Graduate & Professional Students
Life Cycle of a Loan
Understanding the life cycle of a loan will help you in the long run when making decisions about your student loans. View the six stages of a loan's life cycle so you can understand what happens in each step.
2. Loan Funds Arrive at Your School and You're Assigned a Servicer
The Department Assigns You a Servicer
That is who we are—we are the servicer of your loans. As the servicer of your loans, we are your primary point of contact and are here to help you manage your student loans.
What If the School Received Too Much Money?
There are times when you may qualify for more money in student loans than what you need for school. If this happens, you are required to return the money, based on the terms of your MPN. If you could use the money to cover additional educational expenses but are on the fence about whether or not to return the funds instead, know that there are advantages to returning the money.
3. You're in School
No Payments Are Required
As long as you are enrolled at least half-time, you typically don't have to make payments.
Interest & Unsubsidized Loans
If you have an unsubsidized loan or on your subsidized loan, you are responsible for the interest. If you can, paying the interest while in school could save you money over the life of your loan. Learn all you need to know about the benefits of paying interest!
You're Worried About Your Loan Debt Getting Too High
Education can be expensive! One of the best ways to manage how much college will cost is to make sure you are prepared and avoid over borrowing. Check out ways to be a smart borrower.
NOTE: If you have a Parent PLUS loan, repayment begins once the loans are fully disbursed, unless you postpone your payments while you or your dependent student is in school.
Interest is money an individual pays for the use of borrowed funds. Interest that accumulates is based on the loan's unpaid principal balance and accrues on a student loan every single day, even if the account is not in repayment.
When Interest Accrues
Interest accrues every day from the date of disbursement; however, depending on your loan type or repayment plan, such as Income-Driven Repayment plans (review our IDR FAQ), you may not always be responsible to pay the accrued interest.
Check out the overview below to determine when you are responsible for your interest:
Unsubsidized student loan:
- Every day, from the day the loan is disbursed until you make the last payment.
Subsidized student loan:
- Every day, from the day the repayment period starts until you make the last payment, unless in a period of deferment.
- During your grace period if your loan was disbursed on or after July 1, 2012 and before July 1, 2014.
The Department of Education will pay the accrued interest on your subsidized student loan during:
- Your in-school status.
- Your grace period if your loan was disbursed before July 1, 2012 or on/after July 1, 2014.
- An approved deferment.
NOTE: If you are a first-time borrower on or after July 1, 2013 and you exceed the maximum eligibility (150% of the length of time to complete your specific academic program as defined by your school), you will be responsible for the interest on your subsidized loans while in school and during approved periods of postponing payments. You are a first-time borrower for interest subsidy purposes if you had no outstanding balance on a Direct or FFEL Program loan on July 1, 2013, or on the date you obtained a Direct Loan after July 1, 2013.
The loss of subsidy would continue through periods of enrollment and any grace or deferment periods.
How To Calculate Interest
To calculate your daily interest accrual, use the following formula:
Interest rate × current principal balance ÷ number of days in the year = daily interest
Example: Sara Student has a $10,000.00 current principal balance and 6% interest rate.
As a result, Sara's loans will accrue $1.64 in interest per day (until her principal balance is reduced by future payments).
Review Your Interest Rates And Principal Balance in Account Access.
Don't Have an Account?
An interest notice is a summary that details the interest accrued on your student loans during a certain period.
- We may send you an interest notice if your loan is in deferment, forbearance, grace, or in-school status.
- An interest notice differs from a bill because you're not required to pay the outstanding interest. However, if you have the ability to make a payment, it could save you money in the long run.
- As long as you have a valid email address on file and at least one unsubsidized loan, we will send you a quarterly email while you are in school detailing the amount of interest that accrues each day on your loans.
Facts About Student Loans
Understanding the ins and outs of student loans can be confusing; but, it doesn't have to be. Educate yourself on some important points to ensure you start out on the right path.
If you withdraw from school, you still have to pay back your loans.
A portion of your loans may be able to be returned depending on the amount of time you spent at the school. Review your school's refund policy to determine if any of the funds will be returned.
If you can't find a job, you are still responsible for paying back your loans.
Fortunately, there are several different repayment options available, such as Income-Driven Repayment (IDR) plans.
IDR plans take your income, loan debt, and family size into consideration when determining your monthly payment. Your payment could even be as low as $0.00 a month!
When you leave school, you don't have to start paying back your loans right away.
You get a 6-month grace period that begins the day after you graduate, leave school, or drop below half-time status. The purpose of the grace period is to give you time to find employment and prepare for loan repayment.
NOTE: If you previously used your grace period, or forfeited the remainder of your grace period to consolidate your loans, you will enter repayment once you graduate, leave school, or drop below half-time status.
