Federal Loan Repayment Information
Special Loan Consolidation (available January 2012 - June 30, 2012 - all eligible borrowers will be contacted by a US Department of Education servicer)
Postponing Repayment - What to do if you cannot afford your loan payments
Are you confused about how to keep track of your federal loans? Due to changes in federal regulations, your loans may have been sold and sent to different lenders/servicers. As a borrower, you may have several different federal loans serviced by different companies. In order to keep track of your federal loans, you can use the following website to view detailed information about them. Please note, this is only for federal loans (Stafford, Perkins, Grad PLUS) and does not include any private/alternative loans.
- All loans processed at Millersville University beginning with summer 2010, are processed through the US Department of Education. The US Department of Education uses private companies to service the loans. These are the companies you will need to contact regarding your loan repayments.
Currently there are seven servicers of federal loans. To determine who your servicer is, click on the link above.
(If you borrowed federal loans prior to the summer 2010, your servicer may be different than those listed below - the loans processed prior to summer 2010 were done under the FFEL Program with private lenders.)
There are several options for repaying your student loans. Listed below are some options, as well as calculators to determine your estimated monthly repayment amount (click on the calculator picture to use the online calculator)
- The repayment period is 10 years
- Minimum monthly payments start at $50
- Repayment period is extended to a period not to exceed 25 years
- Repayment is fixed annual or graduated repayment
- To qualify, if you borrowed under the FFEL Program, you must have more than $30,000 in outstanding loans
- To qualify, if you borrowed under the Direct Loan Program, you must have more than $30,000 in outstanding loans
- For example, if you have $35,000 in outstanding FFEL Program loans and $10,000 in Direct Loans, you would qualify for the extended repayment for the FFEL Program loans, but not the Direct Loans
- This is a good plan if you will need to make smaller monthly payments - since the repayment period is longer, your monthly payments will be less, however, you will pay more in interest over the life of the loan
- With this plan, payments start out low and increase every two years
- The repayment period is up to 10 years
- Your monthly payment will never be less than the amount of interest that accrues between payments
- This may be a good plan if you expect your income to increase steadily over time
Income Based Repayment (IBR)
- The monthly payment is capped at an amount that is intended to be affordable based on income and family size
- You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan
- If you repay under the IBR plan for 25 years and meet other requirements, you may have any remaining balance of your loan(s) cancelled
- If you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled - see more information on public service loan forgiveness
- For more important information about IBR, go to IBR Plan Information or download an IBR Fact Sheet
Income Contingent Repayment (ICR) - Direct Loans Only
- Each year, monthly payments will be calculated on the basis of your adjusted gross income (AGI, plus your spouse's if you are married), family size, and the total amount of your Direct Loans.
- Each month, you will pay the lesser of:
- The amount you would pay if you repaid your loans in 12 years multiplied by an income percentage factor that varies with your annual income, or
- 20% of your monthly discretionary income
- Maximum repayment period is 25 years
- If you have not repaid your loans in full after 25 years (time spent in deferment or forbearance does not count) under this plan, the unpaid portion will be discharged - you may have to pay taxes on the amount that is discharged
- Loans that qualify are Direct Subsidized, Direct Unsubsidized, and Direct Graduate PLUS Loans (Parent PLUS Loans are NOT eligible)
Income Sensitive Repayment Plan (FFEL Program Loans Only)
- Monthly loan payment is based on your annual income
- As your income increases or decreases, so do your loan payments
- Maximum repayment period is 10 years
A Direct Consolidation Loan allows a borrower to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple payments.
Make sure you carefully consider whether loan consolidation is the best option for you. While loan consolidation can simplify loan repayment and lower your monthly payment, it also can significantly increase the total cost of repaying your loans. Consolidation offers lower monthly payments by giving you up to 30 years to repay your loans. But, if you increase the length of your repayment period, you'll also make more payments and pay more in interest than you would otherwise. In fact, in some situations, consolidation can double your total interest expense. If you don't need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan.
