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Skip Navigation LinksKCC Home > Financial Aid > Loan Repayment Option

 
Repayment Information

The following repayment plans are available to Direct Loan and FFEL Program subsidized, unsubsidized and PLUS loan borrowers:

· Standard Repayment Plan: You generally pay a fixed amount each month for up to 10 years. Your payment must be at least $50 a month.

· Graduated Repayment Plan: Your payments start out low at first and then will increase, usually every two years. You must repay your loan in full within 10 years. At a minimum, your payments must cover the interest that accumulates on your loans between payments. This plan is tailored to individuals with relatively low current incomes (e.g., recent college graduates) who expect their incomes to increase in the future. However, you'll ultimately pay more for your loan than you would under the Standard Plan, because more interest accumulates in the early years of the plan when your outstanding loan balance is higher and your monthly payment is smaller.

· Extended Repayment Plan: If you're a FFEL borrower, to qualify for this plan you must have had no outstanding balance on a FFEL Program loan as of October 7, 1998, or on the date you obtained a FFEL Program loan after October 7, 1998, and you must have more than $30,000 in outstanding FFEL Program loans. If you're a Direct Loan borrower, you must have had no outstanding balance on a Direct Loan Program loan as of October 7, 1998, or on the date you obtained a Direct Loan Program loan after October 7, 1998, and you must have more than $30,000 in outstanding Direct Loans. This means, for example, that if you have $35,000 in outstanding FFEL Program loans and $10,000 in outstanding Direct Loans, you can choose the extended repayment plan for your FFEL Program loans, but not for your Direct Loans.

Under this plan you must repay your loans in full within 25 years. You may choose to make fixed or graduated monthly payments. Your monthly payment amount will be lower than it would be under the Standard Plan, but you'll ultimately pay more for your loan because of the interest that accumulates during the longer repayment period.

· Income-Based Repayment (IBR): Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on your income and family size. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan. If you repay under the IBR plan for 25 years and meet other requirements, you may have any remaining balance of your loan(s) cancelled. Additionally, if you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled. You may call your loan holder or loan servicer, or visit www.studentaid.ed.gov for more detailed information about the Income-Based Repayment Plan.

· Income-Sensitive Repayment Plan (for FFEL Program loans only): With an income-sensitive plan, your monthly loan payment is based on your annual income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years. Contact your loan holder or loan servicer for more information about this repayment plan.

· Income-Contingent Repayment Plan (for Direct Subsidized and Unsubsidized Loans and Direct PLUS Loans for Graduate and Professional Students):Your monthly payments will be based on your annual income (and that of your spouse, if married), your family size, and the total amount of your Direct Loans. Borrowers have 25 years to repay under this plan, the unpaid portion will be forgiven. However, you may have to pay income tax on the amount that is forgiven.

Direct Subsidized Loans, Direct Unsubsidized Loans and Direct PLUS Loans for graduate and professional student PLUS borrowers may be repaid under the income-contingent repayment (ICR) plan. Direct PLUS Loans for parent borrowers may not be repaid under ICR

Prepayment:

· You may prepay all or part of your loan(s) at any time without a penalty. You also have the option of requesting a shorter repayment schedule.

· After you have begun repaying your loans, any extra amount you pay in addition to your regular required monthly payment will reduce your outstanding principal balance, as long as accrued interest and any outstanding late charges are paid.

· The Direct Loan Program currently offers two repayment incentive programs Interest Rate Reduction for Automatic Withdrawal Payments

Under the Automatic Withdrawal payment option, your bank automatically deducts your monthly loan payment from your checking or savings account and sends the payment to the loan holder or loan servicer. In addition to helping to ensure that your payments are made on time, you receive a 0.25 percent interest rate reduction when you have payments made through this option.

·  Up-Front Interest Rebate on Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans

You may receive an up-front interest rebate on a Direct Subsidized Loan, Direct Unsubsidized Loan or Direct PLUS Loan. The rebate is equal to a percentage of the loan amount that you borrow. This is the same amount that would result if the interest rate on your loan were lowered by a specific percentage - but you receive the rebate up front. The correspondence that you receive about your loan will indicate if you received an up-front interest rebate.

To keep an up-front interest rebate that you receive on your loan, you must make all of your first 12 required monthly payments on time (the loan servicer must receive each payment no later than six days after the due date) when your loan enters repayment.

You will lose the rebate if you do not make all of your first 12 required monthly payments on time. If you lose the rebate, the loan servicer will add the rebate amount back to the principal balance on your loan account. This will increase the amount that you have to repay.

· Loan is the money borrowed from a lending institution or the Department that must be repaid.

· Grace Period is the 6-month period after you graduate, leave school, or drop below half-time enrollment during which you are not required to make payments on subsidized and unsubsidized loans. The repayment period begins at the end of the grace period. PLUS loans do not have a grace period.

· Master Promissory Note (MPN) is a binding legal document that you signed before receiving your student loans and by which you agreed to repay your loan(s). You may have received more than one loan under this MPN as it covers a period of up to 10 years to pay for your educational costs, as long as your school was authorized to use the multi-year feature of the MPN and chose to do so. If your school was not authorized to use the multi-year feature of the MPN or chose not to do so, or if you did not want to receive more than one loan under the MPN, you must have signed a new MPN for each loan you received.