Graduate and Professional Students
This information is important to you if you have decided to continue your education beyond a bachelor's degree or are enrolled in a program that would lead to a professional degree.
Lowering Your Payment
Smart Borrowing Tips
Your school might approve more loan funds than you actually need for tuition, fees, and other educational expenses (cost of attendance). So, only borrow what is necessary.
If you take out more than what you need, return the extra money. If you return the money within 120 days of disbursement, we will process it as a Borrower Cancellation Payment. Returning the extra funds is good, because:
- Your principal balance will be reduced, meaning you will have to pay back less over time.
- Any origination fee you were assessed will be adjusted based on your new, reduced principal balance.
- Less interest will accrue over the life of your loans based on the smaller principal balance.
It's important to understand your current level of student loan debt and how taking on more loans will impact your monthly payment in the future.
Don't know how much you've taken out in federal student loans? Sign in to NSLDS.ed.gov to find out.
When considering whether you can afford to take out additional student loans, it's best to understand what you expect to make when you're out of school. Don't forget that student loan payments will only be one of the expenses you'll have to manage.
Visit MySmartBorrowing.org to help you determine how much you may make in your future career, how much your student loan payment may be with the amount you intend to borrow, and how that will fit into a monthly budget.
If you are over budget, carefully consider if there are ways you can limit how much you borrow before you reach that point.
If you feel that you may have over-borrowed for school, there are always options available that can help.
- Different repayment plans, such as Income-Driven Repayment (IDR), are available if you feel you may not be able to afford your monthly payment. You may even qualify for a $0 monthly payment!
- There are special programs available, if you qualify, that could have your loan debt reduced or even eliminated.
- Consolidation allows you to combine one or more existing student loans into a single new loan with a new repayment schedule. Because consolidation extends your repayment period, you will most likely have a lower monthly payment.
No matter what option you choose, just know we are always here to help you manage your student loans.
Ways to Reduce College Costs
It's never too late to start saving for college. Below are a few ways to save extra cash and some ideas on how you can lessen your expenses once you get to college.
- Open a savings account
- Save money you receive as gifts
- Ask yourself if you really need things before you buy them
- Live at home and commute
- Become a Resident Assistant (RA) and get free or discounted room and board
- Live on campus or close by so you can walk to class
- Pick the right meal plan so you don't pay for meals you're not eating
- Buy used text books
Keep in mind that some choices, like changing schools and majors, taking longer than prescribed to complete your program, or studying abroad, could increase your costs of school. Before you make such decisions, consult your school's financial aid office and do all the research you can to understand how these decisions factor into your total cost of college.
Under certain conditions (including as a first time borrower), you must sign a promissory note. The promissory note is a "promise to pay" contract between you and the lender that is providing your loan money (if you have a Direct Loan, the lender is the federal government). This legally binding document specifies your responsibilities for paying back the loan.
Because your responsibilities may vary according to the type of loan you receive, be sure to read the promissory note before you sign it so you know what is expected of you. And pay the loan back per this agreement. After all, you promised, and you will be held accountable.
The U.S. Department of Education centralizes all federal student aid information through its National Student Loan Data System (NSLDS). This online tool includes information from your school, lenders, servicers, and guarantors. Sign in to view details about your federal loans, as well as your history of federal student aid. You will need your FSA ID to access this information.
If you take out a federal student loan, you are supposed to participate in entrance and exit counseling. Entrance counseling takes place around the time you sign your promissory note, before the government disburses your loan money. Exit counseling occurs when you graduate, withdraw, or drop below half-time status.
Pay attention. The purpose of entrance and exit counseling is to educate you about your loan. It speaks honestly about what you can expect throughout the life of your loan, provides contact information (name, phone number, and email address) for your servicer for when you need help managing your student loan debt, and discusses the potential consequences of default.
Entrance and exit counseling is unique to every school. You may receive your counseling online or in person. And there may be testing to confirm your knowledge.
We are here to guide you to successful repayment. We are accustomed to talking with borrowers who are having financial difficulties or can't pay their loan right away. So, JUST CALL US and explain. We'll work with you to figure out your options. You are not alone.
Don't know who services your federal loans? Sign in to NSLDS.ed.gov to find out.
Remember to keep copies of all of your loan documents, including:
- Your FAFSA® (Free Application for Federal Student Aid)
- Promissory notes
- Your loan repayment schedules
- Records showing when loan payments were received
- Records of loan payments you made, including cancelled checks and money order receipts
NOTE: You can also determine if you are an endorser or co-maker by referencing the type of promissory note you signed.
Creating an online account is easy!
- Make a payment
- View the payment status (i.e. Up-to-date vs. Past Due)
- Check the balance and other loan details for your loans
- Update your personal information