You also should take into account the impact of losing any borrower benefits offered under repayment plans for the original loans. Borrower benefits from your original loan, which may include interest rate discounts, principal rebates, or some loan cancellation benefits, can significantly reduce the cost of repaying your loans. You may lose those benefits if you consolidate.
Once your loans are combined into a Direct Consolidation Loan, they cannot be removed. That's because the loans that were consolidated have been paid off and no longer exist. Take the time to study the pros and cons of consolidation before you submit your application.
What kinds of loans can be consolidated?
Most federal student loans are eligible for consolidation, including subsidized and unsubsidized Direct and FFEL Stafford Loans, Direct and FFEL PLUS Loans, Supplemental Loans for Students (SLS), Federal Perkins Loans, Federal Nursing Loans, Health Education Assistance Loans, and, in some cases, 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.
Note: 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 his or her parent's PLUS Loan.
For a complete list of the federal student loans that can be consolidated, contact the Direct Loan Origination Center's Consolidation Department by calling 1-800-557-7392 or visit www.loanconsolidation.ed.gov. TTY users may call 1-800-557-7395.
Note: Before July 1, 2010, Stafford, PLUS, and Consolidation Loans were also made by private lenders under the Federal Family Education Loan (FFELSM) Program. As a result of legislation that was signed into law on March 30, 2010, the authority of lenders to make further loans under the FFEL Program ended effective July 1, 2010. Since that date, all new Stafford, PLUS, and Consolidation Loans have been made by the U.S. Department of Education under the Direct Loan Program.
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?
To qualify for a Direct Consolidation Loan:
- You must have at least one Direct Loan or Federal Family Education Loan (FFEL) that is in grace or repayment.
- If you want to consolidate a defaulted loan, you must either make satisfactory repayment arrangements on the loan with your current loan servicer(s) before you consolidate, or you must agree to repay your new Direct Consolidation Loan under the Income Contingent Repayment Plan or the Income Based Repayment Plan.
- Generally, you cannot consolidate an existing consolidation loan again unless you include an additional FFEL or Direct Loan in the consolidation. However, under certain circumstances you may re-consolidate an existing FFEL Consolidation Loan without including any additional loans. For additional details, go to www.loanconsolidation.ed.gov.
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?
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%. However, the rate will not exceed 8.25%.
How do I apply for a Direct Consolidation Loan?
There are several ways to apply:
- Apply online at www.loanconsolidation.ed.gov
- Download a paper copy of the application and promissory note at www.loanconsolidation.ed.gov
- Apply over the phone if you want to consolidate only Direct Loans -
- Request an application package be mailed to you by:
- Calling 1-800-557-7392 (TDD 1-800-557-7395) or
334-206-7400 (outside the USA)
- E-mailing firstname.lastname@example.org
- Calling 1-800-557-7392 (TDD 1-800-557-7395) or
When do I begin repayment?
Repayment of a Direct Consolidation Loan begins immediately upon disbursement of the loan. (Your first payment will be due within 60 days.) The payback term ranges from 10 to 30 years, depending on the amount of your consolidation loan and your other education loan debt and the repayment plan you select.
Can my loan be cancelled (discharged)?
Yes, but only under limited circumstances. For more information, go to the Cancellation/Discharge page on this website.
The U.S. Department of Education (the Department) will offer Special Direct Consolidation Loans to eligible borrowers, beginning in January 2012. This is a short-term consolidation opportunity, ending June 30, 2012, for borrowers with
- at least one student loan held by the Department (a Direct Loan or a Federal Family Education Loan [FFEL] owned by the Department and serviced by one of the Department's servicers); and
- at least one commercially-held FFEL loan (a FFEL loan that is owned by a FFEL lender and serviced either by that lender or by a servicer contracted by that lender).
