REPAYING YOUR STUDENT LOANS
Your Education is a major investment in yourself. Pursuing your degree at Western University has taken both time and money. Beginning repayment of your student loans can often seem like a confusing and complex process. Successful repayment requires that you understand the basics of your loans and the repayment options available to you. You also need to know what you owe and understand your rights and responsibilities as a borrower.
Please take the time to review this information as you should find it as a helpful guide to getting you started on your repayment options.
After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment, which is called “grace period”. It is important that you take advantage of your grace period on all loans where it is offered.
Six months for a Federal Stafford Loan (Federal Family Education Program or Federal Direct Student Loan Program).
Nine Months for Federal Perkins Loans.
The repayment period for all PLUS loans begins on the date the loan is fully disbursed, and the first payment is due within 60 days of the final disbursement. However, a graduate student PLUS loan borrower can defer repayment while the borrower is enrolled at least half time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the borrower is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower. Capitalization is adding interest onto the principal balance of a loan rather than paying it as it accrues; future interest is than based on the higher loan amount.
Private loans/alternative loans (other lenders). You will need to check the promissory note or contact your private lender as grace periods on these loans may vary.
Twelve month grace period on Primary Care Loans, Loans for Disadvantage Students, Nursing Student Loans , Nursing Faculty Loans and The Health Professions Loan.
Who to Contact Once You Graduate or Leave School
You will need to contact the servicer on the loan(s). In most cases borrowers will have more than one servicer. The servicer specializes in handling loan repayment activities such as billing, collections, deferments and forbearance. The servicer should be the first organization to contact for any assistance during loan repayment. The servicer information for each of your loans such as; name address, phone number can be found on The National Student Loan Data Service, www.nslds.ed.gov.
Not sure who your loan servicer is for your Direct Federal Safford Loans and or your Grad Plus?
Please go to the National Student Loan Data Service at www.nslds.ed.gov , enter your information, you will need your FAFSA PIN, and go to your loan detail, the current loan servicer information will be listed.
For servicing information on your Perkins, Primary Care Loans, Loans for Disadvantage Students, Nursing Student Loans , Nursing Faculty Loans and The Health Professions Loan, please contact:
Educational Computer Systems (ECSI) – 888-549-3274 www.ecsi.net
National Student Loan Data Service
Perhaps one of the most important sources that the borrower can access for information regarding loan history is the U.S. Department of Education’s National Student Loan Data Service (NSLDS). NSLDS allows the borrower to access information on all federal and Perkins loans, loan status, loan balances and disbursements. Please go to www.nslds.ed.gov for detailed information regarding your loan history. The NSLDS does not house any loan history for your private/alternative loans, Primary Care Loans, Loans for Disadvantage Students, Nursing Student Loans or Nursing Faculty Loans. For these loan programs please go to (ECSI – 888-5429-3274) for more information and for private loans please contact your lender.
Deferment and Forbearance
Under certain circumstances a borrower can receive periods of deferment or forbearance that allows the borrower to postpone loan repayment.
A deferment is a period of time during which no payments are required and interest does not accrue on the subsidized portion of the Stafford loan. Interest does continue to accrue on the unsubsidized portion. Borrowers must meet certain requirements and deferment options are limited.
In forbearance if you temporarily can’t meet your repayment schedule but you’re not eligible for deferment, your lender might grant you forbearance for a limited and specific period of time. Forbearance occurs when your lender or servicing agency agrees to either temporarily reduce or postpone your student loan payments. Interest continues to accrue.
Borrowers must contact their servicer for deferment and forbearance information.
For more information on deferments and forbearance, please go to: http://studentaid.ed.gov/PORTALSWebApp/students/english/difficulty.jsp?tab=repaying/
For deferment and forbearance information on your Primary Care Loans, Loans for Disadvantage Students, Nursing Student Loans and Nursing Faculty Loans, please refer to the servicer on these programs at (ECSI – 888-549-3274).
Paying Back Your Student Loan(s)
Borrowers have a choice of repayment options. How much you pay and how long you take to repay your loans will vary depending on the repayment plan you choose. There are a few repayment plans available; Standard Repayment, Extended Repayment, Graduated Repayment, Income-Sensitive Repayment, Income-Contingent Repayment (ICR) , Income-Based Repayment (IBR) and Pay As You Earn (PAYE). Borrowers should set financial goals to develop a budget so you can determine the best repayment option that will fit your strategy for paying off your student loan debt. These repayment plans do not apply to Primary Care Loans, Loans for Disadvantage Students, Nursing Student Loans or Nursing Faculty Loans, please refer to the servicer of these loans at (ECSI – 888-549-3274) www.ecsi.net.
