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Loans

A Federal student loan is money you borrow and must pay back with interest. If you decided to take out a loan, it is important to understand that a loan is a legal obligation that you will be responsible for repaying with interest. Before accepting any aid, students must review and agree to the Terms and Conditions.

To apply for a Federal student Loan, you must submit a Free Application for Federal Student Aid (FAFSA). The Expected Family Contribution (EFC) number generated by your FAFSA application, along with your grade level, will determine your eligibility for a Federal Direct Subsidized Loan and Federal Direct Unsubsidized Loan. Along with completing the FAFSA application, students must also be admitted as a degree-seeking students and be meeting all aspect of Satisfactory Academic Progress (SAP).

An origination fee required by the federal government will be applied to each Direct Loan you borrow. The origination fee is a percentage of the amount of each loan you receive and is subtracted from the amount of the loan you borrow. This means the loan money you receive will be less than the amount you actually borrow. You’re responsible for repaying the entire amount you borrowed and not just the amount you received. For more information about current loan origination fees, please visit the Federal Student Aid website.

To learn more about Federal Student Loans and how to manage your debt, visit the Federal Student Aid Gateway.

Student Loan Options

Loan Basics

  • Interest Rates and Fees
  • Master Promissory Notes
  • Entrance Counseling
  • Accept a Loan
  • Exit Counseling
  • NSLDS – The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s (ED’s) central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, and other Department of ED programs. NSLDS Student Access provides a centralized, integrated view of Title IV loans and grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or grant data.

Federal Loan Repayment Options

Loans begin to go into repayment when a borrower does the following:

  • Graduates from school
  • Drops below half-time enrollment
  • Withdraws from school
  • Takes a Leave of Absence

Federal Direct Loans does provide the option to make payments before your repayment period begins without penalty.

When it comes time to repay your Federal Direct Student Loan, you will need to select a repayment plan. There are several repayment plans to choose from which can be seen in the chart below. How much you pay and how long you take to repay your loans will vary depending on the repayment plan you choose. Consolidation Loans also have varying repayment plans.

If you don’t make your loan payments, you risk going into default. Defaulting on your loan has serious consequences. Your loan becomes delinquent the first day after you miss a payment. The delinquency will continue until all payments are made to bring your loan current. Loan servicers report all delinquencies of at least 90 days to the three major credit bureaus.

A negative credit rating may make it difficult for you to borrow money – i.e. for a car or home – or sometimes may make it impossible. If you can’t make the payments, look into your repayment options listed below, or talk to your loan provider about other ways to get your monthly payments reduced.

Learn about additional repayment options: Forbearance | Deferment | Consolidation | Public Service Loan Forgiveness

REPAYMENT PLAN ELIGIBLE LOANS MONTHLY PAYMENT & TIME FRAME ELIGIBILITY
Standard Repayment Plan
  • Subsidized Loans
  • Unsubsidized Loans
  • All PLUS Loans
Payments are a fixed amount

Up to 10 years

All borrowers are eligible for this plan.

You’ll pay less over time than under other plans.

View a Sample Repayment Schedule.

Graduated Repayment Plan
  • Subsidized Loans
  • Unsubsidized Loans
  • All PLUS Loans
Payments are lower at first and then increase, usually every two years

Up to 10 years

All borrowers are eligible for this plan.

You’ll pay more over time than under the 10-year Standard Plan

Extended Payment Plan
  • Subsidized Loans
  • Unsubsidized Loans
  • All PLUS Loans
Payments may be fixed or graduated

Up to 25 years

If you’re a Direct Loan borrower, you must have more than $30,000 in outstanding direct loans.

If you’re a FFEL borrower, you must have more than $30,0000 in outstanding FFEL Program loans.

Your monthly payments will be lower than under the 10-year Standard Plan or the Graduated Payment Plan

Revised Pay As You Earn Payment Plan (REPAYE)
  • Subsidized Loans
  • Unsubsidized Loans
  • Direct PLUS loans made to students
Your monthly payments will be 10% of discretionary income.

Payments are recalculated each year and are based on your updated income and family size.