The MPN also contains a Borrower’s Rights and Responsibilities statement that explains the terms and conditions of the loans you received. It is very important to read and save this document because you’ll need to refer to it later when you begin repaying your loan.

· Lender is the organization that made the loan initially; the lender could be a bank, credit union, or other lending institution (for FFEL Loans); or the Department (for Direct Loans).

· Loan Holder is an entity that holds your loan promissory note and has the right to collect from you. Many banks sell loans, so the initial lender and the current holder could be different.

· Loan Servicer is an organization that handles billing and performs other loan servicing functions on behalf of the lender.

· National Student Loan Data System (NSLDS) is the Department’s central database for student aid. NSLDS contains information about all of the student loans and other financial aid you have received through the Department’s federal student aid programs. You can access this information online using your Department of Education PIN

Entering Repayment

When you graduate, withdraw from school, or drop below half-time enrollment status you will have six months before your first payment is due on your subsidized and unsubsidized loans. This is called a Grace Period. (PLUS Loans don’t have a grace period). This time can allow you to get financially settled, select your repayment plan and determine the amount of income you need to put toward your student loan each month.

If you have subsidized loans, you will not be charged interest during your grace period. If you have unsubsidized loans, you will be responsible for the interest that accrues during the grace period. You may pay this interest as it accrues during the grace period, or you may allow it to accrue and be capitalized (added to the principal balance of your loan) when your loan enters repayment.

Your repayment period begins the day after your grace period ends. Your first payment will be due within 45 days after your repayment period begins.

As explained above, PLUS loans do not have a grace period. The repayment period for a PLUS loan begins on the day after the final loan disbursement is made. However, you may defer repayment of a PLUS loan while you are enrolled in school on at least at half-time basis and, for PLUS loans with a first disbursement date on or after July 1, 2008, for an additional six months after you graduate, withdraw, or drop below half-time enrollment status. Your first payment will be due within 45 days after your deferment ends.

If you received some PLUS loans that were first disbursed before July 1, 2008, and others that were first disbursed on or after that date, the additional 6-month deferment period after you leave school or drop below half-time status is available only for your PLUS loans that were first disbursed on or after July 1, 2008. If you are unable to begin making payments on your PLUS loans that do not qualify for the additional 6-month deferment period after you leave school or drop below half-time status, contact your loan holder or loan servicer to discuss options for postponing repayment on these loans until the 6-month additional deferment period ends on your PLUS loans that were first disbursed on or after July 1, 2008.

Repayment Plans

 When it comes time to start repaying your student loan(s), you can select a repayment plan that’s right for your financial situation. Generally, you'll have from 10 to 25 years to repay your loan, depending on which repayment plan you choose. The repayment plan options are generally the same in the Direct Loan and FFEL programs, except that the Income-Contingent Repayment plan is available only in the Direct Loan Program, and the Income-Sensitive Repayment plan is available only in the FFEL Program.

The consequences of student loan default are serious and extensive - here's what you need to know:

· Defaulted loans are reported to national credit bureaus and can remain           on your credit report for seven years.

· A defaulted loan may be turned over to a collection agency. They often charge collection fees as well as attorney costs, all of which become part of your debt.

· A defaulted loan is listed as adverse credit on your credit report, which can mean not being able to obtain a credit card, car loan or mortgage.

· A defaulted loan will make you ineligible for additional financial aid, deferments or loan consolidation.

· A defaulted loan can cause you to lose income tax refunds, and refund amounts will be applied to student loan debt.

· Holds may be placed on your college records.

· A defaulted loan can lead up to wage garnishments - up to 10% of your net wages.

· A defaulted loan may jeopardize employment by city, county, state or federal agencies or cause termination, if you are already employed.

· If you need a license to practice in your profession, it may be revoked, cancelled or not renewed.

· A loan, whether or not in default, cannot be discharged in bankruptcy in most cases.

If this report was made in errors please contact your lender to verify information.  For those students who have loans at different schools, you would need to inform all your lenders and servicer. Be sure that all your student loans is deferred while you are in school. If you are having difficulty contact your lender, servicer in regards to payment options.

Helpful websites

There is a great deal of information available to you in connection with student financial assistance and student loans. Below is a list of web sites that you may find useful. These sites are provided for informational purposes only. Kingsborough Community College does not endorse site content

http://www.bls.gov/oes

Information regarding occupations and wages can be downloaded at this Bureau of Labor Statistics page.  This a good page to review when considering taking a loan to finance your education.

http://www.cuny.edu

CUNY’s homepage allows you access to a variety of topics, including links to all the colleges of The City University of New York.

http://www.ed.gov

This is the home page for the United States Department of Education. Questions about federal student loans and student financial assistance can be research here

http://www.fafsa.ed.gov

This is web site for the Free Application for Federal Student Aid (FAFSA) application which you can use to apply for Federal financial assistance.

http://www.pin.ed.gov

This is the web site where you can get your Personal Identification Number (PIN) that you will use for all you Federal financial aid.

http://nslds.ed.gov

The national Student Loan Database System contains information about all your student loans.

http://studentloans.gov

Completing entrance and exit counseling monitor your loans and much more.

Order your free credit report once a year

Equifax www.equifax.com  (800) 888-4213

Trans Union www.transunion.com  (800) 888-4213 

Experian www.experian.com (888)397-3742

www.annulcreditrepor.com(777)322-8228

www.optoutprescreen.com  (888)5optout

 
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