Frequently Asked Questions
Frequently Asked Questions about Student Loans
Student loans can be a useful tool to cover the gap between the cost of higher education and the amount of financial aid you receive in the form of grants and scholarships. Like other debt, you are responsible for repaying the loans.
Below are answers to common questions about student loans. Contact us with any additional questions or concerns.
Prospective and current borrowers
Repaying student loans
What loan programs are available?
There are two categories of loans: Federal student loans and private loans, which are provided by private lenders, unrelated to the Federal government.
There are four basic federal student loan programs: Perkins, Stafford, PLUS, and consolidation loans.
Alternative or private loans are offered through private lenders, so the terms and conditions and eligibility requirements vary from lender to lender.
Since private loans have higher interest rates and less payment flexibility, you should fully explore Federal loan options first. Research private loans carefully:
How do I apply for a loan?
The process is easy. First, complete the FAFSA (Free Application for Federal Student Aid). Once your school notifies you that you are eligible for federal student loans, they will tell you how to complete the Master Promissory Note (MPN).
The MPN is designed to be used as both a single year and multi-year note. Under the MPN process, you most likely will sign a promissory note once (at the time you first borrow). You may obtain additional loans based on that same note, during the same year, or in subsequent years. There may be circumstances where you will be requested to complete a new MPN.
How do I complete the FAFSA?
You can complete the FAFSA (Free Application for Federal Student Aid)
online at www.fafsa.gov.
Before completing the FAFSA, gather all the documents you will need, including your Social Security number, your driver's license, income tax returns, bank statements, and investment records.
How much can I borrow?
Federal student loans are subject to annual limits that vary depending on the loan type, your year in school, and whether you are a dependent or independent student. Your school determines your eligibility based on federal law.
Are there any fees for federal student loan programs?
Yes. Loan fees are deducted proportionately from each loan disbursement. For all Direct Subsidized and Unsubsidized Loans first disbursed on or after July 1, 2010 and before July 1, 2011, the loan fee is 1 percent. The Direct PLUS Loan fee is 4 percent for Direct PLUS Loans made to both parent and to graduate and professional degree student borrowers.
Are there restrictions on how I use my loan money?
Yes. You may only use proceeds from federal student loans for education-related expenses like tuition, fees, books, room and board, etc.
When and how will I receive my money?
Most likely, your school will receive money via an electronic funds transfer (EFT) and credit it to your student account. Check with your school's financial aid office to see when your loan funds will be delivered.
Why is my loan scheduled to be disbursed in two separate payments?
Federal regulations require schools to disburse Direct Loans in two separate disbursements. The second disbursement may not occur before the midpoint date of the loan period or must coincide with the beginning of a payment period (such as the beginning of a semester).
Typically, a semester-based school will deliver the first disbursement of a fall/spring loan at the beginning of the fall semester. The second disbursement of the loan will be delivered at the beginning of the spring semester.
When will I need to start repaying my loan?
Repayment terms depend on the type of loan you receive. Get more information.
How much will my monthly payments be?
The amount will depend on the interest rate on your loan, the total amount of loans you have outstanding, and the type of repayment schedule you choose.
Use the student loan debt/salary wizard to determine how much income is needed to make payments on student loans, as well as how much money you can afford to borrow based on anticipated salary. This tool also returns an estimated repayment amount for standard loan repayment.
After I submit my loan application, how long does it take to receive the money?
You should check with your school's financial aid office to see when your loan funds will be disbursed.
Are there any loans available to students who have already completed their training?
Most federal student aid programs are only available for students enrolled at least half-time in an eligible program at an eligible institution. Check with the financial aid office at the institution you attend to determine if there is any non-federal financial aid available to students who have completed their course of study.
Who do I contact to change my name, address, and/or phone number?
Contact your school and your loan holder.
How do I determine my previous loan holder?
You can login to the National Student Loan Data System (NSLDS) using the PIN you requested to complete the FAFSA and view your loan history.
How do I view my past loan history?
Login to the National Student Loan Data System (NSLDS) using the PIN you requested to complete the FAFSA and view your loan history.
What if I have a dispute about my student loan?
The Federal Student Aid (FSA) Ombudsman works with student loan borrowers informally to resolve loan disputes that the borrower is unable to resolve. The goal is to find creative alternatives for borrowers who need help with their federal loans. You can reach the FSA Ombudsman as follows:
Office of the Ombudsman
United States Department of Education
4th Floor UCP-3/MS 5144
830 First Street NE
Washington, DC 20202
(877) 557-2575
Internet: fsahelp.ed.gov or ombudsman.ed.gov
If I transfer schools, will my student loans automatically transfer?
