In your last year of full-time studies at Concordia, you should start planning for the time when you will have to repay your student loans. We play a role in helping you prepare for this after you graduate.
You must go to the U.S. Department of Education to complete an Exit Counselling session before you leave the University or graduate. You will be counselled on your obligations, rights and options under the terms of your loan. This session will cover repayment options, deferments and other important information you may need during your repayment term. During this session you will need to provide the following information:
- Name and address of closest living relative.
- Two references (different from closest living relative) and with different addresses.
Once this has been completed, print your confirmation page and bring or mail it to the FAAO.
When you begin repaying your loan, you will notice that you owe more than you borrowed. This is because interest has accumulated. The interest rate for FFELP loans varies each year, but will never exceed 8.25%. The rate is adjusted each year on July 1st. You'll be notified of any interest rate changes throughout the life of your loan.
If you borrowed an unsubsidized loan, interest starts accruing (accumulating) from the time the funds were disbursed to you. You choose to either pay it while you were in school or let it accrue. If you let the interest accrue, it has been capitalized (that is, added to your principal balance). This means that the total amount you repay will be greater than if you paid the interest all along. Calculate the amount of capitalized interest you could accrue.
Interest is calculated on a simple daily basis. It can be explained by the following formula:
- Average daily balance between payments
- X Interest rate
- X (Number of days between payments/365.25)
For example, here is how interest accrues between payments made on April 15th and May 15th:
|Average daily balance||$10,000|
|Interest rate||x .08|
|Days between payments (30/365.25)||x .08214|
When you leave Concordia University or drop below half-time enrolment status, your grace period for Stafford subsidized and unsubsidized loans will begin. This gives you up to six months before you must start making monthly principal and interest repayments on your loan. Remember that there is no grace period for PLUS loans.
Before repayment starts, you will be provided with Repayment Options and a Repayment Schedule from your lender or servicer for each type of loan you have. If you do not receive these schedules towards the end of your grace period, contact your lender because repayment begins whether or not you are aware of it. All borrower benefits will only apply if you make your first payment on time.
By the time you finish university, you may have a number of loans. These loans may be with more than one lender and may have different terms. Repayment can become complicated if you have to make different payments at different times of the month. Consolidation is a way to make repayment of multiple loans less complicated.
How it works. You can consolidate all your federal student loans into one loan with a fixed rate and a single, possibly lower, monthly payment. You pay no additional fees to consolidate your loans. More importantly, you may reduce the amount of each monthly payment by extending your repayment term. Always remember that a longer repayment term increases the amount of interest you pay over the term of your loan.
As of July 1st, 2006 students are not allowed to consolidate while they are in school.
What types of loans can be consolidated?
Most federal student loans, including the following, are eligible for consolidation:
· Direct Subsidized Loans
· Direct Unsubsidized Loans
· Subsidized Federal Stafford Loans
· Unsubsidized Federal Stafford Loans
· Direct PLUS Loans
· PLUS loans from the Federal Family Education Loan (FFEL) Program
· Supplemental Loans for Students (SLS)
· Federal Perkins Loans
· Federal Nursing Loans
· Health Education Assistance Loans
· some existing consolidation loans
Private education loans are not eligible for consolidation. If you are in default, you must meet certain requirements before you can consolidate your loans.
A PLUS loan made to the parent of a dependent student cannot be transferred to the student through consolidation. Therefore, a student who is applying for loan consolidation cannot include the PLUS loan the parent took out for the dependent student’s education.
A complete list of the federal student loans eligible for consolidation is available in the application
When can I consolidate my loans?
Generally, you are eligible to consolidate after you graduate, leave school, or drop below half-time enrollment.
What are the requirements to consolidate a loan?
Here are some tips on qualifying for a Direct Consolidation Loan:
· You must have at least one Direct Loan or FFEL Program loan that is in a grace period or in repayment.
· If you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements on the loan with your current loan servicer before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the
· Income-Based Repayment Plan,
· Pay As You Earn Repayment Plan, or
· Income-Contingent Repayment Plan.
· Generally, you cannot consolidate an existing consolidation loan again unless you include an additional Direct Loan or FFEL Program loan in the consolidation. However, under certain circumstances you may reconsolidate an existing FFEL Consolidation Loan without including any additional loans.
There are no application fees for a Direct Consolidation Loan, and you may prepay your loan at any time without penalty.
What is the interest rate on a consolidation loan?
A Direct Consolidation Loan has a fixed interest rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%. There is no cap on the interest rate of a Direct Consolidation Loan.
A deferment is a period of time during which no payments are required and interest does not accrue, unless you have a Direct unsubsidized loan or a PLUS loan. In those cases, you must pay the interest or capitalize it when deferment ends.
