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Graduating Seniors

Did You Borrow a Federal Stafford Loan?

Congress has passed legislation that allowed the US Department of Education to purchase many privately held Federal Stafford and Federal PLUS Loans. These purchased loans were then distributed amongst five student loan servicers. Many UConn student loan borrowers were affected by this purchase program, so you may have Federal loans that are serviced by different companies. It is crucial that you keep track of who services each loan you have borrowed to keep from becoming delinquent.


Where can I get information about my loans?

Students can view detailed information about the federal loans they have received by accessing the U.S. Department of Education’s National Student Loan Data System at http://www.nslds.ed.gov. You will need your four digit Personal I.D. Number (PIN) as provided by the Department of Education (the same PIN you used to complete your FAFSA online). If you do not already have a PIN, you can obtain one at http://www.pin.ed.gov.Many lenders utilized the Loan Purchase Program offered under ECASLA (Ensuring Continued Access to Student Loans Act). Loans sold under the Loan Purchase Program are sold to the Department of Education (ED) and will be serviced by ED’s designated servicer. If your Federal Stafford Loan is sold, you will be notified in writing by your lender. You should open all of your mail so that you do not miss this notification. If your loan is sold, you may need to send payments to a different address and to notify the new servicer if you move. The National Student Loan Data System will indicate the current servicer of your loan.


Interest Rates

Federal Direct Stafford Loans (Subsidized/Unsubsidized) Federal Perkins Loans
  • Unsubsidized Federal Stafford Loans for Undergraduate students and all Federal Stafford Loans for Graduate students that were disbursed between 7/1/2006 and 6/1/2013 carry a fixed interest rate of 6.80%.
  • Subsidized Federal Stafford Loans for Undergraduate students that were first disbursed between 7/1/2011 and 6/30/2013 carry a fixed interest rate of 3.4%.
  • Direct Subsidized and Unsubsidized Stafford Loans for Undergraduate Students disbursed between 7/1/2013 and 6/30/2014 have a fixed rate of 3.86%.
  • Direct Unsubsidized Stafford Loans for Graduate Students disbursed between 7/1/2013 and 6/30/2014 have a fixed rate of 5.41%.
  • Direct Subsidized and Unsubsidized Stafford Loans for Undergraduate Students disbursed between 7/1/2014 and 6/30/2015 have a fixed rate of 4.66%.
  • Direct Unsubsidized Stafford Loans for Graduate Students disbursed between 7/1/2014 and 6/30/2015 have a fixed rate of 6.21%.

Click here for our loan calculator and historical Stafford and PLUS Loan interest rate information.

The interest rate on a Federal Perkins Loans is fixed at 5% for the life of the loan.

Requirements for Graduating Student Loan Borrowers

Federal regulations require Federal Stafford and Federal Perkins Loan borrowers who leave school, drop below half-time status, or graduate to complete exit counseling. The purpose of exit loan counseling is to ensure that students fully understand their rights and responsibilities before their loans go into repayment status.

Federal Direct Stafford Loans (Subsidized/Unsubsidized) Federal Perkins Loans
The Office of Student Financial Aid Services will send information about exit counseling to your University email account. You will be instructed to go to StudentLoans.gov and then log-in using your FAFSA pincode, to complete Loan Exit Counseling. Once you have successfully completed this process, our office will be notified electronically and your file will be updated within 3-5 business days. UConn’s Perkins Loan servicer, ECSI will contact you via your University e-mail account  to complete the exit counseling requirement for Perkins Loans.

What will happen if I do not complete exit counseling?

The University will place a hold on your official transcript until exit counseling is completed. This could jeopardize your job applications and/or your admission to graduate school, so it is important that you complete this counseling in a timely fashion.


Repayment

After graduation, you generally have a grace period before you begin repayment.

Federal Direct Stafford Loans (Subsidized/Unsubsidized) Federal Perkins Loans
For Federal Direct Stafford Loans, the grace period is 6 months. For Federal Perkins Loans, the grace period is 9 months.

If you previously left the University, or consolidated your loans while still in school, you may have used your grace period. In those cases, repayment will begin immediately after you graduate.

NOTE: You may have also borrowed non-federal student loans (private or alternative loans). These loans will not appear in the National Student Loan Data System. Contact your lender/servicer for information on repayment.

Repayment Options

See the US Department of Education’s Your Federal Student Loans guide for more details.