No. Your current school cannot transfer your loans automatically. If you are considering transferring, discuss this with the financial aid office at your current school and the financial aid office at the school to which you intend to transfer.
Can I get a refund if I do not complete the school term?
All schools are required to have a policy to refund a portion of your tuition and fees if you are unable to complete the term. Refund policies are school-specific and will differ from school to school. Be sure to request a copy of the refund policy for the school(s) you plan to attend.
What happens to my student loan money if I withdraw from school?
All federal student aid funds, including federal student loans, are awarded under the assumption that you will attend school for the entire period for which the assistance is awarded. If you withdraw from school, you may no longer be eligible for the full amount of federal student loan funds as was originally scheduled. The school will determine if any student loan funds must be returned to the Direct Loan servicer. If student loan funds are returned to the Direct Loan servicer, those funds will be used to reduce the principal outstanding on your federal student loan.
What is a servicer?
A servicer is the institution or business that manages a loan holder’s or school’s student loan portfolios, including billing, inquiries, etc.
What is loan servicing?
Some schools and loan holders (including the U.S. Department of Education) employ servicers to manage their student loan portfolios. Unlike a loan that has been sold, under servicing, the school or loan holder retains ownership of its loans, but contracts administrative functions, such as billing, inquiries, etc.
What else do I need to know?
Maintain accurate records. Keep copies of any document you send out and note the date and to whom you sent the documents.
Stay on top of deadlines. They are very important and can vary from school to school and from state to state.
Be prudent and follow up. Do not assume someone else is checking on your application for you. Make calls to your financial aid office and document those calls, including the time and date you made the call and to whom you spoke.
Learn as much as you can from the available resources. Ask your school's financial aid office any questions you have. SLGFA also provides helpful links to assist you in finding the information and help you need.
Don't give up. There are a lot of options available to you and your family. By taking the time to explore your choices, you will be well on your way to your goal of obtaining or continuing a higher education.
Will I always make my payments to the same loan holder?
Not necessarily. Sometimes, loan holders sell loans to other lending institutions or secondary markets. If your loan is sold, you will be notified and given instructions for making payments. After such notification, make all subsequent communications with this new holder of the loan.
The sale of your loan does not affect the amount you will pay or the terms of repayment, provided you do not default on your loan obligation.
What if I can't make payments?
Contact your loan holder for help as soon as problems arise or contact SLGFA's Default Prevention Department for assistance.
Loan holders realize you might have financial problems from time to time. If you are genuinely unable to make payments but sincerely wish to honor the loan obligation, the loan holder will be cooperative.
It is in no one's best interest for you to default. The worst thing you can do is fail to make a payment without explanation. You might be entitled to deferments or forbearances that temporarily suspend or reduce your payments during financial hardship.
What happens if I fall behind in my payments?
If you fail to make timely payments and your account becomes delinquent for a specific period of time (depending on the loan type), you will be in default. Default has serious consequences, but you can avoid it.
Is there anything I can do to get my monthly payments lowered?
Yes. You should contact your loan holder and ask about the various repayment options available for student loan borrowers. You might also qualify for a deferment or forbearance. Additionally, SLGFA's Default Prevention Department counselors can assist you.
It is very important to remain current on your loan repayment obligations, so please call your loan holder or SLGFA at 800-622-3446 ext. 655 as soon as possible.
If I work in certain occupations, can I qualify for student loan forgiveness?
Certain professions qualify individuals for loan forgiveness/discharge/cancellation, depending on the loan type and if you meet specific requirements. Occupations include the following:
- education component of a Head Start Program
- fire fighter
- law enforcement or corrections officer
- legal assistance attorney
- librarian
- military service
- nurse or medical technician
- professional provider of early intervention services for the disabled
- public or non-profit child or family services agency employee
- public service employees
- service in areas of national need loan forgiveness
- speech-language pathologist
- teacher
- tribal college or university faculty
Get more information about the requirements.
If I die or become disabled, who is responsible for repaying my loan?
Your loan is eligible for discharge if you die or are totally and permanently disabled; however, keep the following in mind: If you are subjected to total and permanent disability, you must provide your loan holder with a physician's certification of the disability for review. Get more information.
If you die, the loan holder must have a copy of the death certificate or other proof of death acceptable under applicable state law.
If I default on my student loan, what are the payment requirements?
If you default on your loan, the entire balance (principal, interest, and collection fees) is immediately due and payable. Your loan will continue to accrue interest, and your loan holder may add a 25 percent collection charge on the principal and interest.
Default has serious consequences, but you can avoid it.
What is loan consolidation?
Consolidation allows you to combine multiple federal student loans, resulting in one loan payment and one loan with the William D. Ford Federal Direct Loan Program. Find about more about consolidation, including the pros and cons.