If you’re married, both your and your spouse’s income or loan debt will be considered, whether taxes are filed jointly or separately (with limited exceptions).

Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 or 25 years.

Any Direct Loan borrower with an eligible loan type may choose this plan.

Your monthly payment can be more than the 10-year Standard Plan amount.

You may have to pay income tax on any amount that is forgiven.

Good option for those seeking Public Service Loan Forgiveness (PSLF).

Pay As You Earn Repayment Plan (PAYE)
  • Subsidized Loans
  • Unsubsidized Loans
  • Direct PLUS loans made to students
Your maximum monthly payments will be 10% of discretionary income.

Payments are recalculated each year and are based on your updated income and family size.

If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return.

Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 years.

You must be a new borrower on or after October 1, 2007, and must have received a disbursement of a Direct Loan on or after October 1, 2011.

You must have a high debt relative to your income.

Your monthly payment will never be more than the 10-year Standard Plan amount.

You’ll pay more over time than under the 10-year Standard Plan.

You may have to pay income tax on any amount that is forgiven.

Good option for those seeking Public Service Loan Forgiveness (PSLF).

Income-Based Repayment Plan (IBR)
  • Subsidized Loans
  • Unsubsidized Loans
  • All PLUS Loans made to students
Your monthly payments will be 10% or 15% of discretionary income.

Payments will be recalculated each year and are based on your updated income and family size.

If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return.

Any outstanding balance on your loan will be forgiven if you haven’t repaid your loan in full after 20 or 25 years.

You may have to pay income tax on any amount that is forgiven.

You must have high debt relative to your income.

Your monthly payment will never be more than the 10-year Standard Plan amount.

You’ll pay more over time than under the 10-year Standard Plan.

Good option for those seeking Public Service Loan Forgiveness (PSLF).

Income-Contingent Repayment Plan (ICR)
  • Subsidized Loans
  • Unsubsidized Loans
  • Direct PLUS Loans made to students
Your monthly payment will be the lesser of:

  • 20% of discretionary income, or
  • the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income

Payments are recalculated each year and are based on your updated income, family size, and the total amount of your Direct Loans.

If you’re married, your spouse’s income or loan debt will be considered only if you file a joint tax return or you choose to repay your Direct Loans jointly with your spouse.

Any outstanding balance will be forgiven if you haven’t repaid your loan in full after 25 years.

Any Direct Loan borrower with an eligible loan type may choose this plan.

Your monthly payment can be more than the 10-year Standard Plan amount.

You may have to pay income tax on the amount that is forgiven.

Good option for those seeking Public Service Loan Forgiveness (PSLF).

Parent borrowers can access this plan by consolidating their Parent PLUS Loans into a Direct Consolidation Loan.

Income-Sensitive Repayment Plan
  • Subsidized Loans
  • Unsubsidized Loans
  • FFEL PLUS Loans
Your monthly payment is based on annual income.

Up to 15 years

You’ll pay more over time than under the 10-year Standard Plan.

The formula for determining the monthly payment can vary from lender to lender.

Forbearance

If you can’t make your scheduled loan payments, but don’t qualify for a deferment, your loan servicer may be able to grant you a forbearance. With forbearance, you may be able to stop making payments or reduce your monthly payment for up to 12 months. Interest will continue to accrue on your subsidized and unsubsidized loans (including all PLUS loans).

Deferment

A deferment is a period during which repayment of the principal and interest of your loan is temporarily delayed.

Under certain circumstances, you can receive a deferment that allows you to temporarily postpone or reduce your Federal Student Loan payments. Postponing or reducing your payments may help you avoid default. You’ll need to work with your loan servicer to apply for deferment. Be sure to keep making payments on your loan until the deferment or forbearance is in place. You are eligible for an In-School Deferment if you are enrolled at least half-time in school and your loan has been fully disbursed. During a deferment, you do not need to make payments. In addition, depending on the type of loan you have, the Federal Government may pay the interest on your loan during a period of deferment.

More About Deferment

Consolidation

Federal Consolidation Loans allow the borrower to combine all federal student loans into a single loan and extend repayment for up to 30 years.

