College In Colorado

Your Rights and Responsibilities as a Student Loan Borrower

• Receive information from your lender, servicer or school regarding:
  
  • The name, address, telephone number and other contact information of the lender, servicer or secondary market that holds your loan;
  • The total amount of your loan debt including principal, interest, and any other applicable fees and charges as well as the interest rate;
• Have a maximum of ten years to repay your student loan unless you are granted a deferment, forbearance or choose a different repayment option other than the standard repayment;
• Pay off your student loan early without being charged a penalty fee;
• Receive notification in writing if your loan is sold or transferred to another lender. You must direct all your loan payments and correspondence to this new holder;
• Receive a repayment schedule from your lender or servicer. This document includes information regarding the total amount of your monthly principal and interest payments and the date that your loan payments will begin;
• Request a deferment from your lender or servicer. If you are eligible for and granted a deferment, you will be allowed to temporarily postpone your monthly loan payments for a specific period of time based on the date of your oldest loan;
• Apply to your lender for a forbearance if you are experiencing a financial hardship that makes it difficult to meet your monthly loan payments. A forbearance can allow you to delay, reduce or extend your monthly payments for a period of time determined by your lender;
• Receive information regarding the possible consolidation of multiple student loans;
• Receive information regarding the consequences and implications of defaulting on your student loan.

• Repay your entire student loan amount plus interest according to the terms and conditions of your promissory note even if you do not complete your program of study, are unable to acquire a job after completing your program of study or are dissatisfied with the education you received;
• Make your monthly loan payments on time even if you don't receive a billing statement from the holder of your loan;
• Complete and submit all requested forms and documents to your school, lender, guarantor and/or servicer in a timely manner;
• Notify the holder of your loan or servicers of any changes to your:
  • Name;
  • Address;
  • Telephone number;
  • Employment status;
  • Ability to make your monthly loan payments;
• Notify the holder of your loan if you re-enrolled in college on at least a half-time basis;
• Maintain copies of all loan documents for your records.

Payments

Repayment of most subsidized and unsubsidized Stafford Loans (made under either FFELP or Direct Loans) begins six months after you have graduated or are no longer enrolled at least half-time. This six-months is called a grace period. For Perkins Loans the grace period is nine months. Repayment of PLUS loans begins 60 days after the loan is fully disbursed.

It is very important that you keep the holder of the loan informed of your current address and contact information because the loan servicer or holder of the loan will mail you a repayment schedule (which may be in the form of a billing statement or coupon book) approximately 30 days before your first loan payment is due. The repayment schedule will reflect the total balance of your loan, the interest rate, amount and due dates of your monthly payments and the holder's address where you must send payments. Carefully review all the information on your repayment schedule to make sure it is correct. If the information is not accurate or you do not receive this document, contact the holder of your loan immediately.

Repayment Options

Four repayment plans are available under the Direct Loan Program: (1) Standard Repayment Plan; (2) Extended Repayment Plan; (3) Graduated Repayment Plan; and (4) Income Contingent Repayment Plan. There are also four repayment plans available under the FFEL Program: (1) Standard Repayment Plan; (2) Extended Repayment Plan; (3) Income Sensitive Repayment Plan; (4) Extended Repayment Plan.

1. The Standard Repayment Plan is available under both loan programs and is the least expensive in the long run. The minimum monthly payment is $50 per loan regardless of the number of loans you may have. The maximum payoff time is typically 10 years and your payments are fixed. If you can manage the payment amount, the standard option may be your best choice to pay off your loan in the shortest time possible since you'll pay the least amount in interest.



2. Under the DL Program Graduated Repayment Plan you monthly payments start out low, then increase in stages. You generally have between 12 and 30 years to repay the loan(s). Your intial monthly payments will be equal to either the interest that accumulates on your loan between payments, or half the payment you would normally make each month under the Standard Repayment Plan, whichever is greater. Your monthly payments will never increase to more than 1.5 times what you would pay under the Standard Repayment Plan.


