Student Loan Repayment Information
Federal Direct Loans enter repayment (principal and interest) six months after you graduate or stop attending at least half-time. Standard repayment lasts ten years (alternative repayment plans are also available). It is very important that students contact their lender(s) and the U.S. Department of Education whenever they change their mailing address or phone number.
KNOW WHAT U OWE
To review your loan history you will need:
- Your Social Security number
- The first two letters of your last name
- Birth Date
- The Federal PIN used to sign your FAFSA
Defaulting on a student loan is very serious and can result in various problems. The links below will help you learn about avoiding default. If you are already behind on student loan payments, Davenport encourages you to contact the financial aid office or to use one of the following government sources for more information:
- Student Loans web site
- Federal Student Aid information on defaulted student loans
- NSLDS -- a government web site with information about your student students.
- Federal Office of the Ombudsman -- a government website to assist you if you see an error on your student loan record.
Standard Repayment Plan
This plan offers the lowest overall cost. When you are due to start repaying, your federal student loans are automatically placed into this plan and it will apply until you make a change. You make level monthly payments of principal and interest over the term of the loan.
Graduated Repayment Plan
With this repayment plan for your federal student loans, your monthly payments are lower at the beginning of repayment and increase over the term of the loan.
Income-Sensitive Repayment Plan
Payments on your federal student loans are based on a percentage of your monthly income from 4% to 25% as long as you pay at least the interest that accrues every month. In certain circumstances payments can be less then interest through the use of reduced payment forbearance.
Income-Contingent Repayment Plan
Under this plan your required monthly payment amount will be based on your annual income, family size and total loan amount. You have 25 years to repay and the unpaid portion will be forgiven. However, you may have to pay income tax on the amount that is forgiven.
Income-Based Repayment Plan
Under this plan, your required monthly payment amount will be based on your income during any period that you have a partial financial hardship. Your monthly payment will be adjusted annually. Maximum repayment under this plan may exceed 10 years. After a certain period of time you may qualify for cancelation of any outstanding balance on your loans. However, you may have to pay income tax on the amount that is forgiven. Click here for more information on this repayment plan.
Applications for Income-Based Repayment Plans (IBR) are available below. Access the application or directions for applying by clicking on the links below.
- Federal Direct Loan Program IBR.
- Sallie Mae requires that you login to their website to access the IBR application.
- Chase requires that you log in to their web site or call customer service at 1-800-489-5005 to apply.
- Wells Fargo requires that you call customer service to apply for the IBR plan at 800-658-3567.
All FFEL and Direct Stafford Loan borrowers are eligible to consolidate after they graduate, leave school or drop below half-time enrollment. PLUS Loans are eligible for consolidation once they are fully disbursed. Plus loan borrowers also have to initiate an in-school deferment with the U.S. Department of Education. Borrowers who are delinquent or in default must meet certain requirements before they may consolidate their loans.
Consolidation Eligibility Requirements:
- To qualify for a Direct Consolidation Loan, borrowers must have at least one Direct Loan or Federal Family Education Loan that is in grace, repayment, deferment, or default status. Loans that are in-school no longer are eligible to be included in a Direct Loan Consolidation.
- Borrowers can consolidate most defaulted education loans, if they make satisfactory repayment arrangements with the current loan holder(s) or agree to repay their Direct Consolidation Loan under the Income Contingent Repayment Plan.
- Borrowers who do not have Direct Loans may be eligible for a Direct Consolidation Loan with a FFEL consolidation lender OR have been unable to obtain a Federal Consolidation Loan with income-sensitive repayment terms acceptable to them or intend to apply for loan forgiveness under the Public Service Loan Forgiveness Program.
- Borrowers who have only a Direct Consolidation Loan cannot consolidate again unless they include an additional loan.
- For more information on weighing the pros and cons of consolidation, click here.
Consolidation-Loan consolidation is the process of combining one or more eligible federal educational loans into a single new loan. Payments under consolidation may become more manageable. You have to apply for consolidation and choose a repayment plan. You may lose your rights to deferment and cancellation.
Deferment-A deferment is a period in which repayment of the principal balance is temporarily postponed provided that you meet certain requirements. If you do not meet the requirements for a deferment you may be eligible for forbearance.
Forbearance-A Forbearance allows you to postpone or reduce your monthly payment for a specific period of time. That is provided that you are unable to make your scheduled loan payments for reasons including, but not limited to financial hardships and/or illness. You must request forbearance from your loan holder and you are responsible for the interest that accrues during the forbearance period.
Forgiveness/Cancellation-Forgiveness or the cancellation of a loan is based on the borrower performing certain types of services such as teaching in a low-income school.
Guarantee Agency-The guarantee agency or guarantor insures student loans against default. They usually charge a 1% default fee that is deducted from each loan disbursed to handle the costs of insuring the loan.
Tax Credits-The IRS offers two federal income tax credits to certain taxpayers for higher education expenses. They are the Hope Tax Credit and the Lifetime Learning Tax Credit. More information is available at www.irs.gov.
NOTE: More details and forms required for the definitions listed above are available at the federal government web site.