Student loans are real loans — just like car loans or mortgages. Which means you have to pay them back. But you do have payment options. Learn about them in the FAQs below.

• Is repaying my student loan a serious obligation?
• Are student loans a good way to finance my education?
• If I am eligible for the maximum loan amount, should I borrow the entire amount?
• What is a grace period?
• What is a student loan deferment?
• What types of loans are eligible for deferment?
• How can I get a deferment?
• What is student loan forbearance?
• What happens if I miss a student loan payment? Will my loan be in default?
• Is it easier for me to consolidate my loans?
• What repayment options are available?
• Can payments be made automatically?
• Who is the holder of my loans?
  
  

YES! When you borrow money for your education, you sign a promissory note legally obligating you to repay the loan according to the stated terms and conditions. When the time comes for repayment, usually after your education is complete, meeting your student loan obligation promptly helps you earn a good credit rating, which follows you throughout your life.

If you don't repay your loans, you will suffer serious consequences:

• You may not be able to obtain more credit, (i.e. to buy a car or house.)
• You may be turned down for a credit card.
• You will forfeit your tax refunds.
• Your employer can be ordered to garnish your pay (i.e. withhold what you owe from your paycheck).
• You will be sued and will owe collection fees and attorney fees, in addition to repaying your loan.

Remember, you must repay your student loans, EVEN IF:

• You don't graduate or otherwise complete your education.
• You can't find a job after graduation.
• You aren't satisfied with the education you received.

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Student loans have been the key to higher education and a brighter future for many students. If you borrow sensibly and understand your obligation to repay the loan, you shouldn't be afraid to use a student loan to pay for your education. You should seek grants and scholarships first, then consider subsidized, unsubsidized, and private loan products.

Before you agree to a student loan obligation, think about how much a student loan costs to repay over a certain period of time. Tables that show payments at various interest rates are available from lending institutions and school financial aid offices. You should also consider what income you can realistically expect in your proposed career. Ask your guidance counselor or visit your library for the latest salary information for various professions and occupations.

For more information about loans, contact your high school guidance counselor, college financial aid office, or contact your servicing center. The name of your servicing center appears on your bill.

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When you borrow money to finance your education, keep in mind that a student loan is a debt and must be repaid. To avoid financial problems later, you should keep track of the amounts you borrow each year and only borrow the minimum amount needed to pay for your education.

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A grace period is the time period allotted after you finish school or drop below half-time enrollment and before you must begin repayment on your loans. The grace period with a Stafford Loan is usually six months. Please review your promissory note for grace period time frames on various loans.

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A deferment is an authorized temporary suspension of repayment and may be granted under certain circumstances. A deferment is not automatic; you must apply, meet the qualifications, and make arrangements with the servicer of your loans.

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Deferments may be available to students who borrowed under the Federal Stafford, SLS, and Consolidation Loan programs.

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To apply for a deferment, you must complete a deferment form, which is available from the servicer of your loans. The appropriate official must sign the form to verify your eligibility then you must return the form and any additional required information to the servicer. The servicer will notify you in 30 days if you qualify for a deferment. Until notified, you should keep your payments up-to-date.

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Forbearance allows you to reduce the amount of your student loan payment or to suspend payments temporarily. During a forbearance period, interest continues to accrue. If you are willing but not financially able to make payments under the terms of your repayment schedule, you may request forbearance for the following periods:

• A short period during which you make no payment.
• A period in which you make smaller payments than were originally scheduled.

You must provide the servicer of your loans with the reason for your forbearance request as well as other required information. The servicer of your loans can grant forbearance upon receipt of proper documentation if:

• You are a medical or dental intern.
• Your monthly student loan payments equal or exceed 20 percent of your monthly income
• You are serving in a national service position.
• You are qualified under the Student Loan Repayment Program administered by the U.S. Department of Defense.

• You are affected by a local or national emergency.
• You are a member of the National Guard or Reserves which has been or will be mobilized.
• You reside in an area that is officially designated a disaster area.

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A loan can go into default after 150 days of nonpayment for private loans and 270 days of nonpayment for federal loans. One missed payment will not put a loan into default; however, a missed payment appears on your credit record and may affect your ability to obtain additional credit. If you can’t make a payment, you should contact the servicer of your loans and explain your situation. In some cases, you may be eligible for a deferment or forbearance.

If you run into financial difficulties while paying back your student loan, the worst thing you can do is miss a payment or be habitually late in making your payments; instead, contact the servicer of your loan and explain your situation. The servicer may be willing to renegotiate the amount of your monthly payments or offer you financial hardship forbearance. Unlike a student loan deferment, forbearance is granted at the discretion of the servicer of your loans.

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It may be easier to repay several loans if you consolidate them into a single monthly payment.

• Consolidation is also available for loans obtained separately by you and your spouse.
• Consolidation loan repayment can be extended up to 30 years instead of the usual 10-year repayment period. Consolidation lowers your monthly payment; however, over the life of your loan you will pay more interest. You also should be aware that in some cases, the interest rate on a consolidation loan might be higher than the rates on your original loans.

If you borrowed through one or more federal student loan programs, you may consolidate through the Graduate and Professional Services consolidation program or Network Consolidation program. Consolidation Loans can be established with equal monthly payments through the life of the loan; or monthly payments can be lower in the initial years and increased over the course of the loan repayment term.

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Besides loan consolidation, these repayment plans are also available:

• Standard Repayment Schedule - payments are the same each month but may be adjusted each year to reflect the variable interest rate. Total repayment schedule is 10 years.
• Graduated Repayment Schedule - you make smaller monthly payments early in the repayment schedule and larger payments later in the schedule. Total repayment schedule is 10 years.
• Income-Sensitive Repayment Schedule - loan payments are based on your monthly income. The total repayment term may be extended beyond 10 years.

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AES offers options that allow a student loan borrower’s monthly payments to be automatically deducted from a checking or savings account. For more information call your loan servicer.

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The holder of your loans is either the financial institution that originally loaned you the money or an institution that purchased your loans. Lenders have the right to sell loans, but they must notify the borrower. Sometimes the loan holder has another organization act as the loan servicer. In this case the borrower communicates with the loan servicer instead of the holder.

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