Special Direct Consolidation Loans are intended to help borrowers manage their debt by ensuring all of their federal loans are serviced by the same entity, resulting in one bill and one payment (borrowers repay loans to a loan servicer). Borrowers will also receive an interest rate reduction on Special Direct Consolidation Loans as a repayment incentive.
The information below describes the eligibility requirements and benefits of taking out a Special Direct Consolidation Loan.
Who is eligible for a Special Direct Consolidation Loan?
You must have at least one loan owned by the Department of Education and at least one commercially-held FFEL loan to qualify for a Special Direct Consolidation Loan.
What federal student loans are eligible for the Special Direct Consolidation Loan program?
While you must have both a Department-owned loan and a commercially-held FFEL loan to be eligible, ONLY your commercially-held FFEL loans are eligible for consolidation under this initiative. These include:
- FFEL Subsidized and Unsubsidized Stafford Loans;
- FFEL PLUS Loans (both those taken out by graduate/professional students and those taken out by a parent to pay for the costs of an undergraduate student); and
- FFEL Consolidation Loans
In order to be eligible for consolidation under this initiative, these loans must be in grace, repayment, deferment, or forbearance.
The following loans are ineligible for this program:
- FFEL loans in default or subject to a bankruptcy proceeding;
- Perkins Loans;
- Health Education Assistance Loans (HEAL), Health Professions Student Loans (HPSL), Nursing Student Loans (NSL), Loans for Disadvantaged Students (LDS); and
- Private student loans
What are the benefits of Special Direct Consolidation Loans?
- Interest rate reduction: If you consolidate into a Special Direct Consolidation Loan, you will receive a 0.25% interest rate reduction from the current interest rate on your commercially-held FFEL loan(s) as of the date of consolidation. The interest rate will be fixed for the life of the loan and cannot exceed 8.25%.
- Repayment term will not be changed: The repayment term on your Special Direct Consolidation Loan (the length of time you have to repay the loan) will remain the same as your current repayment terms and will not be reset. As a result, you will pay less interest over the life of the loan than you would with a traditional Direct Consolidation Loan.
- Credit for Previous Income-Based Repayment (IBR) Payments: If you made any IBR loan payments on your commercially-held FFEL loans prior to consolidation, those payments will count toward the required repayment time for cancellation if you remain in IBR. Under IBR, any remaining loan balance is forgiven after 25 years of repayment.
- Eligibility for loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program: By consolidating your commercially-held FFEL loans into a Special Direct Consolidation Loan, those loans become Direct Loans, and as result, are eligible for the PSLF Program if you meet the additional program requirements. Under this program, you may qualify for forgiveness of the remaining balance due on your eligible Direct Loans after you have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers.
How are Special Direct Consolidation Loans different than traditional Direct Consolidation Loans?
|Traditional Direct Consolidation Loan||Special Direct Consolidation Loan|
|Repayment Term||The repayment term for the loan starts over, giving students longer to repay their loan. A longer repayment term may result in lower monthly payments but will ultimately increase the amount the borrower will pay over the life of the loan since more interest will accrue during a longer repayment period.||Each loan that is consolidated retains its original repayment term. As a result, borrowers will pay less interest over the life of the loan than they would under the traditional consolidation program.|
|Interest Rate||A fixed rate based on the weighted average of the interest rates of those loans being consolidated rounded up to the nearest one-eighth of 1%, not to exceed 8.25%.||A fixed rate (not to exceed 8.25%) after applying the 0.25% interest rate reduction to the FFEL loans being consolidated.|
|Electronic Debit Benefit||Eligible for a 0.25% interest rate reduction if the loan is repaid through the Department's automatic debit system.||Eligible for an additional 0.25% interest rate reduction if the loan is repaid through the Department's automatic debit system.|
Should I consolidate my loans into a Special Direct Consolidation Loan?
You should assess your personal student loan situation to determine if you should consolidate your loans into a Special Direct Consolidation Loan. While Special Direct Consolidation Loans offer certain benefits, such as a reduced interest rate, some borrowers may choose not to take advantage of this limited time offer because they are satisfied with the current repayment arrangements on their existing loans, or they wish to consolidate all of their federal loans (including those loans ineligible for this special consolidation opportunity) into a traditional Direct Consolidation Loan.
