Central Penn is committed to educate our students in default management which includes loan responsibilities, financial literacy and identity theft. It is important that students understand their obligation in repaying their student loan. Students begin repaying Federal Direct Stafford loans six months after graduation, leaving school, or dropping below half-time enrollment. Also, students must complete a federally required Exit Counseling before they graduate from Central Penn, drop below half-time attendance, or withdraw from classes completely. Academic records will be on hold until this is completed.
The Department of Education offers loan repayment plans and calculators. When the loan comes due, the federal loan servicer will mail a payment schedule with monthly payment of principal and interest, and the unpaid balance for each month it takes to repay the total debt.
If your servicer does not contact you, students are still responsible for the loan and contacting them at: Direct Loan Servicing Online
Visit the National Student Loan Data System (NSLDS®) to view information about all of the federal student loans you have received and to find contact information for the loan servicer or lender for your loans. You will need your Federal Student Aid PIN to access your information.
A loan servicer is a company that handles the billing and other services on your federal student loan. The loan servicer will work with you on repayment plans and loan consolidation and will assist you with other tasks related to your federal student loans.
The following are loan servicers for federally held loans made through the William D. Ford Federal Direct Loan (Direct Loan) Program and the Federal Family Education Loan (FFEL) Program.
|Primary Federal Direct Loan Servicers|
|Great Lakes||(800) 236-4300|
|Navient (Formerly Sallie Mae)||(800) 722-1300|
|Regional Federal Direct Loan Servicers|
|Aspire Resources||(855) 475-3335|
|Granite State||(888) 556-0022|
|OSLA Servicing||(866) 264-9762|
|VSAC Federal Loans||(888) 932-5626|
|FFEL (Federal Family Education Loan) Servicers*|
|AES (American Education Services)||(800) 233-0557|
*These are older student loans taken out before Jun 30, 2010 that have a lender (bank, commercial lender or credit union) and are federally guaranteed by the Department of Education. This program was replaced by the Federal Direct Loan program and as of June 30, 2010 you can no longer take out a loan under the FFEL program.
Default is the failure of a borrower to make installment payments when due, or to meet other terms of the signed promissory note. If you do not make any payments on your student loans for over 270 days and do not make special arrangements with your servicer to get a deferment or forbearance, your loans will go into default.
Staying in touch with your federal loan servicer is the number one way to prevent default! You may have more than one federal loan servicer. If you are unsure who is servicing all of your loans, log on to the National Student Loan Data System (NSLDS) and find out who your servicer is today!
CONSEQUENCES OF DEFAULT
You are responsible for repaying your student loans even if you do not graduate, have trouble finding a job after graduation, or if you are not satisfied with your education. If you do not make any payments on your student loans for over 270 days and do not make special arrangements with your lender to get a deferment or forbearance, your loans will go into default.
Failure to repay your loans enters you into loan default. Loan default can result in the following consequences:
- Your entire outstanding loan balance becomes due and payable immediately.
- Your default will be reported to national consumer reporting agencies and will affect your ability to obtain other consumer credit for up to seven years.
- Your federal and state income tax refunds or other government benefit payments may be withheld.
- You will lose deferment, loan forgiveness, and repayment options.
- Your wages may be garnished.
- You will be ineligible to receive any further federal and state financial aid.
- You may not get hired for certain jobs where they require credit checks.
- You may lost or be denied a state professional license.
- You may be sued.
GETTING OUT OF DEFAULT
There are three ways you can get out of default:
- Loan Repayment
- Pay off the remaining balance and any additional fees assessed to the loans
- Loan Consolidation
A defaulted federal student loan may be included in a consolidation loan after you’ve made arrangements with ED and made several voluntary payments (contact your school for information about making payments on a Perkins Loan). Usually, you would be required to make at least three consecutive, voluntary, and on-time payments prior to consolidation.
- Loan Rehabilitation
Another option for getting your loan out of default is loan rehabilitation. To rehabilitate your Direct Loan or FFEL Program loan, you and ED must agree on a reasonable and affordable payment plan. (Remember, contact your school for your Perkins Loan.)Your loan is rehabilitated only after you have voluntarily made the agreed-upon payments on time and the loan has been purchased by a lender. Once your loan is rehabilitated, you may regain eligibility for benefits that were available on your loan before you defaulted. Those benefits may include deferment, forbearance, a choice of repayment plans, loan forgiveness, and eligibility for additional federal student aid. After rehabilitation, your monthly payment may be more than the amount you paid while you were rehabilitating your loan. Collection costs may be added to your principal balance, increasing the total amount you owe. Delinquencies (late payments) reported before the loan defaulted will not be removed from your credit report.
Paying for your student loans
There are several ways you can make payments towards your federal student loans:
- By mail - Must be a check, do not mail cash
- Over the phone
- Online - Create an account through your federal loan servicer
- Direct Debit - Automatically debits your account each month, and receive a .25% interest rate deduction.
Federal student loans offer a variety of different repayment plans to choose from:
This repayment plan saves you money over time because your monthly payments may be slightly higher than payments made under other plans, but you’ll pay off your loan in the shortest time. For this reason, you will pay the least amount of interest over the life of your loan.
If your income is low now, but you expect it to increase steadily over time, this plan may be right for you.
If you need to make lower monthly payments over a longer period of time than under plans such as the Standard Repayment Plan, then the Extended Repayment Plan may be right for you.
- Income Driven Repayment
Income-driven repayment plans are designed to make your student loan debt more manageable by reducing your monthly payment amount. If you need to make lower monthly payments, one of the three following income-driven plans may be right for you.
Postponing Payments (Deferment or Forbearance)
Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your federal student loan payments. Postponing or reducing your payments may help you avoid default. You’ll need to work with your loan servicer to apply for deferment or forbearance; and be sure to keep making payments on your loan until the deferment or forbearance is in place.
Direct Loan Consolidation
A Direct Consolidation Loan allows you to consolidate (combine) multiple federal education loans into one loan. The result is a single monthly payment instead of multiple payments. If you are interested in applying for a Direct Loan Consolidation, you can apply online.
If you work full-time in a public service job, you may qualify for Public Service Loan Forgiveness. Under this program, borrowers may qualify for forgiveness of the remaining balance of their Direct Loans after they have made 120 qualifying payments on those loans while employed full time by a certain public service employer.