than 8 percent of your future gross income.
What are my rights and responsibilities regarding loan repayment?
As a borrower you do have rights in dealing with your loan and loan holder. You also have clear responsibilities as well.
• You are entitled to a copy of your Repayment Schedule and Disclosure Statement.
• You have the right to be notified in writing if your loans are sold or transferred for servicing.
• You are entitled to a repayment period of at least five years.
• You have the right to prepay any part of your loan at any time without penalty.
• If you qualify, you have the right to defer your loan payments.
• You are entitled to have any questions about your student loan answered by your lender, guarantor, or the U.S. Department of Education.
• You have the right to have your loan canceled as a result of death or total and permanent disability.
• You have the right to a graduated or income-sensitive repayment schedule.
• If you first borrowed on or after 10/7/98 and have a debt of at least $30,000, you are entitled to an extended repayment schedule.
• You are entitled to receive the original Promissory Note when your loan is paid in full.
• You must notify your lender or servicer if you change your name, address or enrollment status (i.e., you withdraw, graduate, drop to less than half-time enrollment or change your school of attendance).
• You are responsible for knowing the terms of your student loans. You should keep copies of all student loan documents in a safe place.
• You must repay your loan whether or not you complete your studies, are satisfied with the education you receive or are able to find employment.
• You must make your loan payments on time.
• You must begin making payments at the end of your grace period whether you have received a repayment schedule or not. If your first payment due date is nearing and you have not received a payment schedule, you must immediately contact your lender or servicer.
• If you are unable to meet a scheduled payment, you must contact your lender or servicer as soon as possible. The lender or servicer may be able to help if you seek assistance before you are late making a payment.
• When you graduate, withdraw or drop to less than half-time enrollment, you must give your school your expected permanent address, the name and address of your expected employer and the address of your closest relative. Your school will forward this information to your guarantor, lender or loan servicer.
I'm Entering Repayment Soon
What should I do to get ready for successful loan repayment?
Know where your loans are. Go online to www.NSLDS.ed.gov to view all of your federal student loans and find out who is servicing each one.
Know when your first payment is due. Generally, the first payment is due approximately six months after you leave school. Making your payments on-time can help you build and maintain a good credit rating.
Calculate your estimated monthly payment. Use the repayment plan calculator available online at www.studentloans.gov to get an idea of what your monthly payments will be.
Pick the payment plan that works for you and your income level. You may have the option of arranging regular monthly payments or minimizing payments initially. For example, federal student loans offer income-driven repayment plans that set your payment at an amount intended to be affordable based on your income and family size. Before selecting a repayment plan, understand what the total loan cost will be. Many alternative payment plans reduce the monthly payment amount, but significantly increase the total cost of your loan—call your loan servicer to explore the best option for you.
Pay a little extra. By paying more than the minimum on your student loans every month, you can lower the amount of interest you pay over the life of the loan.
Lower your interest rate by signing up for automatic debit. Borrowers who make scheduled payments via automatic debit may qualify for a 0.25 percent interest rate reduction.
Consider Loan Consolidation. A Direct Consolidation Loan allows a borrower to consolidate multiple federal student loans into one loan. The result is a single monthly payment instead of multiple payments. Loan consolidation isn’t right for everyone. Be sure to do you research before you consider consolidation.
Use deferments or forbearances as a last resort. Postponing payments can cost you extra because unpaid interest on your loan will “capitalize” (add to the balance). Use these options only if absolutely necessary.
Stay in contact with your loan servicer. Log on to your servicers website – sign up to manage your accounts online and receive loan information via email. Always open your student loan notices on a timely basis to ensure you stay informed about the status of your loans. If you move or change email addresses, be sure to update your information with ALL of your servicers.
Keep your loans in good standing. Failure to repay your student loans (default) has serious consequences.
◦Your credit rating will be severely damaged for a minimum of seven years which can affect your ability to obtain credit, auto insurance and even a job;
◦Your Federal tax returns may be withheld; and
◦Your wages may be garnished.