How much money will I save in interest if I obtain a Special Direct Consolidation Loan?
Your interest savings must be evaluated on a loan-by-loan basis. If you are eligible for a Special Direct Consolidation Loan, the federal loan servicer that contacts you starting in January 2012 will be able to provide you with detailed interest reduction information.
How will I know if I am eligible for the Special Direct Consolidation Loan Program?
Once Special Direct Consolidation Loans are available in January 2012, a Department of Education servicer will notify you if you are eligible.
What action should I take to initiate a Special Direct Consolidation Loan?
You do not need to take any action until you are contacted by a Department of Education servicer. If you're interested in taking out a Special Consolidation Loan, it is critical that you do not start the traditional Direct Consolidation Loan process. If you consolidate your loans into a traditional Direct Consolidation Loan before Special Consolidation Loans are available, you will not be eligible for a Special Direct Consolidation Loan.
Who will contact me if I am eligible for a Special Direct Consolidation Loan?
You will be contacted by one of the Department of Education's servicers if you are eligible for this special consolidation opportunity. The Department of Education servicers for this special initiative are FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, and Sallie Mae.
Will I be required to sign a new promissory note to obtain a Special Direct Consolidation Loan?
Yes, by consolidating your loans into a Special Direct Consolidation Loan you are securing a new loan. This requires a new promissory note.
What repayment options are available for Special Direct Consolidation Loans?
You can choose any of the following repayment plans to repay your Special Direct Consolidation Loan:
- Standard Repayment Plan
- Graduated Repayment Plan
- Extended Repayment Plan
- Income-Contingent Repayment (ICR) Plan
- Income-Based Repayment (IBR) Plan
However, it is important to remember that your repayment term does not start over when you receive a Special Direct Consolidation Loan. Instead, each commercially-held FFEL loan that you consolidate will retain its original repayment term. This means, for example, that if you had made three years of loan payments on a 10-year standard repayment plan prior to consolidating a Federal Stafford Loan and you choose the Standard Repayment Plan for your Special Direct Consolidation Loan, your remaining repayment term would continue to be 7 years.
Please note that if your Special Direct Consolidation Loan includes parent Federal PLUS Loans, or Federal Consolidation Loans that repaid parent PLUS loans, that portion of your consolidation loan may not be repaid under the IBR Plan. However, you have the option of paying that portion of your loan under the ICR Plan.
For more information about each repayment plan, visit Repayment Plans and Calculators.
Where can I get more information about Special Direct Consolidation Loans?
If you have further questions about Special Consolidation Loans, you can visit the Special Direct Consolidation Loans web page for more information.
If you have trouble making your education loan payments, contact immediately the organization that services your loan. You might qualify for a deferment, forbearance, or other form of payment relief. It's important to take action before you are charged late fees. For Federal Perkins Loans, contact your loan servicer or the school that made you the loan. For Direct and FFEL Program Stafford Loans, contact your loan servicer. If you do not know who your servicer is, you can look it up online.
Deferment: You can receive a deferment for certain defined periods. A deferment is a temporary suspension of loan payments for specific situations such as reenrollment in school, unemployment, or economic hardship. Click here to see a loan deferment summary chart. You don't have to pay interest on the loan during deferment if you have a subsidized Direct or FFEL, Stafford Loan or a Federal Perkins Loan. If you have an unsubsidized Direct or FFEL Stafford Loan, you're responsible for the interest during deferment. If you don't pay the interest as it accrues (accumulates), it will be capitalized (added to the loan principal), and the amount you have to pay in the future will be higher. You have to apply for a deferment to your loan servicer (the organization that handles your loan), and you must continue to make payments until you've been notified your deferment has been granted. Otherwise, you could become delinquent or go into default.
