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Managing Your Loan
It's easier than you might think. What's
more, it will save you considerable angst and eliminate serious
Fast Facts To Help Manage Your Loan Payments
- On-time repayment of your student loan is
critically important. It's also a great way to develop a
good credit history, which follows you wherever you go and
whatever you do.
- Delinquent payments are reported to a
national credit agency and will damage your credit report and
your future ability to borrow.
- Your lender or guarantor can provide you with
options if you're having difficulty making payments.
- The consequences of defaulting on your
student loan can be downright scary:
- You lose the privilege of monthly
payments, and the full amount of your loan becomes
immediately due and payable.
- Your wages and/or your entire tax refund
may be garnished.
- Collection charges and attorney fees may
be assessed, increasing the loan payoff amount.
- You will lose your eligibility for any
additional federal student financial aid.
- Your payments may increase, further
straining your ability to repay.
- You will lose the options of deferment
- You may not be eligible for certain
federal and state jobs.
- You may lose your professional license.
- A deferment is the temporary postponement of
payments on your student loan
- Your lender or guarantor can advise you on
your deferment eligibility status.
- Primary reasons and time considerations for
- Returning to school at least half time
- Unemployment (six-month period with a
maximum of six periods)
- Economic hardship (12-month period with a
maximum of three periods)
- Deferments are not automatic; you must apply
for one and receive approval from your lender.
- When subsidized loans are deferred, the
principal payments are postponed and the interest is billed to
the federal government.
- When unsubsidized loan is deferred, the
principal payments are postponed but you are responsible for
paying the accrued interest.
- If you received a student loan prior to July
1, 1993, additional factors may constitute eligibility for
deferment - a graduate fellowship, military duty, parental
leave, and more. Talk to your lender for details.
- Forbearance is the temporary cessation or
reduction of principal payments on your student loan.
- You are still responsible for all accrued
interest during the forbearance period.
- If you do not qualify for a deferment but are
having a hard time repaying your student loan, you may be
eligible for forbearance.
- Common reasons for forbearance include:
- Poor health
- A rigorous residency program
- A loan payment that exceeds 20 percent of
your total monthly gross income
- Forbearance is allowed at the discretion of
- Forbearance often results in an extended
- A loan may be cancelled under extreme
- Permanent and total disability
- inability to complete a course of study
because your school closes (if certain conditions prevail)
- Eligibility falsely certified by your