Central Penn College - Debt Management

 

Debt Management

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

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Paying for your Student Loans

Student loans must be repaid. Students usually pay back the money when they are no longer in school or become less than half-time. Students are not required to pay for any loans while in school. However interest can be paid on an Unsubsidized loan while in school, if the student elects to do so.

  • Federal Student Loans: The Federal Direct Student Loan [Direct Loan] Program
  • Two types of Stafford Loans:
    • Subsidized Loan- available to students who meet certain financial need. Federal government pays the interest on the loan while you are in school.
    • Unsubsidized Loan- available to students regardless of financial need. Students are responsible for the interest that accumulates on the loan.

All student’s borrowing under the Federal Direct Loan Program are required to complete an Entrance Counseling prior to your loans being certified and Exit Counseling upon graduating, leaving Central Penn or dropping below six credits.  The Entrance and Exit Counseling can be completed at www.studentloans.gov.  Both processes take approximately 30 minutes to complete.

Who is my servicer?

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.

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.

Loan Servicer

Contact

Direct Loan Servicing Center (ACS)

1-800-848-0979

Department of Education Student Loan Servicing Center (ACS)

1-800-835-4611

ESA/Edfinancial

1-855-337-6884

FedLoan Servicing (PHEAA)

1-800-699-2908

Great Lakes Educational Loan Services, Inc.

1-800-236-4300

MOHELA

1-888-866-4352

Nelnet

1-888-486-4722

Sallie Mae

1-800-722-1300

What is default?

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.

 PREVENTING DEFAULT

Defaulting on your student loans is preventable.  Here a few tips to help you::

  1. Make sure you understand your options and responsibilities before borrowing.
  2. Keep careful records regarding your loan. Put copies of all your letters, canceled checks, promissory notes, notices of disbursement and other forms in a file folder.
  3. Make your payments on time.
  4. Notify your lender or servicer promptly of any changes that may affect the repayment of your loan. For example, your home address, enrollment changes and/or graduation.
  5. If you are having trouble making your payments, your lender may be able to suggest alternate repayment options.
  6. If you encounter extreme financial difficulties, consider applying for a deferment or forbearance on your loans.

 The worst thing you can is nothing.  Repaying your student loan obligation will not go away. 

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

To get out of default, you need to make arrangements with your servicer or lender to repay the loan. Once you have made six regular payments, you will be eligible for additional Title IV aid. After you have made twelve regular payments and applied for and received "rehabilitation", you will no longer be considered in default. At this time, record of the default will be removed from the reports to credit reporting bureaus.

For information about your options, contact the servicer of the loan and/or the original lender.  If you do not know who currently is servicing your loan, create an account with the National Student Loan Data System (NSLDS).

Postponing Repayment

The two options available for postponing repayment of your student loans are deferments and forbearances. Stay in contact with servicer, they will help you determine if you are eligible for a deferment or forbearance BEFORE you default.

Deferments

The lender allows you to postpone repaying the principal of your loan for a specific period of time, making your debt more affordable. Contact your lender for more specific information regarding this process.

Forbearances

During forbearance, the lender allows you to postpone or reduce your payments, but the interest charges continue to accrue. Contact your lender for more specific information regarding this process.

Consolidate your loans

If you have multiple federal student loans, you can consolidate them into a single Direct Consolidation Loan. This may simplify repayment if you are currently making separate loan payments to different loan holders or servicers, as you'll only have one monthly payment to make. There may be tradeoffs, however, so you'll want to learn about the advantages and possible disadvantages of consolidation before you consolidate.  To learn more about consolidating your loans talk with your servicer or your may go to  http://www.loanconsolidation.ed.gov/.

Financial Planning

There are many reasons to develop your own budget. A budget keeps you aware of your spending habits, helps you to borrow less, useful in the event of an emergency. The following websites will give you more information on ways to budget:

  • CGI.Money
  • EducationQuest

Preventing Identity Theft

  1. Don't give anyone your Social Security, credit card, or bank account numbers unless you know the source and/or have initiated the contact.
  2. Don't just throw away papers that have important account or financial numbers listed on them. Tear up the papers or shred them. Thieves often go through the trash looking for intact bank account, credit card, etc. numbers which easily gives them access to your account.
  3. Keep your credit card and ATM receipts in a safe place. If you do not need them, there is no need to keep them. You should shred them.
  4. Don't leave bill payment envelops in a home mailbox for the mail carrier. Someone might take them. Instead, put your envelops inside a postal mailbox.
  5. Never send your credit card number over the Internet unless you are sure the website is secured and your computer is protected by anti-virus, anti-spyware, firewall, and other security software.
  6. Don't get hooked by "phishing." If you get an unexpected email asking you to update or verify any important information, be careful. It might be a "phisher," a scam artist trying to con you out of your personal information. For more information, visit www.phishinginfo.org.
  7. Keep watch of your credit card statements, telephone bills for unauthorized use. It's also smart to retrieve a copy of your credit report for fraudulent activity. If you suspect fraud, call the company immediately.
  8. If you're a victim of identity theft, report the crime to the police immediately.

Here are a couple of websites to give you more information on Identity Theft:

  • FTC.gov
  • 101-Identity Theft

Questions?

We're Here To Help!

Contact the Financial Aid office at (800) 759-2727 or email FinancialAid@centralpenn.edu

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