Under the FFEL Graduated Repayment Plan your monthly payments will be lower at first and increase over time. Each payment must at least equal to the interest that accumulates on your loan between payments. No scheduled payment amount can be more than three times greter than any other scheduled payment amount. You are generally expected to repay the loand within 10 years.

This plan may be a good choice if you are starting out at a job where you are paid less initially but the salary is expected to rise significantly over time, or if you are required to meet apprenticeship, internship or field certification requirements after you graduate. You will pay more interest over the life of the loan than you would under the Standard Repayment Plan


3. The Income Contingent Repayment Plan under the DL Program is very similar to the income sensitive repayment plan for FFEL borrowers. It is designed to give you the flexibility to pay your loan without causing undue financial hardship. Each year your monthly payent will be based on your adjusted gross income (as reported on your U.S. income tax return), your family size, your interest rate, and the total amount of your DL loans. Ay balance not paid after 25 years is forgiven, but you have to pay taxes on the forgiven amount. If the amount is very large, your tax burden can be in the hundreds or thousands of dollars. But, the savings can be significant for students who wish to pursue careers in public service.



4. The Income-Sensitive Schedule, for FFELP borrowers, bases your monthly payment on your yearly income. As your income rises or falls, so do your monthly payments. Your monthly payments must at least cover interest charges and no scheduled payment can be more than three times greater than any other scheduled payment. This schedule can be helpful to you if you are in a very low or sporadic income situation. This plan can be used for a maximum of 5 years. At the end of 5 years the plan will be converted to a Standard or Graduated Repayment Plan.
   
   FFEL Program borrowers with no outstanding loans before October 7, 1988 are eligible for the Extended Repayment Plan. Under this plan, borrowers with more than $30,000 in total loan debt may receive a standard (fixed) or graduated (low at first and then increased over time) repayment schedule over a period of 25 years.
   
   DL Program borrowers must make a minimum monthly payment of $50, but can generally take from 12 to 30 years to repay the loan. The length of the repayment period will depend on the total amount owed when the loan goes into repayment.
   
   The Extended Payment Plan is a good plan if you think you will need to make smaller monthly payments. Because the repayment period is longer, your monthly payments will be less than with the Standard Plan. However, you will end up payming more in interest because you are taking longer to pay back the loan.

If you do not indicate a preference for a particular repayment option at the time of your first monthly payment, the standard repayment schedule will be applied to your loan. You can change your plan once a year. Review these options carefully and choose the one that will work best for you.

You can access information about your Federal student loans any time on the National Student Loan Data System (NSLDS) by using your PIN you received from the U.S Department of Education. Simply go to: www.nslds.ed.gov/nslds_SA/ and click on "Financial Aid Review". You will be asked for information to identify who you are, including your PIN. When you click on "Submit", you will receive a summary of all the loans you have accepted, information about each loan and totals. You can click each loand for more detailed information about your loan, including contact information for the current servicer, lender and guaranty agency for that loan

Consequences of Default on Your Lifestyle

Defaulting on your student loan may have strong negative affects on your future. Your loan will be placed in default status if you fail to make your scheduled payments.

As soon as you miss any monthly payment you become delinquent on that loan. . At first you will receive letters offering help and information, but if you continue to miss payments, communications will become more and more demanding. Federal regulations require that you are contacted by letter and phone, so phone calls regarding your delinquent account will soon begin. If you find you cannot make a scheduled payment, talk with your lender or servicer before the payment is due.