In order to qualify for deferment under the FFELP, you must be in school at least half-time, unable to find work (for up to three years) or suffering economic hardships (up to three years). Parent PLUS loan borrowers may not receive a deferment based on a dependent student's half-time enrolment, but graduate and professional PLUS borrowers may defer based on enrolment status. Active duty military personnel, those studying in an approved rehabilitation training program for the disabled and some others in special circumstances are also eligible.
In most cases you aren't just granted deferment automatically; you have to formally apply to your lender. The following forms are provided by the US Department of Education:
|Form||To be completed by|
|Economic hardship deferral||Student|
|In-school deferral||Student and school|
|Parental leave deferral||Student and school|
|Temporary total disability derferral||Student and physician|
Forbearance occurs when your lender agrees to either temporarily reduce or postpone your loan payments. Interest continues to accrue, however, and you are responsible for paying it no matter what kind of loan you have. Interest can also be capitalized if you choose not to pay it during forbearance.
Forbearance is available to those who don't qualify for deferment but are still temporarily unable to meet their repayment schedule. Unlike deferment, which you are entitled to receive, your lender does not have to grant forbearance except in certain mandatory circumstances, such as a medical or dentistry residency or internship, or borrowers whose monthly payments are 20% or more of their monthly income. For complete information about forbearance eligibility, contact your lender.
In rare circumstances, your loan may be discharged or cancelled. This releases you from all obligations to repay the loan. Note that your loan can't be discharged because you didn't like your school or program of study, or because you didn't get a job after graduation.
Eligibility. The following chart from the US Department of Education is a summary of valid reasons for the discharge/cancellation of your loans.
|Cancellation conditions||Amount forgiven||Notes|
|Bankruptcy||100%||In rare cases, only possible if the court rules that repayment would cause undue hardship|
|Closed School||100%||If occurs before the program of study was completed.|
|Borrower's total and permanent disability or death||100%||For a PLUS Loan, includes the death, but not disability, of the student for whom the parents borrowed|
|Full-time teacher in a designated elementary or secondary school serving students from low-income families||Up to $5,000 (or up to $17,500 in certain specialties)||Detailed information available on Federal Student Aid site.|
|False loan certification and identity theft||100%||Effective July 1st, 2006|
|School does not make required return of loan funds to the lender||Up to the amount that the school was required to return|
When your monthly payment is 30 days or more overdue, you are considered to be delinquent on your loan. Most lenders and servicers will contact you directly about delinquent payments and begin collection activity. Your delinquency may be reported to a credit bureau which could damage your credit rating. If you expect to have a problem making a monthly payment, contact your lender immediately. It is always easier to discuss alternatives before the due date rather than after a payment is late.
If you fall 270 days behind on a scheduled payment, you are legally in default on your loan agreement. The lender can assume that you are not going to repay; and the lender may declare the entire amount you owe, including interest, immediately due and payable.
Defaults are reported to credit bureaus and stay on your credit record, whether or not you eventually pay off the loan. The consequences of default are severe:
· The entire unpaid balance of your loan and any interest is immediately due and payable.
· You lose eligibility for deferment, forbearance, and repayment plans.
· You lose eligibility for additional federal student aid.
· Your loan account is assigned to a collection agency.
· The loan will be reported as delinquent to credit bureaus, damaging your credit rating. This will affect your ability to buy a car or house or to get a credit card.
· Your federal and state taxes may be withheld through a tax offset. This means that the Internal Revenue Service can take your federal and state tax refund to collect any of your defaulted student loan debt.
· Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney’s fees, and any other costs associated with the collection process.
· Your employer (at the request of the federal government) can withhold money from your pay and send the money to the government. This process is called wage garnishment.
· The loan holder can take legal action against you, and you may not be able to purchase or sell assets such as real estate.
· Federal employees face the possibility of having 15% of their disposable pay offset by their employer toward repayment of their loan through Federal Salary Offset.
· It will take years to reestablish your credit and recover from default.
Withdrawing from Concordia. You are responsible for notifying the FAAO, the school, and your lender if you choose to withdraw. If you are an undergraduate and you choose to withdraw from Concordia, you must comply with the guidelines given in Sections 16.1.6 and 15.3.1 of the Undergraduate Calendar. If you are a graduate student, you should consult the Tuition and Fees Section of this site.
If you withdraw from courses before the official withdrawal (DNE) deadline, you will receive a full refund of your tuition and compulsory fees. If you withdraw after the DNE deadline, you will be responsible for the full payment of your tuition and compulsory fees.
If you withdraw from the University, you may be required to repay part of or all your loan(s). You may also owe the University any loan funds returned on your behalf. US Department of Education regulations state that your school must return loan funds if you have not completed a minimum of 60% of the payment/enrolment period. If you received more loan funding than was "earned", the excess funds must be returned by your school and/or yourself. The amount of money to be returned is determined by a specific formula that is used in a calculation called a "Return to Title IV." If you did not receive all of the funds that were earned, you may be eligible for a post-withdrawal disbursement. Further information is available at www.studentaid.ed.gov.