Standard Repayment – Borrower will pay an equal (fixed) amount each month for up to 10 years. The minimum monthly payment is $50.00, but your actual payment amount and repayment period will depend on the total amount owed. Your lender/servicer will place your loan(s) in this plan if you don’t select a different plan. This plan has the highest initial monthly payment, but it also has the lowest cost in total interest paid over the life of the loan.
Loan Calculator (Standard and Extended Repayment)
Extended Repayment – Borrowers who are eligible can extend their maximum period to 25 years using either fixed or graduated monthly payments. The cost in interest is greater over the life of the loan, however, the money that you are not paying each month on your loans(s) gives you the flexibility to pay other expenses, including paying off higher cost debts such as credit cards.
Loan Calculator (Standard and Extended Repayment)
Graduated Repayment – Unlike the standard and extended repayment plans, this plan starts off with lower payments, which gradually increases every two years. Initial payments are lower than the Standard Repayment Plan because early payments typically cover only the accrued interest each month. As principal is included in the payment, the minimum monthly payment amount will increase. The total interest cost is higher over the length of the repayment in the Graduated Repayment Plan than with the Standard Repayment Plan. The Graduated Repayment Plan is best suited for those who expect large salary increases at a predictable point in time. Maximum repayment period is 10 years.
Income Contingent Repayment (ICR) – Income-contingent repayment is currently available only from the U.S. Department of Education and available to Direct Loan borrowers. ICR is designed to help borrowers who intend to pursue jobs with lower salaries such as careers in nonprofit organizations or public service. The ICR tailors your monthly payment based on your income, family size and amount borrowed. The maximum repayment period is 25 years, after that any remaining debt is discharged, but you will have to pay income taxes on that portion that is discharged.
Income Contingent Repayment
Income-Sensitive Repayment (ISR) – This repayment plan is only available to FFELP loans. This plan is designed to make it easier for borrowers with lower paying jobs to make their monthly loan payments. Borrower’s monthly payments are based on your anticipated total monthly gross income and student loan debt, and are reviewed/adjusted annually. The monthly payment can be no less than the amount of accrued interest. The maximum repayment period for Income-Sensitive Repayment is 15 years.
Income-Based Repayment (IBR) – To qualify for IBR, borrowers must be experiencing “partial financial hardship” at the time you enter IBR. “Partial financial hardship” exists when the annual amount you would be required to pay under the Standard Repayment Plan exceeds 15% of your “disposable” adjusted gross income (AGI). “Disposable” adjusted gross income is defined as that portion of your household AGI that exceeds 150% of the poverty guideline for your household size, and the poverty guideline for your house hold size and state of residence. Payments will change as these factors change. Eligibility for IBR and the amount of your monthly payment must be re-evaluated and adjusted as needed annually. Maximum repayment period is 25 years and any remaining loan balance after 25 years will be forgiven.
Please note: It may be beneficial for a graduating student to files taxes even though there may have been no income and enters into the IBR plan as the income would then be based on the tax return instead of based on a current pay stub and projecting forward 12 months.
Additional information on the Income-Based repayment plan can be found at www.ibrinfo.com
IBR questions and answers prepared by Federal Student Aid U.S. Department of Education
Pay As You Earn (PAYE) – To qualify for Pay As You Earn, you must have a partial financial hardship. You have a partial financial hardship if the monthly amount you would be required to pay on your eligible federal student loans under a 10-year Standard Repayment Plan is higher than the monthly amount you would be required to repay under Pay As You Earn. For this purpose, your eligible student loans include all of your William D. Ford Federal Direct Loan (Direct Loan) Program loans that are eligible for Pay As You Earn, as well as certain types of Federal Family Education Loan (FFEL) Program loans. Although your FFEL Program loans cannot be repaid under Pay As You Earn, the following types of FFEL Program loans are counted in determining whether you have a partial financial hardship:
- Subsidized and Unsubsidized Federal Stafford Loans
- Federal PLUS Loans made to graduate or professional students
- Federal Consolidation Loans that did not repay any PLUS loans for parents
- You also must be a new borrower as of Oct. 1, 2007, and must have received a disbursement of a Direct Loan on or after Oct. 1, 2011. You are a new borrower if you had no outstanding balance on a Direct Loan or FFEL Program loan as of Oct. 1, 2007, or had no outstanding balance on a Direct Loan or FFEL Program loan when you received a new loan on or after Oct. 1, 2007.
- Your payment amount may increase or decrease each year based on your income and family size. Once you’ve initially qualified for Pay As You Earn, you may continue to make payments under the plan even if you no longer have a partial financial hardship
Please go to Repayment Plans and Calculators for more information about the various repayment plans and to calculate your estimated repayment amount under each of the different plans.