If you continue to miss payments, your delinquent loan will go into default. Here are some of the consequences of letting matters reach the default level — you may:

• Immediately owe up to 25% more because collection charges will be added to the defaulted amount;
• Be sued for the entire amount of your loan including unpaid interest and collection charges -- and you may have to pay court costs and attorneys fees;
• Severely damage your credit rating, making it difficult to borrow money for a car or home or obtain credit cards. Even if you are able to obtain credit in spite of the default, you will likely pay much higher interest rates;
• Have your federal and/or state income tax refunds intercepted to pay on defaulted loans;
• Endure the embarrassment of having your wages garnished (withheld for payment) by your employer;
• Have your account be referred to a collection agency that specializes in contacting borrowers to obtain payment;
• Become ineligible to receive further federal financial aid unless you make satisfactory arrangements to repay the amount due on your defaulted loans;
• Become ineligible for assistance from federal benefit programs (business and home loans, public assistance, etc.).
• Become ineligible for deferments;
• Not be able to renew a professional license that you hold.

If your lender, servicer, or guarantee agency calls about a delinquent loan, listen carefully to them — they will try to help you to prevent or resolve your default.

Preventing Default

Your lender, servicer and College Assist™ want to help you in every way possible to avoid defaulting on your student loan. Notify the holder of your loan immediately if you find you are not able to make a payment. Your lender or servicer wants to help you avoid default and will work with you to solve repayment problems. Default on a student loan is truly unnecessary since loan programs have many provisions to help borrowers who encounter difficult circumstances.

Here are some tips to help you remain out of default status:

• Make your payments on time;
• Set up your loan payments for direct withdrawal from your bank account. This not only saves you time and postage in writing checks, but often an interest break is offered just for doing so. Check with your lender or servicer regarding this option;
• Be aware of repayment benefits that your lender or servicer may offer. Some lenders offer an interest reduction for achieving a set number of on-time monthly payments;
• Notify the holder of your loan or servicer immediately if you change address, name or other contact information;
• If you find that you are experiencing financial difficulties in meeting your loan payments, contact your lender to apply for a deferment or forbearance on your loan;
• Consider changing your repayment plan to another option that better suits your financial situation;
• Considering consolidating multiple student loans into one new loan;
• Keep copies of all records and documents pertaining to student loans. This is particularly important if you need to research information you believe may be inaccurate.

Consolidation Loans

Consider student loan consolidation if you have multiple loans (all or some) that you wish to combine into one new loan. Loan consolidation allows you to make one monthly payment to a single location instead of several. You can apply for consolidation during your grace period or once you have entered repayment. The interest rate on a consolidation loan is a fixed rate and is calculated from the weighted average of the loans being consolidated, rounded up to the nearest 1/8 of 1% or 8.25%, whichever is less. Depending on your total student loan amount, you could have up to 30 years to repay a consolidated loan. However, remember that if you extend a repayment period, more interest will ultimately accrue on the loan.

Consolidated loans offer the choice of Standard, Graduated, Income-Sensitive or Contingent Repayment Plans. Loan programs that can be consolidated are the Federal Stafford Loan (subsidized and unsubsidized), the Federal Supplemental Loan for Student (FSLS), the Federal Perkins Loan, FISL, HEAL, HPSL, Nursing Student Loan and the Federal Direct Student Loan. You will have up to 180 days after your consolidation is complete to include all eligible loans.

Depending on which loans you include in a consolidation, a deferment could be available if you (or your spouse if applicable):

• Go back to school at least half time
• Become unemployed
• Suffer from an economic hardship

To apply for a consolidation loan contact the holder of your current loans or servicer. Both FFELP and Direct Loans have consolidation loan programs.

Loan Deferments

If you are not able to make a loan payment, contact the holder of your loan or servicer to discuss whether another payment arrangement can be made. You may qualify for a deferment that will allow temporary postponement of monthly payments for a specified period of time.

On subsidized Stafford Loans and Federal Perkins Loans, the federal government pays the interest during deferment. However, you will maintain responsibility for the interest payments for other loan programs such as the unsubsidized Stafford Loan. You can pay this interest every month, every quarter or have it capitalized (added to the loan principal). Capitalizing the interest will result in your paying interest on interest, thus increasing the total amount of your debt. Consider these options carefully and choose wisely. There are several deferments available to you if you are a Federal Stafford, PLUS or Consolidation Loan borrower. The types of deferments for which you may qualify are determined by the type of deferment you are requesting and the type of loans in repayment.

