Information regarding the following topics is provided for your assistance:
If you remember one thing about loan repayment, remember: always keep in touch with your loan providers. Borrowers are required by law to inform loan providers of any changes in their circumstances or status (name change, new address or telephone number, etc.) throughout the life of their loans. Failure to do so may lead to late payments, damage to your credit status, garnishment of wages, seizure of federal tax refunds, and possibly a declaration of default, which makes loans due and payable immediately. On the other hand, if you anticipate having difficulty in making payments and communicate with your loan provider ahead of time, the loan provider can work with you to explore all of the repayment options available to avoid default or delinquency. Remember that loan providers too, would prefer that you avoid default. Again, always keep in touch with your loan providers!
To help you estimate the cost of your loans over different repayment periods, and to show the effects of a variety of repayment options and loan consolidation, many loan providers/servicers and student financial aid organizations include loan repayment calculators among their online services. You may wish to consult the SmartStudent™ Guide to Financial Aid website or the website of your own lender/holder/servicer to get an idea of estimated monthly payments based on specified interest rates and repayment periods. While extending the loan repayment period is advisable for borrowers who may be having difficulty meeting their standard monthly loan payments and need to lower them, we would like to draw your attention to the significant rise in interest costs when the length of repayment is increased. Here are some helpful online links for loan repayment:
Lenders and loan servicers may offer repayment incentives on private loans to encourage on-time repayment. Contact your lenders or servicers for more information about any incentive programs they may offer. Remember, too, that there is no penalty for pre-payment of educational loans.
Some lenders of private educational loans offer Bar Examination loans to credit-worthy borrowers to help cover costs during the study period immediately after graduation. Depending on the loan program and your total debt, you may currently apply for up to $15,000. Bar Exam loan applications typically must be certified by the Financial Aid Office, and checks are mailed directly to the graduating student. Application should be made prior to graduation, but some lenders accept applications after graduation as well. International students may be eligible to apply, depending on the lender. Please contact your private educational loan lender for applications and for more information about the availability of Bar Examination loans. You may read more about the University’s suggested lenders.
Generally, payments of principal and interest on both federal and private educational loans are deferred until six or nine months after a student's enrollment status drops to less than half-time. The grace period is six (6) months for Federal Direct Unsubsidized loans. Some private educational loans have grace periods of up to nine (9) months. The Federal Direct Graduate PLUS loan has a six month post enrollment deferment (repayment begins 6 months after a student's enrollment status drops to less than half-time). Equally important, educational loans only carry one grace period. Therefore, if you had previous educational loans on which the grace period has expired (usually due to taking time between previous education and law school or taking a leave of absence during law school), those loans begin repayment immediately upon graduation or after your enrollment drops to less than half time. In some cases forbearance is available, but you must request it from your loan provider. While no loan payments are required during the grace period, most student loans accrue interest. Please consult your disclosure statements and/or contact your loan provider(s) for current updated information and terms.
Deferment of federally guaranteed loans is your right under certain circumstances, provided you file the appropriate paperwork with your loan provider(s). Private educational loan programs are not governed by the deferment provisions for federal loans, but they usually have their own, much more limited, guidelines for deferment and forbearance. Your loan applications and disclosure statements should list the provisions for loan deferment and forbearance. You also may check with your loan provider to learn what forbearance and deferment options are offered, and how to request them. If forbearance is granted, it is usually for a limited period of time, and interest either accrues or must be paid during that period. Depending on the loan program, you may contact your loan provider(s) about forbearance for periods of unemployment or economic hardship. Be sure to request deferment or forbearance as soon as you anticipate needing it, so that your request can be handled in time. If you are delinquent on your loans, loan providers are frequently limited in the forms of assistance they can provide, so do not delay in contacting them.
Though many students think of consolidation as a way to combine all of their loans to facilitate repayment, please note that this is not always the case. You can consolidate federal loans only with other federal loans, so if you have federal and private loans, you cannot combine them all. For borrowers considering loan consolidation, we strongly advise you to visit the Federal Direct Consolidation Loans website for more detailed information and application instructions.
You should consider consolidation primarily if you are having difficulty in managing your repayment obligations, but only after carefully reviewing the various loan repayment options available to federal loan borrowers. Consolidation reduces your monthly payments by increasing your loan repayment period, for as long as 30 years in some cases. But this means you may be paying considerably more in interest charges over the life of the loan if you consolidate. The interest rate on a consolidation loan also may be higher than the rate on loans in standard repayment.
There may be other disadvantages to consolidation, including, but not limited to, the possible loss of on-time repayment incentives, and borrowers should contact their lender(s) and/or the Federal Direct Consolidation Loan Program to obtain specific information. We advise that borrowers then carefully consider their options to ensure that consolidation fits into their long-term financial planning.
Note also that the College Cost Reduction and Access Act of 2007 contains a section (401) pertaining to Federal Loan Forgiveness for Public Service Employees. The federal loan forgiveness provisions require borrowers to have borrowed Direct Loans or to have consolidated their federal loans through the Federal Direct Consolidation Program. As such, we advise that borrowers carefully consider the available educational loan programs (private versus Direct Graduate PLUS) to ensure that their individual loan borrowing fits into their long-term financial planning. While borrowing through private educational loan programs may provide better loan terms in the short term, it also may limit your options should you decide one day to use the Federal Loan Forgiveness for Public Service Employees program. While we encourage loan borrowers to refer to the detail of the Federal Program in determining all relevant issues, the Financial Aid Office is available to address individual concerns.
The promissory disclosure statements for each of your loans will provide the names of the holders of your loans.
To locate the lender/holder/servicer of a federal loan, you can also check online at the National Student Loan Data System (NSLDS).