When preparing to repay your student loan(s), there is information that is important for you to know. This information would include:
- A promissory note is a contract signed by the borrowing student before obtaining the loan that contains all the agreed regulations, terms and conditions
- Borrowers should always directly contact their billing servicer if their contact information changes or if they need of any type of assistance
To help you get better understand repayment of long-term student loans, read the following frequently asked questions concerning the repayment phase of the student loan experience:
What is principal and interest?
Principal is the amount you borrowed. Interest is a fee charged to you for use of the loan money, calculated as a percentage of the principal of the loan and paid over a specified time.
What's the difference between subsidized and unsubsidized loans?
With subsidized (need-based) loans, the federal government pays the interest that accrues when you are enrolled at half-time level or higher in qualified courses, during your grace period, or during authorized deferment periods.
With unsubsidized (non need-based) loans you, the borrower, are responsible for payment of interest while attending school, during your grace period, and during authorized deferment periods.
Capitalization occurs if you choose not to pay the interest that is accruing on an unsubsidized loan during such periods. When capitalizing, the unpaid interest is added to the loan principal, increasing your total outstanding balance.
What is a grace period?
A grace period is a stated amount of time when you are not expected to make payments. A grace period begins when your enrollment falls below half-time status, you leave school or graduate. The grace period for a Direct/Stafford Loan is six months. A Perkins Loan has a nine-month grace period.
What is a billing servicer?
A billing servicer processes student loan bills, payments, deferments, and provides other administrative services.
Are Perkins and Direct/Stafford Loan repayment statements together in one bill?
No, you will receive a separate bill for each of these loan programs. The Perkins Loan is campus-based and administered at UCLA by the Loan Collections Office. Affiliated Computer Services, Inc. ( ACS ) on behalf of UCLA will bill you for your Perkins Loan(s). Non-campus-based Direct/Stafford Loans are handled by a loan (or billing) servicer assigned by the Federal government, such as Sallie Mae. Your assigned loan servicer will bill you for your Direct/Stafford Loans.
What if my grace period expires before I go on to graduate school?
When your grace period expires, payment is due. In order to suspend your payments, the school where you obtained your Perkins Loan(s), as well as the loan servicer of your Direct/Stafford Loan(s), must receive verification of your enrollment. Please see the Bruin Dollars and $ense How To File a Deferment page for more details. If in the mean time you are still unable to pay, please contact your servicer(s) directly to inquire about deferment options.
How do I file a student deferment?
Procedures for filing a student deferment for campus-based loans differ from procedures for non-campus-based loans. For campus-based loans, acquire a deferment form from the school where you obtained the loan; for non-campus-based loans, please contact your loan servicer for instructions. See the Bruin Dollars and $ense How To File a Deferment page for more details on how to complete the process.
What do I do if I can't make my loan payments?
You may request a forbearance, an unemployment deferment, or an economic hardship deferment to obtain a temporary cessation of your payments. Contact the holder of your loan(s). The loan holder will determine your eligibility.
What is a Perkins Loan cancellation and how would I qualify?
A loan cancellation is a gradual reduction of a borrower's Perkins Loan principal. You may be eligible for cancellation by working in specified jobs, including teaching in a Title I school, law enforcement, and social work, among others. Please contact the UCLA Collections Office at (310) 794-2812, for further details on how to initiate the loan cancellation process.
Is there a penalty for prepayment of my student loans?
Your federal student loans may be prepaid or paid-in-full at any time without penalty. You may elect to shorten the duration of your loan payments by making extra payments or paying more than the minimum amount billed. By taking these actions, you will also lower the total loan finance charge. (NOTE: Private loans may have different terms and conditions; please refer to your promissory note or contact your lender for clarification/details.)
What are repayment incentives and how do I qualify?
Repayment incentives are monetary rewards for doing business in a specified way. The most common repayment incentive offered is an interest rate reduction for payment of your loan(s) through automatic debit from your checking or savings account. Check your servicer's website for information on incentives offered and qualifying details.
What is loan consolidation?
Consolidation combines (refinances) multiple educational loans into one new loan. The new loan will have a new interest rate, new terms and conditions. Consolidation may be beneficial to some borrowers, but it may pose drawbacks for others. For example, Perkins Loan borrowers lose valuable cancellation rights by consolidating. Consolidation is usually limited to larger loan amounts and may extend the loan repayment period. Extending the repayment period may increase your total finance charge, notwithstanding a lower interest rate and monthly payment. Be aware of all loan provisions before consolidating your educational loans.
TELL ME ABOUT...
Introduction to Repayment
Knowing ‘the basics’ before making that first payment
Understanding the many choices offered
Deferments / Forbearance / Cancellations
Making use of benefits
Determining the advantages and disadvantages