
See information below on the different types of federal loan repayment options in addition to consolidation, deferment, forbearance, forgiveness programs, exit counseling, grace period, delinquency, and default definitions.
Contact ECMC for support at https://www.ecmc.org/borrowers/index.html and 1-844-782-2333
Use the federal loan repayment estimator for assistance.
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Use the refinancing calculator.
Should You Refinance Student Loans?
When You Should or Shouldn't Refinance
• Have a fixed interest rate based on the average interest of your federal loans rounded up to the nearest one-eighth of 1 percent
• May give borrowers a lower monthly payment
• Option for those with multiple servicers and wish to make one payment each month
• New interest rate, repayment schedule and terms of loan
• Borrowers may choose their own servicer
• Loan applications available at student loans.gov
• Borrower must be in grace period of repayment to consolidate
• Repayment begins approximately 60 days after consolidation process is completed
• Borrowers have 180 days to add to a direct consolidation loan once it’s been made
• Postponement of loan payments based on borrower eligibility which depends on specific criteria, the loan type, and the date of the borrowers first loan
• In most cases, borrowers must request a deferment and provide documentation necessary to support eligibility
• In school deferment is automatic
• Most deferments are borrower –specific
• The federal government pays the accruing interest on subsidized loans
o Types and length of deferment
In-school, graduate fellowship, military, and rehabilitation training program have no time limit
Unemployment and economic hardship are up to 36 months
• Temporary postponement, reduction, or repayment extension of loan payments
• Interest accrues on all loans
• Offered at lender discretion, except mandatory forbearance
• Typically granted for up to 12-month intervals, but the loan servicer sets the maximum time allowed
• Borrower’s first payment is due no later than 60 days after the date the forbearance expires
o Types include administrative, discretionary, mandatory and mandatory administrative
o Borrowers who hold a full-time public service position for 10 years may be eligible to have the remaining Direct loans balance cancelled after making 120 qualifying monthly payments after October 1, 2007.
o The Teacher Loan Forgiveness Program is intended to encourage individuals to enter and continue in the teaching profession. Under this program, if you teach full-time for five complete and consecutive academic years in certain elementary and secondary schools and educational service agencies that serve low-income families, and meet other qualifications, you may be eligible for forgiveness of up to a combined total of $17,500 on your Direct Subsidized and Unsubsidized Loans and your Subsidized and Unsubsidized Federal Stafford Loans. If you have PLUS loans only, you are not eligible for this type of forgiveness.
Student loan forgiveness guide
• Required for Direct federal student loan borrowers
• May be conducted in person, by audiovisual presentation or by interactive electronic means
• Students should sign up for online account access with their loan servicer
• Create a budget to determine affordability
• Review all repayment plans
• Use calculators to help find the affordable plan to meet their goals
The lender must offer the borrower a choice of repayment schedules no more than 6 months before the first payment is due
The borrower must select a repayment schedule within 45 days of lender’s notification
If the borrower does not select and plan, the lender will establish the standard repayment schedule
• A loan is considered delinquent when one payment is missed
• Delinquent loans are reported on a borrower’s and co-signer’s credit report
Technical Default occurs when a borrower does not make payments for 270 days on subsidized, unsubsidized, PLUS or consolidation loans
• For direct loans – the Department of Education defines default as a loan that is more than 270 days delinquent and the loan is referred to the Debt Management Collection System (DCMS) and considered in default once the borrower is 360 days delinquent
• For FFELP loans – the lender files the claim up to 60 days after technical default; the loan is not considered in default until the claim is paid (up to 60 days later)
Damaged credit rating for at least 7 years
Federal tax refund revoked
Collection fees assessed on defaulted loans
Wages garnished
Inability to receive additional financial aid
Schools receive privileges and sanctions based on the percentage of defaults
• Three year cohort default rate = percentage of borrowers who enter repayment in one federal fiscal year and default by the end of the next two federal fiscal years