Loan Repayment - Direct Loans
Loan repayment begins six months after you leave school or cease to be enrolled an at least a half-time basis. These six months are referred to as a grace period.
The federal government offers various loan repayment options listed below.
- The standard loan repayment plan requires fixed monthly repayment amount paid over a fixed period of time.
- The extended repayment plan assumes a fixed annual repayment amount paid over an extended period of time.
- The graduated repayment plan establishes annual repayment amounts at two or more levels. Repayments are paid over a fixed or extended period of time.
- The income contingent repayment plan calls for varying annual repayment amounts based on the Adjusted Gross Income (AGI) of the borrower over an extended period of time, as determined by the U.S. Department of Education.
On June 16, 1999 the U.S. Department of Education announced a package of three discounts for all students who borrow under the Direct Loan program. The package of discounts includes: 1) a 1% point reduction in the up-front loan origination fee; from four percent to three percent, 2) a .25% point interest rate deduction for borrowers paying off loans electronically and 3) a .6% point interest rate deduction for borrowers who consolidate their loans while they are in school, or during the six month grace period before they enter repayment.
While you are enrolled in school, no payments are due on the subsidized Federal Direct Student Loan, and no interest accrues (unless you are repaying a previous loan and are enrolled less than full time). The Federal Government pays the interest for you during this time.
The grace period for the unsubsidized Federal Direct Student Loan is the same as the subsidized, but you are responsible for the interest on the loan while in the grace period. Repayment on the Federal Direct PLUS Loan begins shortly after the loan is fully disbursed.
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Loan Consolidation
Students who borrow a Federal Direct Student Loan and have borrowed a Federal Stafford Loan in the past, can have their loans consolidated so that they will be making only one payment. Loan consolidation will be made at the request of the student when entering repayment. The Student Loan Office at 732 445-2535 will provide more information to you regarding this option as you approach graduation.