Military Service Deferment (pdf form)
An active duty military deferment is available to borrowers in the Direct, FFEL, and Perkins Loan programs who are called to active duty during a war or other military operation or national emergency. This deferment is available while the borrower is serving on active duty during a war or other military operation or national emergency or performing qualifying National Guard duty during a war or other military operation or national emergency and, if the borrower was serving on or after Oct. 1, 2007, for an additional 180-day period following the demobilization date for the qualifying service.
Post-Active Duty Student Deferment (pdf form)
A Direct, FFEL, or Perkins Loan borrower who is a member of the National Guard or other reserve component of the U.S. Armed Forces (current or retired) and is called or ordered to active duty while enrolled at least half-time at an eligible school, or within six months of having been enrolled at least half-time, is eligible for a deferment during the 13 months following the conclusion of the active duty service, or until the borrower returns to enrolled student status on at least a half-time basis, whichever is earlier.
Economic Hardship Deferment
A Direct, FFEL, or Federal Perkins Loan borrower may qualify for an economic hardship deferment for a maximum of three years if the borrower is experiencing economic hardship according to federal regulations. The Summary of Loan Deferment Conditions chart here shows Stafford and Perkins Loan deferments for loans disbursed on or after July 1, 1993. For information on deferments for loans received before that date, Direct Stafford Loan, FFEL, and PLUS Loan borrowers should contact their loan servicer.
Forbearance: Forbearance is a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. You can receive forbearance if you're not eligible for a deferment. Unlike deferment, whether your loans are subsidized or unsubsidized, interest accrues, and you're responsible for repaying it. Your loan holder can grant forbearance in intervals of up to 12 months at a time for up to 3 years. You have to apply to your loan servicer for forbearance, and you must continue to make payments until you've been notified your forbearance has been granted.
Other Forms of Payment Relief
Although you're asked to choose a repayment plan when you first begin repayment, you might want to switch repayment plans later if a different plan would work better for your current financial situation. Under the Federal Family Education Loan Program, you can change repayment plans once a year. Under the Federal Direct Student Loan Program, you can change plans any time as long as the maximum repayment period under your new plan is longer than the time your Direct Loans have already been in repayment. Go to the Repayment Plans and Calculators section to learn more about options available to you to repay your loans.
The Public Service Loan Forgiveness Program was created to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, you may qualify for forgiveness of the remaining balance due on your eligible federal student loans after you have made 120 payments on loans under certain repayment plans while employed full time by certain public service employers.
Only non-defaulted loans made under the William D. Ford Direct Loan ProgramSM are eligible for loan forgiveness. The Direct Loan Program includes the following types of loans:
- Federal Direct Stafford Loans (Direct Subsidized Loans)
- Federal Direct Unsubsidized Stafford Loans (Direct Unsubsidized Loans)
- Federal Direct PLUS Loans (Direct PLUS Loans)- for parents and graduate or professional students
- Federal Direct Consolidation Loans (Direct Consolidation Loans)
Although loan forgiveness under this program is available only for loans made and repaid under the Direct Loan Program, loans made under other federal student loan programs may qualify for forgiveness if they are consolidated into a Direct Consolidation Loan. Therefore, only payments made on the Direct Consolidation Loan will count toward the required 120 monthly payments.
The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans:
- Income Based Repayment (IBR) Plan
- Income Contingent Repayment Plan
- Standard Repayment Plan with a 10-year repayment period
- Any other Direct Loan Program repayment plan, but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments.
For additional information on PSLF, check out the Public Service Loan Forgiveness Program Q&As. The Q&As are grouped into four categories: General Information, Eligible Loans, Qualifying Payments, and Qualifying Employment. The answers are dated and, as new questions are added or a previous response is updated, we will include a new date.
Go to the Public Service Loan Forgiveness fact sheet (pdf) for more information on the terms and conditions of the program and to understand what types of public service jobs qualify.
For more information on repaying your student loans, please review the following resources.
Repayment Information (website)