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Student Loan Repayment Guide

Federal Loans

 

The following are Federal loans* that students have taken out at the Conservatory:

  • Direct Subsidized Stafford Loan—a need-based loan. No interest is charged on the Subsidized Loan until six months after the student graduates, withdraws, goes on a leave of absence or drops below half time. The six months period is called the Grace Period.
  • Direct Unsubsidized Stafford Loan—a non-need-based loan. Interest starts to accumulate as soon as the loan is completely disbursed.  Payments can be deferred until after the grace period is over.
  • Direct Grad PLUS Loans—also a non-need-based loan that requires a credit check. Interest starts to accumulate as soon as the loan is completely disbursed. Grad PLUS Loans do not have a grace period, but payments can be deferred until six months after the student graduates, withdraws, goes on a leave of absence or drops below half time.

In addition, there is the Parent PLUS Loan. The Parent PLUS is for undergraduate students and is taken out by their parent. Interest starts to accumulate and repayment takes place immediately after the loan has been completely disbursed usually in the spring semester. The parent can ask for a deferment of payments until after the student has left school. 

*Before the 2010–2011 academic year, federal loans at The Boston Conservatory were made through the Federal Family Educational Loan Program (FFELP). The FFELP loans were made through banks or other educational lenders and subsidized by the Federal Government. The information below may have information on the FFELP loans as well as Direct Loans.

PUT Loans

During the economic meltdown of 2008, the Ensuring Continued Access to Loans Act (ECASLA) authorized the sale of federal student loans to the Department of Education. This means that the Department of Education may now be the holder of one or more of a student’s loans. These loans (called PUT Loans) are still considered FFELP loans with all the borrower benefits attached, however, the servicers of these loans, may not match the servicers of the student’s other FFELP loans. Students whose loans were bought by the Department of Education were notified of this when the sale occurred. Students should go to the National Student Loan Data System (NSLDS) website to at www.nslds.ed.gov to find out where his/her loans are being serviced.

Exit Counseling Interview

PLEASE NOTE that any student who took out a Federal Loan MUST fill out an Exit Counseling Interview once they graduate, withdraw or drop below half time.  The Exit Interview is available at www.studentloans.gov. The Exit Interview is a federal regulatory requirement.  It provides you with a list of your rights and responsibilities as a borrower and it also provides you with valuable information to help you manage your loans.   

To fill out the Exit Interview: 

1. Go to www.studentloans.gov  

2. Sign in using your birth date, social security number and your FAFSA pin number (if you don’t have a FAFSA pin number, go to www.pin.ed.gov to get one)

3. Once inside click on Complete Counseling, then click on Exit Counseling 

5. Continue on until you have submitted the counseling.  

Transcripts, Grades and Diplomas Will Be Held Until the Exit Interview Has Been Filled out. No Documents Will Be Released Until You Fill out the Exit Interview.

The Financial Aid Office will send students that withdraw, graduate or drop below half time a list of the loans (federal and private) that they’ve taken out while at The Boston Conservatory.  Parent loans will not be included, but parents can ask for a separate listing of any educational loans they took out if they wish. 

Students can also see a listing of their federal loans through the National Student Loan Data System website at www.nslds.ed.gov

Student Loan Repayment Options

There are a few different options that you can take advantage of when repayment of your federal loans begin.  The Standard Repayment plan is the one you will automatically get.  If you wish to enroll in a different repayment plan, you will need to contact your lender: 

Standard Repayment – Maximum of 10 years 

1. Your payment is based on this repayment option unless you request a different option 

2. Your payment stays the same throughout the repayment period 

3. This option keeps total interest you pay to a minimum versus other repayment options 

4. If you wish for a different repayment plan, you will have to contact your lender. 

Graduated Repayment – Up to 10 years 

1. Payments start low, then increase every 2 years 

2. Payments must be at least equal to monthly interest due

3. No single payment will be more than 3 times greater than any other payment 

4. You pay more interest over the life of the loan 

Extended Fixed Repayment - Up to 25 years

1. Fixed Payments

2. Only available to borrowers with more than $30,000 in student loan debt whose oldest loan was originated on or after October 7, 1998 

3. Payments of $50 or more

4. You pay more interest over the life of the loan

Extended Graduated Repayment – Up to 25 years 

1. Payments start low, then increase every two years 

2. Only available to borrowers with more than $30,000 in student loan debt whose oldest loan was originated on or after October 7, 1998 

3. Payments must be at least equal to monthly interest due

3. No single payment will be more than 3 times greater than any other payment

3. You pay more interest over the life of the loan 

 