Consolidation loans will combine your federal loans into one single package. Your interest rate might be slightly higher on a consolidation loan as the weighted average of the interest rates on the loans being considered for consolidation will be rounded up to the nearest 1/8 of a percent. There are no fees or cost to consolidate a loan. Remember, when you consolidate your loans you will be giving up any grace period that you would have had on those loans, you will also be giving up any benefits or incentives that you would have had on those loans as well. Primary Care Loans, Nursing Faculty Loans or private loans are NOT consolidatable. Borrowers should do as much research as possible before choosing to consolidate; it might be right for some but not for others. For more information on consolidation, please go to:
Students that do not have a defaulted loan assigned to the Department can apply using the Direct Consolidation Loan application process at www.studentloans.gov .
Students that do have a defaulted loan assigned to the Department will need to apply using the existing loan consolidation application process on the Direct Consolidation Loans Web site http://www.loanconsolidation.ed.gov/ .
Please note: Please beware of companies and individuals trying to solicit you for your consolidation business and charge you a fee to do so. Be careful of print ads that come in the mail and want you to call them, sign up or give them your e-mail contact information. Students can apply for consolidation on their own directly through the Department of Education at NO charge. www.studentloans.gov
Public Service Loan Forgiveness (PSLF)
The Public Service Loan Forgiveness Program was created to encourage individuals to be employed full time in a public service (non-profit) organization. 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)
Repayment Plan Options and Public Service Loan Forgiveness Program – Quick Guide
|Repayment Plan||Eligible Loans||Monthly Payment and Time Frame|
Qualifying PSLF repayment plan
|Extended Repayment Plan||
|Income-Based Repayment (IBR)
Qualifying PSLF repayment plan
| Pay As you Earn Plan
Qualifying PSLF repayment plan
You have no outstanding balance on a Direct Loan or FFEL Program Loan as of October 1, 2007, or had no outstanding balance on a Direct or FFEL Program Loan when you obtained a new loan on or after October 1. 2007.
You have a Direct Loan with a disbursement made on or after October 1, 2011
|Income-Contingent Repayment (ICR)
Qualifying PSLF repayment plan
How much will you repay when it’s time to pay back your federal student loan?
Simply enter the required information and calculate your estimated payment and repayment summary details for your loan under each plan. Be careful to enter the correct information for all your loans. For example, if you have a subsidized loan with an interest rate of 3.4% and an unsubsidized loan with an interest rate of 6.8%, you must do a separate calculation for each loan. Calculate payments now! – Repayment Calculator
What kinds of employment qualify?
Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a non-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC). Check with the employer regarding the classification (government, non-profit, etc.) Depending on employer type, public websites are available:
Non-Profit 501(c)(3) and Private Non-Profit
What must I do to have any remaining balances on my Direct Loans forgiven under the PSLF Program?
You must make 120 on-time, full, scheduled, monthly payments on your Direct Loans. Only payments made after October 1, 2007 qualify. You must make those payments under a qualifying repayment plan. When you make each of those payments, you must be working full-time at a qualifying public service organization.
For more information regarding Income-Driven Repayment and Public Service Loan Forgiveness Plans, please view the power point presentation posted on the Financial Aid’s Literacy webpage, Click here.
For questions regarding the Public Service Loan Forgiveness Program, please contact Fedloan Servicing by visiting the website at www.myfedloan.org.
More information can be found on the Public Service Loan Forgiveness fact sheet.
If you would like to check a hospital’s profile to determine if it qualifies for PSLF, please go to: http://www.ahadataviewer.com/# and then click on “Get a FREE Hospital Profile”. Enter the Hospital name and click download and then open.
Primary Care Loans, Loans for Disadvantage Students, Nursing Student Loans and Nursing Faculty Loans are not eligible or do not qualify for the Public Service Loan Forgiveness program.
Western University’s Financial Aid office and Alumni Relations has teamed up with SALTSM, to provide education debt management services to WesternU students and alumni. SALT is created by American Student Assistance®, a 56-year-old nonprofit organization and has been a leading service provider in student loans since 1956. They provide education and guidance to student loan borrowers throughout a borrower’s entire loan experience.
SALT is a multi-faceted program that provides financial tools and services that will assist our students and alumni in better understanding their student loans. SALT provides a secure, web-based dashboard that enables students and alumni not only to see and manage their personal education loans in one place, but also provides them with information on the cost and benefits of various repayment options. Additionally, students and alumni will have access to personal education debt counseling services with trained ASA counselors.
SALT is a membership program and is a FREE service to our students.
The FSA Ombudsman works with the federal student loan borrowers to resolve loan disputes or problems from an impartial, independent viewpoint. If you have a problem with a federal student loan, you should contact the holder/servicer of the loan and try to resolve the problem first. If you can’t resolve the problem with the loan holder/servicer, contact the FSA Ombudsman at 1-877-557-2575 or at Ombudsman