After submitting your FAFSA, you will receive your financial aid award on your MyInfo account with a list of the types and amounts of federal student loans you are eligible for. You do NOT have to accept the entire loan amount you are awarded. Before you take out student loans be sure to accept any grants, scholarships, work study or tuition waivers first! These are free money that you do not have to repay.
Accepting Student Loans: Know you limits.
Financial aid is not infinite; you have a limit of the amount of student aid you can receive. Know what you owe and try to avoid taking loans as long as possible to save for when you will really need them. Find out more here.
While You're in College
We strongly encourage you to start paying toward your student loans while you are still in school. Even $5 a month can make a difference. You are granted one 6 month grace period prior to starting repayment on your loans. If you are attending and taking at least 6 credits your loans are considered to be in "in school deferment". If you attend less than half time (<6 credits) or you stop attending you go into repayment. If your servicer contacts you regarding your enrollment you can complete the following form to make your loans go back into the "in school deferment" status.
Paying Off Student Loans
If you drop below 6 credits or you graduate or stop attending your grace period begins. Subsidized and Unsubsidized loans have a grace period of 6 months. Once your grace period is over, you will be in repayment on your student loans. Prior to going into repayment you should contact your servicer to set up a payment plan. There are many different repayment options, some with $0 per month payments.
If you don't make your student loan payments....
A Federal student loan enters default when your last payment is over 270 days (that is 9 months) late. The number one defense for default is communication. There are several payment plan options available to you, some with payments as little as ten dollars a month.
Your loan service providers are there to help you and if you stay in communication with them they will work with you!
The penalties that accompany student loan default are sever:
- Collection costs are added at 24% on the principle and the interest of your loan.
- The Federal Government will take 15% of your paycheck as a wage garnishment.
- If you receive Social Security benefits, those will be garnished at 15% as well.
- You will not receive a Federal or State tax refund while your loans are in default.
- All of this information goes on your credit report.
- You could lose many state licenses, including driver's licenses and hunting and fishing licenses.
Don't panic if you have defaulted. There are ways to get out of default. Contact your servicer as soon as possible and you can rehabilitate your loans.