Income Sensitive Repayment for FFELP Loans– Up to 10 years 

1. Your monthly payment is based on your annual income 

2. Your payments change as your income changes

3. Each Lender's formula for determining the monthly payment amount under this plan may vary

4. If you think you would want a lower payment for a longer time you may want to consider Extended Repayment or Income-Based Repayment (Direct Loan Consolidation of your FFELP loans is required to use the IBR plan)

5. This option may extend your repayment period, which will result in you paying more interest over the life of the loan 

 

Income Contingent Repayment for Direct Loans –  Up to 25 years  

1. It’s similar to the Income Sensitive Repayment.  If you consolidate your FFELP loans into Direct Loans you can qualify for Income Contingent Repayment 

2. The ICR is designed to make repayment easier for students who choose jobs with lower salaries, like a career in public service  

3. It pegs the monthly payment to the borrower’s income, family size and total amount borrowed 

4. After 25 years if there’s a balance owed it will be forgiven.  Under current law, the amount forgiven will be considered taxable income  

5. The ICR contains an interest capitalization cap.  If your payments don’t cover the interest, unpaid interest is capitalized once a year (added to the principal).  However, this capitalization will be capped at 10% of the original loan amount. 

 

Income-Based Repayment – Up to 25 years 

1. The IBR is considered an alternative to ISR and ICR 

2. To qualify for Income-Based Repayment, you must show partial financial hardship 

3. You will have to reapply every year.  Usually a tax return is required.  Payments are adjusted annually and can rise and fall depending on your discretionary income 

4. Monthly payments are capped at no more than 15% of your discretionary income, which is based on your income, family size, and total amount borrowed 

5. You can report $0 income and $0 payments are allowed 

6. After 25 years, any remaining debt is discharged, but will be considered taxable income 

7. This option may extend your repayment period, which will result in you paying more interest over the life of the loan

 

Pay As You Earn - Up to 20 years

1. Your maximum monthly payments will be 10% of discretionary income

2. Your payments change as your income changes

3. You must be a new borrower on or after 10/1/2007 and must have received a disbursement of a Direct Loan on or after 10/1/2011

4. You must have partial financial hardship

5. Your monthly payments will be lower than under the 10 year Standard Plan

6. If you have not repaid your loan in full after you made the equivalent of 20 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven

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

More information on Payment Plans can be found at www.finaid.orgwww.ibrinfo.orghttp://studentaid.ed.gov.  Your servicer should also be able to help you

Consolidation – 10 to 30 years 

1. You consolidate all your federal student loans into one new loan (usually with a new lender) with one monthly bill 

2. The longer repayment period would reduce your monthly payments, but extend your repayment term, resulting in a higher total amount paid 

3. Your interest rate is fixed, and it will not change for the life of the loan.  It is calculated by taking the weighted average of the interest rate(s) of your existing loan(s) and rounding up to the nearest 1/8% 

4. You will lose the benefits of the underlying loans, and new borrower benefits will vary depending on your lender.  Always evaluate the benefits you have with your current lender before consolidating.  Do they outweigh the advantages you’ll gain with consolidation? 

5. Because this is a new loan, repayment begins once it is disbursed – even if your previous loans were in their grace periods 

6. Private loans CANNOT BE consolidated with federal loans 

7. Parent PLUS Loans CANNOT BE consolidated with federal student loans 

8. You cannot reconsolidate any consolidated loans UNLESS you are adding a new loan. 

9. If you wish to be eligible for the Public Servant Loan forgiveness you MUST consolidate into the Direct Loan program.  See the Loan Forgiveness section of this email for more information 

10. Most lenders no longer offer consolidation loans because it’s no longer profitable for them.  The Federal Government offers consolidation through the Direct Loan program.  The Borrower number for the Direct Loan Program is 1-800-848-0979.  To apply for the Direct Consolidation Loan call 1-800-557-7392. 

11. For more information on consolidation, please go to http://loanconsolidation.ed.gov/index.html or www.finaid.org

 

 

Postponement Options

Deferment and Forbearance allow you to postpone making payments on your federal student loans, however, there are key differences between the two.

Deferment is your right, so you can’t be denied one if you meet the criteria set by the federal government, have provided all relevant documentation and haven’t exhausted your available time for a deferment.  During an approved deferment period, the federal government pays the interest on your Subsidized Loans, but NOT on Unsubsidized Loans, Parent PLUS or Grad PLUS Loans. 

You may qualify for a deferment if you meet any of the following conditions: 

  • Economic hardship 
  • Unemployment 
  • At least half time enrollment in a degree program 
  • Summer between semesters 
  • Graduate fellowship 
  • Rehabilitation training 
  • Active Military Duty 

Forbearance is not a right, and it is granted primarily at the discretion of your lender or servicer.  Interest continues to accrue while in forbearance.  This is a more expensive form of postponement so try for a deferment first. 

