Before Loan Repayment

As a borrower, you may prepay all or any part of the unpaid student loan balance at any time without penalty. Payments will be applied first to any accrued unpaid interest and fees with any remaining amount applied to principal.

• Direct Subsidized/Unsubsidized, FFEL Stafford, PLUS, and alternative loan servicers will provide assistance regarding payments made during grace and deferment periods. Log in at StudentAid.gov and review the details for each loan listed for servicer contact information
• For Perkins, Nursing, and SPU Institutional loans, contact Student Financial Services for payment information during grace and deferment periods.

Interest begins to accrue on Unsubsidized Direct, FFEL Stafford, PLUS, and alternative loans at disbursement. You may choose to pay the interest as it accrues or, if you choose to let it accrue, it will be added to the principal balance of your loan when it enters repayment in a process called “capitalization.”  Capitalization increases the total cost of your loan. 

For example, on a $3,500 loan with an interest rate of 6.8%:

• If you paid the $19.83 interest each month while in school, you would pay a total of $950 in interest over the life of your loan. (Length of repayment: 7.5 years.)
• If you did not pay any interest on the same loan while in school, you would pay a total of $1,486 in interest over the life of your loan. (Length of repayment: 9.6 years.)

Following your last day of half-time (6 undergraduate credits or 3 graduate credits) or greater enrollment, your loan may enter a grace period before you begin repaying it. The length of the grace period depends on the type of loan:

• Direct Subsidized/Unsubsidized, FFEL Stafford, Grad PLUS and SPU Institutional loans: six months.
• Perkins and Nursing loans: nine months.
• Alternative (private) loans: Check with your lender or loan servicer.

If you return to half-time or greater enrollment before the grace period ends, the entire grace period will be available when you next drop to less than half-time status, withdraw, or graduate.

If you return to half-time or greater enrollment after the grace period ends, the loans on which the grace period has expired will be eligible for in-school deferment but will not receive another grace period prior to repayment. These loans immediately go into repayment, including any period when the borrower is enrolled less than half-time.

Prepare for repayment

Your grace period is an excellent time to create a realistic budget for your income and expenses, including all loan payments.

• Budget information and an interactive worksheet is available at CashCourse and may be available from your loan servicer(s) or your bank.
• Financial Awareness Counseling and Exit Counseling provided at StudentAid.gov also include budgeting and loan repayment information.

Review of the repayment plans offered for Direct Subsidized/Unsubsidized, FFEL Stafford and PLUS loans and loan consolidation options may be helpful to achieve a total monthly loan payment amount that fits within your budget.

Your loan servicer(s) will send you information about your loan prior to repayment. Be sure to read all communications from your loan servicers carefully and contact them if you have any questions.

• Direct Subsidized/Unsubsidized, FFEL Stafford, PLUS, and alternative loan servicer(s) will send you information about the date your loan will enter repayment, the minimum payment amount, and other information. Online information may also be available from your loan servicer(s).
• Perkins, Nursing, and SPU Institutional loans exit counseling documents provide repayment information. You may also review repayment information online at Heartland ECSI.
• Whenever a change is necessary, update your contact information with each of your loan servicers to ensure that you receive all notifications.

Your loan servicer(s) will provide monthly statements or coupon books for payment of your loans. Statement notification via email or text may also be available.

• Online payments can be made through the loan servicer's website.
• Automatic debit payments may be arranged through your loan servicer(s). These payments are directly pulled from your checking or savings account. Some loans receive a benefit for making payments via automatic debit.

Contact your loan servicer(s) or review your servicer website(s) for additional information.

If you have trouble making your loan payment, don't wait — contact your loan servicer immediately.

Interest rates for direct Subsidized/Unsubsidized, FFEL Stafford, and PLUS loans are specific to the type of loan and academic year that the loan was borrowed in. Information about interest rates for these loans is available at StudentAid.gov. The interest rate for each loan will be available from your loan servicer(s) and in the details for each loan record maintained at StudentAid.gov.

Perkins, nursing, and SPU institutional loans have a fixed interest rate of 5 percent.