Making Payments

Federal Direct Stafford Loans (Subsidized/Unsubsidized) Federal Perkins Loans
You will make payments on your Federal Stafford Loan to your loan servicer(s). Your loan servicer may be different from your lender. You should begin to receive information on repayment approximately halfway through your grace period. You should keep the lender/servicer of your loan informed about any changes to your name and/or address. IMPORTANT: You may have multiple loan servicers for your federal loans! Be sure to open all mail concerning your student loans and contact our office if you are unsure of who services your loans. You will make payments on your Federal Perkins Loan to ECSI, a company that services Federal Perkins Loans on behalf of UConn.

What if I have trouble making my payments?

Stay in touch with your lender/servicer(s). Sometimes unexpected difficulties can affect your ability to make your monthly loan payments, but if you let your lender/servicer know right away, you can work together to make alternate arrangements and avoid default. Federal loans offer several deferment and forbearance options to help you during difficult times. The most important thing you can do when having trouble is to contact your loan servicer(s).

What happens if I go on to graduate school?

As long as you are enrolled at least half-time you may be eligible for a deferment on your loans. Contact your lender/servicer(s) for information on how to request an in-school deferment.

Can my loans be discharged or cancelled?

In certain rare circumstances, yes. A discharge releases you from all obligations to repay the loan. Refer to the Department of Education’s “Funding Education Beyond High School: The Guide to Federal Student Aid”  for a list of cancellation provisions.

Important Terms

Deferment

A deferment is an authorized period of time during which you may postpone payment on your loan. On a subsidized loan, both principal and interest payments are deferred. On an unsubsidized loan, the principal is deferred while interest continues to accrue. You may pay the interest if you wish to avoid additional costs that result when the unpaid interest is added to the loan principal (capitalized). Federal education loans are deferred while you are enrolled in school at least half-time, and during the six-month grace period before repayment begins.

Forbearance

Forbearance is an authorized period of time during which the lender/servicer of your loan allows you to postpone repayment because of temporary financial difficulty. However, you cannot be in default on the loan. Forbearance is meant to relieve temporary financial difficulty in situations where deferments are not authorized or your payments are delinquent prior to receiving a deferment.


Consolidation

Consolidation allows you to combine several federal student loans, such as Federal Direct Stafford or Federal Perkins with various repayment schedules into one loan with one monthly payment. Your monthly payments might be significantly lower if you consolidate, however the total cost of the loan is usually greater. Keep in mind that federal loans have no pre-payment penalties, so you may always pay more than the minimum amount due to decrease the total interest you will pay. You may not consolidate alternative/private loans together with Federal loans.

How do I consolidate my loans?

Information about consolidating federal loans is available at StudentLoans.gov.

What’s the interest rate on a Consolidation Loan?

The interest rate for a Consolidation Loan is a fixed rate for the entire time you repay the loan. This means once you consolidate, your rate won’t change, regardless of what future rates might become. The interest rate is equal to the weighted average of the loans you want to consolidate, rounded up to the nearest 1/8% with a maximum rate that is capped at 8.25%.

Are there any disadvantages to getting a consolidation loan?

In certain cases.

  • Perkins loans that are consolidated will lose their special cancellation benefits and change from subsidized to unsubsidized loans. This means that they will accrue interest during periods of deferment once consolidated.
  • Also keep in mind that consolidation will affect your grace period and deferment options for both Stafford and Perkins loans. You should think very carefully before consolidating your Perkins loans with your Stafford loans.
  • Once made, consolidation loans can’t be unmade because the loans that were consolidated have been paid off and no longer exist. Take the time to study your consolidation options before you apply. Additional information is available at StudentLoans.gov.

Default

Default is the failure to repay your loan according to the terms of your promissory note. If you default, your school, the lender/servicer of your loan, state, and federal governments can all take action to recover the money.

What will happen to me if I default?

Your default status is reported to national credit bureaus, which could jeopardize your ability to get credit in the future. You may have trouble renting an apartment, buying a house, buying a car, or getting a job with certain companies and federal agencies. Then it could take years to clear your record. A court judgment could be rendered against you. You could be ineligible for additional financial aid. You could lose your savings. Your federal and state tax refunds could be seized. Your wages could be garnished. You could be required to pay the entire unpaid balance immediately, including interest, late charges, and other costs.

Defaulting on a loan is never an acceptable alternative. Don’t take chances with your future. If you are having difficulty repaying your loan, contact the lender/servicer immediately. There’s usually a solution to your problem.