Student Loans - General | Default


Student Loans - General


Q. Can I transfer my loan to another school?

A. No. A student must request a new loan from the financial aid office at the new school. The new school's financial aid staff will recalculate the student's loan eligibility, which may be reduced by the amount of loan funds already received for attendance at the prior school.

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Q. How is Federal Direct Loan eligibility determined?

A. Subsidized Stafford

Financial need = cost of attendance - expected family contribution - expected financial assistance

This figure cannot be more than the annual Stafford grade level maximum.

Unsubsidized Stafford

Remaining financial need = cost of attendance - expected financial assistance (including any amount of subsidized Stafford Loan)

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Q. What happens to the interest that accrues on my loan while I am in school?

A. If you are a subsidized Stafford Loan borrower, the U.S. Department of Education pays the interest that accrues on your loan while you are in school on at least a half time basis and during authorized deferment periods.

If you are an unsubsidized Stafford Loan borrower, interest that accrues on your loan while you are in school may be capitalized – or added to the principal balance of your loan. If you want to pay the interest as it accrues, you can make this selection when completing your federal Master Promissory Note. Otherwise, unpaid accrued interest will be capitalized.

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Q. What is a student loan?

A. A student loan is money you borrow to pay for your college education. Student loans must be repaid, even if you:

  • are not satisfied with the quality of your education,
  • do not complete your program of study, or
  • are not able to obtain employment after you graduate.

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Q. What is my balance and who do I pay?

A. All loans first disbursed after June 30, 2010 will be originated by the Federal Direct Loan Program. If your loan was originated before June 30, 2010 and you do not know the holder of your student loan, visit the National Student Loan Data System, or NSLDS, or call (800)433-3243 to talk to the federal information center. The NSLDS or federal information center will also provide the loan amount(s) certified by your school. Contact your loan holder to determine your outstanding balance and how to submit payments.

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Q. What is the difference between subsidized and unsubsidized Federal Direct Stafford Loan?

A. Subsidized Stafford Loans are need-based and the interest is paid by the U.S. Department of Education while the student is in school and in authorized deferment periods. Some subsidized Stafford Loans are also eligible to have the interest paid while the student is in the grace period.

Unsubsidized Stafford Loans are not need-based. The interest payment is always the borrower's responsibility. A borrower can choose to pay interest that accrues while the borrower is in school, in grace, in deferment or other times when payments are not otherwise expected can be paid, or the unpaid accrued interest will be capitalized, i.e., added to the outstanding principal amount of the loan.

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Q. What is the Federal PLUS Loan?

A. The Federal PLUS loan is for graduate or professional students (to borrow on their own behalf) or for parents to borrow on behalf of their undergraduate, dependent students. The borrower may borrow up to the cost of attendance less any financial aid the student has been awarded. To be eligible for a PLUS loan, the borrower must not have negative credit.

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Default and Repayment


Q. Why did my loan go into default, I sent a deferment/forbearance form to my lender?

A. If you choose not to make payments and apply for a deferment or forbearance, it is your responsibility to ensure the lender receives the complete documentation in a timely manner. You should keep a copy of all forms submitted and keep checking with the lender to ensure they receive the documentation and place the deferment or forbearance on the account. When a payment is not made by the due date, the account is delinquent. When the delinquency reaches 270 days, the account is in default status.

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Q. How do I get a deferment or forbearance form?

A. Contact your lender

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Q. How do I get my loan discharged because I attended a school that closed while I was there?

A. If the loan is not in default, the borrower should request the closed school discharge application from the lender. In order to qualify, the student must have been in attendance within 90 days of the school's closure and must not have been able to transfer to another school or complete the program of study. Lack of job placement or subsequent training is not reason for discharge.

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Q. What is the AmeriCorps program?

A. It is a federal program in which participants can get vouchers to pay existing loans or pay future educational expenses. For more information, call:
National number: (800) 942-2677
Attorney General's office: (573) 751-4727

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Q. Who can answer my questions about a forbearance form?

A. Questions about forbearances should be directed to the borrower's lender. Each lender may have its own forbearance form.

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