New loans may be deferred if you are:

• Enrolled at least half-time at a postsecondary school
• Studying in an approved graduate fellowship program or in an approved rehabilitation training program
• Unable to find employment
• Having economic hardships

Forbearance

If are willing yet unable to make your loan payments and do not qualify for a deferment, you still could qualify for a forbearance. Call the holder of your loan and request an application. You will be asked to clearly explain and provide documentation about your financial situation and the reasons why you are unable to make your loan payment. Lenders can grant a forbearance at their discretion and may do so in cases of extreme financial hardship and extenuating circumstances. A forbearance may allow you to delay, reduce or extend payments for a specified period of time. However, unlike a deferment, the federal government does not pay the interest on loans in forbearance — not even on subsidized loans. You are responsible for paying the interest on your loans either monthly or quarterly, or requesting that interest is capitalized. You must continue making monthly payments until the holder of your loan notifies you that you have been granted a forbearance — otherwise, your loan will proceed into default status.

You must request a deferment or forbearance through the procedures your loan holder has established. You will need to provide documentation showing you are qualified for deferment or forbearance you are requesting. Make sure all your paperwork is in order and the loan holder receives it.

One of the most important things to remember is: You must continue to make paymenrts on the loan until you have been notified the deferment or forbeanrance has been approved. Someitime the borrower apply and assume things are fine. Or, as soon as they send the form and the paperwork, they think they can immediately stop payment. Even if the paperwork is received without any problem, it takes a while to process. Check with the loan holder. If your deferment or forbearance has not been processed, make your payment! You may go into default otherwise and cannot get a deferment or forbearance if your loan goes into default .

Bankruptcy

Filing for bankruptcy will not help you, as generally federal student loans are not excused under bankruptcy — you must still re-pay your student loans.

Student Financial Aid Ombudsman

The U.S. Department of Education provides an ombudsman -- a government official dedicated to working with student loan borrowers -- to informally resolve loan disputes and problems. The ombudsman's customer service line is (877) 557-2575.

Create a Budget

For peace of mind because you are in control of your finances, create a budget (an analysis of how much you bring in compared to how much you spend). Obviously, you should not spend more than you make. Your student loan payments must be included in monthly expenses the same as rent or house payment, car payment, utilities, insurance and so forth. A simple, easy-to-remember budget is adequate. We have provided the following example:

Of course, if you can reduce your monthly expenses by sharing an apartment, riding the bus, taking lunch to work, being careful with utilities and phone minutes, using basic cable and so forth, you will have a greater cash cushion for discretionary use.

Other money-saving tips for repaying student loans:

• Be aware of repayment benefits your lender offers. Some lenders offer an interest rate reduction for automatic payments (payments that are automatically withdrawn from your checking account); and/or interest reduction for achieving a set number of on-time monthly payments; and/or a portion of the origination fee (charged when you received your loan) credited back to you. These repayment benefits can add up to significant savings in interest charges over the life of your loans;
• Carefully analyze deferment and forbearance time periods. If you need a deferment or forbearance, apply to the holder of your loan before your loans become delinquent — otherwise your loan could be placed in default status.
• Examine your Repayment Plan periodically to determine if changing it would save you money. For example, if you're in the early stages of a graduated schedule but you think you can manage a standard schedule, switching may save a considerable amount in interest.

If you have a loan guaranteed by College Assist™, contact the Repayment Services Center at (303) 305-3500 or (800) 777-5626 to speak with a repayment agent who will be happy to help you. Contact your school for questions regarding Perkins Loans and the Direct Loan servicer of the U.S. Department of Education for questions on Direct Loans.