  • Federal Consolidation Loans have one fixed-interest rate based on a weighted average of the current rates on your existing loans.
  • Borrowers must be in repayment to qualify
  • Borrowers who are delinquent or in default must meet certain requirements before they may consolidate their loans
  • Parent PLUS Loans are eligible for consolidation once they are fully disbursed.
  • Private loans are not part of the federal loan consolidation program.

Why Consolidate?

  • If you currently have federal student loans that are with different loan servicers, consolidation can simplify loan repayment by giving you a single loan with just one monthly bill.
  • Consolidation can lower your monthly payment by giving you a longer period of time to repay your loans
  • A consolidation loan has a fixed interest rate for the life of the loan
  • Consolidated loans have several different repayment plans
  • If your loans are held by multiple lenders and/or servicers, consider consolidating
  • If your loans are held by the same government servicer but are both Stafford and Direct Loans, consider consolidating.

When to Consolidate?

  • We recommend that you begin the consolidation process 4 months after graduating or leaving school so that the consolidation takes place at the very end of your statutory 6 months grace period.  (It can take 6 to  weeks for the consolidation process to be completed)
  • When, based on your personal situation, you have determined that consolidation is right for you.

Additional Questions?

How to Start the Consolidation Process?

Federal Direct Loans – Sample Repayment Schedule

Direct loan repayment varies by student.  Your monthly payment amount is determined by how much you borrowed when the funds were disbursed, when your loan enters repayment and the type of repayment plan you choose.

To give you an idea of repayment, let us assume we have an undergraduate borrower with the following loans:

1st year Subsidized Loan of $3,500 with an interest rate of 4.66%

2nd year Subsidized Loan of $4,500 with an interest rate of 4.29%

3rd year Unsubsidized Loan of $4,500 with an interest rate of 3.76%

4th year Unsubsidized Loan of $5,000 with an interest rate of 4.45%

For a total amount of loans borrowed of $17,500 with a weighted average interest rate of 4.3%

Assume the student enters repayment immediately following the end of their six-month grace period, and they have an annual salary of $32,000.  The gird below shows the different repayment options available to the borrower and lists the monthly payment, the length of time it takes to pay off the loan, and the total amount paid for the loan.

Federal Direct Loan Sample Repayment Schedule

Payment Plan Name Monthly Payment Total Amount Paid # of Months in Repayment
Standard $180 $21,556 120
Graduated $101 – $303 $22,575 120
Revised Pay As you Earn (REPAYE) $115 – $242 $22,653 132
Pay As you Earn (PAYE) $115 – $180 $22,822 143
Income- Base Repayment (IBR) $172 – $180 $21,600 121
IBR for New Borrowers $115 – $180 $22,822 143
Income- Contingent Repayment $119-143 $24,207 186

The example above does not take into consideration the interest that accrues on the Unsubsidized loan while the student is in school.

We recommend that you log into the Repayment Estimator at StudentLoans.gov with your FSA credentials to get an estimate using your actual loan data.

Federal Direct Loans (Stafford and PLUS)

If you have a federal Direct Loan, please send your payment to your loan servicer.  You may log into the National Student Loan Database System (NSLDS) to access your loan servicer information.

 

Federal Perkins Loans

If you have a Federal Perkins Loan, you can access your loan account, update your personal information, and make payments online at Heartland/ECSI.

 

Payment can also be mailed to –

Educational Computer Systems, Inc. (ECSI)

PO Box 718

Wexford, PA 15090

Phone: 888-549-3274

Private Education Loans

If you have a private educational loan, please contact your lender for payment information.

Apply for Federal Direct Student Loans

(e.g. Subsidized, Unsubsidized, Parent PLUS, and Graduate PLUS)

Step 1. Complete the Free Application for Federal Student Aid (FAFSA)
Step 2. If you are awarded loans, accept your loan on your myNMSU account
Step 3. Complete Entrance Counseling
Step 4. Complete Master Promissory Note (MPN)

It is important that all borrowers understand there are borrower rights and responsibilities that must be followed.