Above all, if you are struggling to make your payments, ask for help. Seek out assistance from your loan servicer or get in touch with your local accredited non-profit credit counseling service. You may also contact Missouri Western’s Student Loan Repayment Coordinator for assistance.
How do I qualify for the Public Service Loan Forgiveness (PSLF)?
• Public Service Loan Forgiveness Fact Sheet
• Public Service Loan Forgiveness Q&A
• Dear Borrower Letter
• Instructions for Completing Employment Certification for PSLF
• Employment Certification for PSLF
How do I qualify for the Teacher Loan Forgiveness?
The Teacher Loan Forgiveness Program is intended to encourage individuals to enter and continue in the teaching profession. Under this program, individuals who teach full time for five consecutive, complete academic years in certain elementary and secondary schools that serve low-income families and meet other qualifications may be eligible for forgiveness of up to a combined total of $17,500 in principal and interest on their FFEL and/or Direct Loan program loans.
Is the interest on my student loans tax deductible?
How do I resolve issues relating to my student loans?
Student Aid Ombudsman Contact Information
Phone: 877-557-2575 Fax: 877-557-2575
Postal Mail: U.S. Department of Education, FSA Ombudsman Group, 830 First Street, N. E., Mail Stop 5144, Washington, D.C. 20202-5144
I Can't Afford My Loan Payments
What are the consequences of default?
• Your entire loan balance (principle and interest) will be due in full immediately.
• A collection agency will take over your loans and you will incur additional fees.
• Your credit history will be severely damaged and you will be unable to obtain a home mortgage.
• You will be required to pay much higher interest rates on vehicle purchases and credit card balances.
• You will be required to pay higher insurance premiums.
• Your wages may be garnished.
• Your tax refund and Social Security benefits may be withheld.
• You will no longer be eligible for future federal loans.
• Deferment will no longer be an option for you.
• You may have difficulty getting a job (employers check your credit history as part of the highering process).
How do I rehabilitate my defaulted loans?
After successfully completing the rehabilitation program:
• your loan(s) will no longer be considered to be in a default status;
• the default status reported by your loan holder to the national credit bureaus will be deleted;
• you will be eligible for the same benefits that were available on the loans before the loans defaulted. This may include deferment, forbearance, and Title IV eligibility; and
• wage garnishment ends and the Internal Revenue Service no longer withholds your income tax refund.
What If I Default On My Student Loans?
What repayment options are available?
Loan Deferment is a temporary suspension of loan payments for specific situations.
Forbearance is a temporary postponement or reduction of payments for a period of time, as you and the lender or holder of your loan may agree, because you are experiencing financial difficulty.
Graduated payment plans provide short-term relief through low, interest-only payments followed by standard principal and interest payments.
Pay As You Earn, Income-Based, Income-Contingent and Income-Sensitive payment plans offer payment relief with payments that are a specific percentage of your gross monthly income.
Can I consolidate my student loans?
A Direct Consolidation Loan allows a borrower to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple payments.
Make sure you carefully consider whether loan consolidation is the best option for you. While loan consolidation can simplify loan repayment and lower your monthly payment, it also can significantly increase the total cost of repaying your loans. Consolidation offers lower monthly payments by giving you up to 30 years to repay your loans. But, if you increase the length of your repayment period, you'll also make more payments and pay more in interest than you would otherwise. In fact, in some situations, consolidation can double your total interest expense. If you don't need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan.
You also should take into account the impact of losing any borrower benefits offered under repayment plans for the original loans. Borrower benefits from your original loan, which may include interest rate discounts, principal rebates, or some loan cancellation benefits, can significantly reduce the cost of repaying your loans. You may lose those benefits if you consolidate.
Can my student loans be discharged or cancelled?
• You die or become totally and permanently disabled.
• Your school closed before you could complete your program.
• For FFEL and Direct Stafford Loans only: Your school owes your lender a refund, forged your signature on a promissory note, or certified your loan even though you didn't have the ability to benefit from the coursework.
• You work in certain designated public school service professions (including teaching in a low-income school).
• You file for bankruptcy. (This cancellation is rare and occurs only if a bankruptcy court rules that repayment would cause undue hardship.)