REPAYMENT OPTIONS This repayment guide will assist you with the options available and the steps to take. Unless otherwise noted, the following information applies if all of your outstanding federal student loans were made on or after July 1, 1993, and when your first federal student loan was made on or after July 1, 1993, you had no outstanding federal student loans that were made before July 1, 1993. Outlined below are the four options available to manage your student loan investment: (1) consolidation, (2) deferment, (3) forbearance, and (4) repayment. Consolidation: This is a widely used method for managing your federal student loan debt. If you have Federal Stafford Loans that were borrowed prior to July 1, 2006, the interest rate on these loans will increase by 0.6% when your loans enter repayment. It is advisable to complete the consolidation application at least 6 weeks prior to your repayment start date to secure the lower interest rate. There is a section on the application where you can indicate your grace end date so that you can take advantage of the maximum grace period and lower interest rate before the consolidation loan is completed. If you decide to consolidate your federal loans, your eligibility for the economic hardship deferment or forbearance will not be negatively affected. The calculations and eligibility criteria are the same as before consolidation. Every lender has to follow the same federal requirements to qualify for the economic hardship deferment, determining the interest rate, and repayment terms. Some of the benefits of consolidation include: You are still entitled to the same deferment and forbearance provisions as before consolidation. Lock in a fixed interest rate for the entire repayment period. One loan servicer to make payments and provide updates to. Extend your repayment period to lower your monthly payments, if desired. Some of the disadvantages to consolidation include: You won't be able to take advantage of any future interest rate decreases. Any attached benefits to the loans you consolidate will be lost since those loans will be paid off during the consolidation process to create the new loan. Accrued interest will capitalize when you consolidate. If you request an extended repayment period to lower your monthly payment, the interest expense will be higher over the term. At any time, you can set-up a shorter repayment period or pre-pay without penalty. Ed-Invest formed the Health Professions Consolidation Center (HPCC) to provide personalized counseling and assistance. Deferment: The Department of Education offers the following deferment options: In-School* - You attend school at an eligible institution on at least a half-time basis. Unemployment* - You are seeking, but unable to find full-time employment. Rehabilitation Training* - You are in a full-time rehabilitation training program. Graduate Fellowship* - You are studying in a full-time graduate fellowship program. Economic Hardship* - You are experiencing an economic hardship. The maximum deferment period is 3 years, filed one year at a time. The main advantage of deferment vs. forbearance is that you retain the interest subsidy from the government on your subsidized Stafford loans. Some suggestions to keep in mind as you apply for the economic hardship deferment: Be sure to include all of your federal loans on the application. Include pay stubs, tax returns, W-2's, and other income documentation. If you filed a joint tax return, you may want to use another form of income documentation to improve your eligibility. Consider applying 30-60 days prior to the end of your grace period. Once your consolidation loan is complete, you will need to submit this application to apply towards your new loan. Qualification requirements are defined by federal regulation and apply to all lenders. If you do not meet the requirements for economic hardship deferment, you can request forbearance from the servicer. Forbearance: If you are experiencing financial difficulties in making your scheduled payments: (1) whether or not you have consolidated your federal loans or (2) do not qualify for a deferment, you may request forbearance from the servicer. Forbearance allows either: (1) a temporary cessation of payments, (2) a temporary arrangement for making smaller payments, or (3) an extended period of time for not making payments. Repayment: Following the afforded six-month grace period after graduation, repayment will commence on your Federal Stafford loans. You can choose to make payments using one of the following payment options: (a) standard or level (equal payment amounts), (b) graduated (payments start low and increase at designated intervals), and (c) extended repayment (up to 25 years if you borrowed $30,000 or more in Stafford loans on or after Oct. 7, 1998). Steps to Successful Loan Repayment: Be aware of who the holder(s) are for your loans and the servicer(s) you will send payments to and work with directly. Many lenders contract with a third party servicer to perform billing, collections, deferment/forbearance processing, and other associated activities during your repayment period. Keep all of your financial aid documents organized and in one place. Be sure to include copies of forms, correspondence, payment records, and notes from conversations. Open and read your mail immediately and either respond as directed or place them in your loan file. Keep your loan servicers informed of changes in your address, phone number, or name. A common reason for delinquency is an incorrect address or contact information. It is your responsibility to immediately notify servicers to keep your account information updated. If you are experiencing any problems in making your loan payments, contact your servicer immediately. There are several payment arrangements that can be made to accommodate your situation. Help is readily available to maintain a good credit history. Deferment forms should be sent to: Great Lakes Higher Education Corp. P.O. Box 7860 Madison, WI 53707 Phone: (800)236-4300 Fax: (800)375-5288 *Adobe Acrobat Reader is required to view these files. You may download it free here:

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