Forbearance is usually reserved for cases of economic hardship, but you may also be eligible if you meet the following conditions: 

  • Internship or residency 
  • Excessive debt 
  • Disaster 
  • Military mobilization 
  • National and community service 
  • Temporary disability 

To apply for either deferment or forbearance you will need to contact your lender or servicer.  You should complete the application and return it to your servicer for review along with any supporting documentation required.  You should continue to make monthly payments until your servicer notifies you that your postponement has been granted.  Contact your servicer if you have any questions. 

Delinquency and Default

If you don’t make a scheduled payment, your loan will be considered delinquent.  If you don’t make payments on your loan for 270 days, it will go into default.  The following consequences can result from default: 

  • Negative information will be reported to the consumer reporting agencies.  It will appear on your credit reports, and will remain for at least 7 years after the loan is paid in full. 
  • Your state and federal tax refunds can be seized 
  • Your wages can be garnished by your loan holder 
  • Legal action, including civil claims, liens, etc.., can be taken against you 
  • You may be disqualified from borrowing additional student loans 
  • You will be ineligible to receive all forms of federal student aid 
  • Your ability to take out other loans (car, mortgage, etc…) may be impacted 
  • Employment opportunities may be affected 
  • Professional licenses may be revoked

Loan Forgiveness for Teachers

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.  For more information on the Teacher Loan Forgiveness Program please go here

The American Federation of Teachers also offers a list of loan forgiveness programs here.

Loan Forgiveness for Public Service Employees

Recently, Congress passed the College Cost Reduction and Access Act.  One of the provisions of this act is to grant federal loan forgiveness to full time public service employees after 120 monthly payments have been made. 

Under this program, the federal government will forgive the remaining outstanding balance of principal and accrued interest on an eligible loan for a borrower who is NOT in default and who makes 120 monthly payments on the loan after October 1, 2007.  The borrower must be employed full-time in a public service job during the same period in which the loan payments are made AND at the time that the cancellation is granted. 

The borrower must use one of the following repayment plans to qualify for the loan forgiveness program: 

  • An income-based repayment plan 
  • An income-contingent repayment plan 
  • A Direct Loan standard repayment plan based on a 10 year repayment period or 
  • Any Direct Loan repayment plan or Direct Consolidation Loan repayment plan where the monthly payments are not less than the Direct Loan standard repayment plan payments 

NOTE
If you’re in a Standard Repayment plan you’re supposed to pay your loan off after 10 years, so there’ll be little or nothing to forgive.  It’s strongly suggested that you get into the IBR or ICR repayment plans if you want the Public Service Loan Forgiveness. 

ANOTHER NOTE:  KEEP YOUR PAPERWORK 
There has been no information about how this forgiveness program will work after the 10 years are up, but you should definitely be able to prove that you worked in the public service sector all the while you made payments.

FINAL AND VERY IMPORTANT NOTE
There are two different programs that offer federal loans.  One is the Federal Family Educational Loan Program (FFELP) and the other is the Direct Loan Program (DL). The Loan Forgiveness program is only for students in the Federal Direct Loan Plan.  Conservatory students received their federal loans from both the FFEL and the DL programs.  Those students who wish to take advantage of the Loan Forgiveness program MUST consolidate their FFELP Loans (Stafford and Grad PLUS) into a Direct Consolidation Loan before they can be eligible for the loan forgiveness program.  Any payments made to FFELP Loans will not count toward the loan forgiveness program.  Only payments made to a Direct Loan or Direct Consolidation Loan will count toward Loan Forgiveness.  To apply for a Direct Consolidation Loan, students need to call 1-800-557-7392.  

For more information on this loan forgiveness program, please call the Federal Direct Loan Servicer at 1-800-848-0979 or visit http://studentaid.ed.gov/students/attachments/siteresources/LoanForgivenessv4.pdf or www.ibrinfo.org.

Loan forgiveness for death and total permanent disability

If you die or become totally, permanently disabled, your federal student loans will be forgiven.  Your family should contact your lender(s) to get the paperwork for forgiveness.

Private Loans

PRIVATE LOAN REPAYMENT OPTIONS – Check your lender to see if these or any other repayment options apply to their particular loan. 

1. Interest-only repayment 

2. Extended repayment 

 

CONSOLIDATION - Private loans cannot be consolidated with federal loans, but it is possible to consolidate your private loans.  Currently two lenders offer private loan consolidation (see below).  Before consolidating, however, make sure that the advantages of private loan consolidation outweigh your current private loan benefits.  Once you consolidate you'll lose whatever benefits you have.

www.suntrusteducation.com

www.wellsfargo.com/student


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