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What is default | Can student loans be "forgiven" | Student loan cancellation, forgiveness, and discharge | Interest Rates | Loan Information | Loan Consolidation | Why Consolidate My Loans | Who is my Loan Servicer
Failure to make required loan payments according to the terms agreed upon. The consequences of default are severe.
Under certain circumstances, a person may be able to have all or part of a student loan(s) forgiven.
If you have any questions regarding your student loans, check with the financial aid office or your loan provider.
Student must be in "good standing" to be eligible . This benefit does not happen automatically. You must apply and be approved to receive the benefit.
A deferment is when a borrower is allowed to postpone repaying a loan for a certain amount of time. Deferments are available while a person is at school at least half time, during periods of unemployment, military service, or any economic hardship. Other deferments may be available depending on what you have borrowed. A forbearance is when the lender allows the borrower to postpone repaying your monthly loan for a certain amount of time. The interest still will continue to accrue, even on subsidized loans. This interest must be paid. If you do not pay the interest, your loan holder will add it to your existing balance when your forbearance ends.
*A person must REQUEST deferments or forbearances for each loan.
Interest rates of Stafford Loans are variable they adjust every year in July, and are based on a formula that the government devised that includes T-bill rates and other factors. Current rates (2010-2011) are roughly between 5.0% and 6.8%, depending on the age and status of the loan
Subsidized Stafford Loans: Subsidized means the government is "subsidizing" the interest on your loans while you are in school or while your loan is in deferment or a grace period. Interest will not begin to accrue until you enter repayment. You must meet certain requirements to qualify for subsidized loans.
Unsubsidized Stafford Loans: Interest begins to accrue on this type of loan from the time you receive your disbursement and continues through the life of the loan. You have the option of paying your interest quarterly while you are in school. If you do not, the interest that has accrued on your unsubsidized loans will be "compounded" at the time you enter repayment.
Perkins Loans: Generally, have the same characteristics as a Subsidized loan. No interest accrues on a Perkins Loan while you are in school or while your loan is in a grace period or a deferred status.
Loan Consolidation is when a loan program allows a borrower to combine various loans into one new loan.
If you know your interest rate will increase over many years, a loan consolidation can be helpful because it allows you to lock in a lower interest rate for the life of your loan. Consolidating your student loans can helps ease your finances and make repayment easier in the end. Consolidating your student loans can reduce your monthly payment by 10% and up to 60%
Make sure you think hard about consolidating a loan because there are many "ifs and buts". If you have any questions, please call to make an appointment with a financial aid officer to help you.
*If you would like to consolidate your student loans, go to www.loanconsolidation.ed.gov
You can go to the Direct Loan website which allows you to find phone numbers and websites of your loan servicer.
Sharon Fraser, Default Prevention Counselor
Missouri Southern State University, Financial Aid Office