Consolidation Options and Managing Your Loans
Consolidation Loans
Consolidation loans allow borrowers to combine eligible education loans into a new loan. Typically, these loans will have a lower monthly payment, but a longer repayment term than the original loans. Consolidation loans should be considered carefully. Generally they are determined by weighted interest, meaning that an average rate is determined between the higher and lower interest rates on all loans a borrower has taken. Federal Direct Loans cannot be consolidated with private loans.
For more information on consolidation go to http://studentaid.gov/
Repaying Student Loans
For many borrowers, repayment on loans will not begin until after graduation. However, it is important for borrowers to know their responsibilities when it comes to student loans. Some loans require interest-only payments while in school or immediate repayment. Never take a loan without understanding exactly when you will recieve your first bill. As a matter of good financial management, do your best to understand the terms and conditions of your loans. If you don't understand them, contact your lender. Remember, as a borrower, you are responsible for repaying the loans fully and on-time.
For More Guidance
SallieMae's website offers some guidance on responsible borrowing, click here. If SallieMae is not your lender, or if you are confused to which loans you have taken, visit the National Student Loan Database at www.nslds.ed.gov for a list of your Federal Direct Student Loans. You will need your federal PIN number, that you recieved when you completed your FAFSA, in order to access the information on this site. If you have forgotten your PIN go to www.pin.ed.gov to request a duplicate PIN.
Repayment Caculator
The loan repayment calculator will help student loan borrowers caculate monthly Principal and Interest payments under the different payment plans. Click here for the repayment calculator.
To view a list of payment plan options go to www.studentaid.gov.
Deferment
You can receive a deferment for certain defined periods. A deferment is a temporary suspension of loan payments for specific situations such as reenrollment in school, unemployment, or economic hardship. You don’t have to pay interest on the loan during deferment if you have a Federal Direct Subsidized or FFEL, Stafford Loan or a Federal Perkins Loan. If you have a Federal Direct Unsubsidized Direct or FFEL Stafford Loan, you’re responsible for the interest during deferment. If you don’t pay the interest as it accrues (accumulates), it will be capitalized (added to the loan principal), and the amount you have to pay in the future will be higher. You have to apply for a deferment to your loan servicer (the organization that handles your loan), and you must continue to make payments until you’ve been notified your deferment has been granted. Otherwise, you could become delinquent or go into default.
Forebearance
Forbearance is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. You can receive forbearance if you’re not eligible for a deferment. Unlike deferment, whether your loans are Subsidized or Unsubsidized, interest accrues, and you’re responsible for repaying it. Your loan holder can grant forbearance in intervals of up to 12 months at a time for up to 3 years. You have to apply to your loan servicer for forbearance, and you must continue to make payments until you've been notified your forbearance has been granted.
For more information about Federal Direct Student Loans, contact the U.S. Department of Education's Direct Loan Customer Service Department at 800-848-0979.
Direct Loan Servicing Center, Borrower Services Department
PO Box 5609
Greenville, TX 75403-5609
The Federal Student Aid Ombudsman Group is where individuals can turn after trying other ways to resolve a federal student aid dispute.
U.S. Department of Education Ombudsman Office
U.S. Department of Education
FSA Ombudsman
830 First Street, NE
Fourth Floor
Washington, DC 20202-5144