Interest accrual and capitalization

Unsubsidized loans

• At disbursement, interest begins to generate (or accrue) on unsubsidized Direct, FFEL Stafford, PLUS, and alternative loans. You may choose to pay the interest as it accrues, or if you choose to let it accrue, it will be added to the principal balance of your loan when it enters repayment in a process called “capitalization.”
• Capitalization increases the cost of your loan, as shown in this example:
  • Loan amount: $3,500
  • Interest rate: 6.8%
  • Estimated monthly interest: $19.83
  • Deferment period prior to repayment: 36 months
• If you pay the $19.83 interest each month while in school, you will pay a total of $950 in interest over the life of your loan (length of repayment: 7.5 years).
• If you do not pay any interest on the same loan while in school, you will pay a total of $1,486 in interest over the life of your loan (length of repayment: 9.6 years)
• During periods of deferment, unsubsidized Direct, FEEL Stafford, and PLUS loans will accrue interest.

Subsidized loans

• Subsidized Direct*, FFEL Stafford, Perkins, Nursing, and SPU Institutional loans will not accrue interest during deferment periods. During periods of forbearance, unsubsidized and subsidized loans accrue interest.
• You may pay the accruing interest during a period of deferment or forbearance; any accrued, unpaid interest at the end of a deferment or forbearance period may be capitalized.

*Direct subsidized loans with a first disbursement date between July 1, 2012, and before July 1, 2014, will begin to accrue at the beginning of the six-month grace period.

Alternative loans

• Alternative loans may have a capitalization schedule that is more frequent. If you have an alternative loan, contact the lender for capitalization information.

If you fail to make your payments as scheduled, or do not promptly request deferment, late charges and fines may be assessed and the delinquency will be reported to the credit bureaus.

If your loan continues to be delinquent for an extended period of time the loan may go into default (the point when a monthly payment has not been made to your loan servicer for an extended period of time). Your school, the lender that owns your loan, your loan guarantor, and the federal government can take action to recover the money you owe. Here are some consequences of default:

• National credit bureaus will be notified, harming your credit rating.
• You lose eligibility for additional federal (Title IV) student aid.*
• Funds may be withheld from your paycheck for repayment of your loan.
• State and federal income tax refunds may be withheld and applied toward the amount you owe.
• You may have to pay late fees and, if your loan is placed with an agency for collection, collection fees of at least 30 percent and up to 40 percent may be added to the entire loan balance. You will also be responsible to pay any court or legal fees caused by the default.
• You may be sued.

Here's information about federal loan default: Avoiding Default, Understanding Default, and Getting Out of Default.

*Eligibility for federal student aid may be restored by establishing satisfactory repayment arrangements and making six monthly payments over a six-month period.

Collections

When a delinquent loan has been sent to an agency for collection, the borrower must make repayment arrangements with the agency. The borrower is responsible for the additional collection charges and legal fees associated with collection of the debt, as indicated in the promissory note.

Rehabilitation

Defaulted Direct Subsidized/Unsubsidized, FFEL Stafford, Perkins, PLUS, and SPU Institutional loans are eligible for rehabilitation. To rehabilitate a defaulted loan, you must enter into an agreement with the loan holder and make nine on-time, monthly payments. A loan may be rehabilitated only one time. Advantages of rehabilitation include:

• 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.

Direct loans

If you will be borrowing a direct student loan — Direct Subsidized, Direct Unsubsidized, Grad PLUS, and/or Parent PLUS — find the links and information you need here. If you have questions, contact Student Financial Services. For assistance with steps that need to be completed at StudentAid.gov, contact DL Applicant Services at 1-800-557-7394.

• Direct Loan Master Promissory Note (MPN)
• Direct Loan Entrance Counseling
• Direct Loan PLUS Loan Application (Grad and Parent PLUS)
• Direct Loan PLUS Counseling

Campus-based loans

All Institutional, Nursing and/or Perkins Loan requirements are completed online through ECSI.  Notification will be sent to your SPU email account when your documents are available, usually beginning in July.