Understanding Educational Loan Options
Along with understanding the loan programs we offer, nothing is more important than understanding that you have options when it comes to repayment of student loans. While interest rates, origination fees, and repayment terms can all seem hard to navigate, the easiest way to understand them is to start learning what they all mean.
Interest Rate — A loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender. The expense is calculated as a percentage of the unpaid principal amount of the loan.
Lender — The organization that made the loan initially. The lender could be the borrower's school; a bank, credit union or other lending institution; or the U.S. Department of Education.
Loan Servicer — A company that collects payments, responds to customer service inquiries and performs other administrative tasks associated with maintaining a federal student loan on behalf of a lender. If you're unsure of who your federal student loan servicer is, you can look it up in My Federal Student Aid.
Loan Origination Fee — The loan fee is a fee charged by the lender that is deducted proportionately from each loan disbursement you receive. This means the money you receive will be less than the amount you actually borrow. You're responsible for repaying the entire amount you borrowed and not just the amount you received.
There are several plans available for federal loans. Understand and select the plan that best meets your circumstances. It is important to note that if you have borrowed or plan to borrow a private loan, it cannot be included in these repayment plans.
Standard Repayment Plan
The Standard Repayment Plan is available to all Direct Loan and FFELP borrowers. Borrowers repay a fixed monthly amount (minimum $50) during the life of the loan, not to exceed 10 years.
Graduated Repayment Plan
The Graduated Repayment Plan is available to all student borrowers of Direct and FFELP Loans. Lower initial payments increase every two years during the 10-year maximum life of the loan.
Extended Repayment Plan
The Extended Repayment Plan is available to Direct Loan and FFELP borrowers whose loans exceed $30,000; Parent PLUS Loan borrowers are also eligible. Monthly payments must be at least $50 and can be fixed or graduated over an extended repayment period not to exceed 25 years. Remember: Extending repayment beyond the standard or graduated 10-year plans can reduce the amount of monthly payments but definitely will increase the interest expense and total amount repaid.
Income-Contingent Repayment Plan
The Income-Contingent Repayment Plan is for Direct Loan borrowers only. Payment amounts are calculated each year based on the amount of the borrower's adjusted gross income and family size and the total amount of Direct Loans. If the loan has not been repaid after 25 years under this plan, the unpaid portion will be forgiven, with the forgiven amount considered taxable income.
Income-Based Repayment Plan
The Income-Based Repayment Plan is an option for borrowers who are experiencing personal financial hardships. Direct and FFELP student loans, including Graduate PLUS Loans and consolidation loans that don't include Parent PLUS Loans, can be repaid through this option. The maximum monthly payment is determined annually and is capped at 15 percent of discretionary income (the difference between adjusted gross income and 150 percent of the poverty income guideline for the borrower's family size and state of residence). After 25 years of qualifying repayment (including periods of economic hardship deferment), any remaining loan balance will be forgiven.
New Income-Based Repayment Plan
The New Income-Based Repayment Plan is an option only for new borrowers of Direct Loans on/after July 1, 2014, that aren't Parent PLUS Loans and consolidation loans that repaid Parent PLUS Loans. The borrower must be experiencing personal financial hardship. The maximum monthly payment is determined annually and is capped at 10 percent of discretionary income (the difference between adjusted gross income and 150 percent of the poverty income guidelines for the family size and state of residence). After 20 years of qualifying repayment (including periods of economic hardship deferment), any remaining balance will be forgiven.
Pay-As-You-Earn Repayment Plan
The Pay-As-You-Earn Repayment Plan is available to new borrowers (after Oct. 1, 2007) who received a qualifying Direct Loan on or after Oct. 1, 2011. Direct Loans, including Graduate PLUS Loans and consolidation loans that don't include Parent PLUS Loans, can be repaid through this option. Similar to the IBR, the Pay-As-You-Earn Repayment Plan requires the borrower to annually demonstrate a financial hardship with monthly payment based on 10 percent of discretionary income (the difference between adjust gross income and 150 percent of the poverty income guidelines for the borrower's family size and state of residence). After 20 years of qualifying monthly payment (including periods of economic hardship deferment), any outstanding balance will be forgiven.
Revised Pay-As-You-Earn Repayment Plan
The Revised Pay-As-You-Earn Repayment Plan (offered beginning in December 2015) is available to all borrowers of Direct Loans except for Parent PLUS and consolidation loans that repaid Parent PLUS Loans. There is no income qualification or personal financial hardship definition requirement. Monthly payments will generally be 10 percent of discretionary income (the difference between adjusted gross income and 150 percent of the poverty income guidelines for the borrower's family size and state of residence). For borrowers whose repayment includes only loans received as an undergraduate, any remaining balance after 20 years of qualifying repayment will be forgiven. For borrowers whose repayment includes loans received as a graduate or professional student, forgiveness occurs only after 25 years of qualifying repayment.
With loan consolidation, repayment can be greatly simplified by combining your debt into one bill. Variable interest rate loans can become fixed interest loans, and by consolidating you may become eligible for repayment plans for which your loans didn't previously qualify.
Repayment for Other Loans
The university has contracted with Heartland ECSI to service Perkins, Nursing, Health Professions and Primary Care Loans. If you have questions regarding any of these programs, please contact the university bursar. For information about repayment options for private loans, you should contact your lender.
Research shows that successful borrowing experiences can be tied directly to prudent financial planning and management as well an academic performance that will lead to timely completion of the degree you are seeking. Here are a few tips to help you manage you educational debt successfully:
Check your online student account.
By doing so, you can remain current on your balance and learn about updates that could support your repayment efforts. The National Student Loan Data System retains all information about your total loan amount borrowed and loan servicer information.
Graduate at an accelerated pace.
The length of time to complete your degree and the cost of completing your degree are closely related. By completing your degree at an accelerated pace, you increase the value of your success after graduation.
Implement smart budgeting and money management strategies.
In order to minimize the cost of attending college, smart budgeting and money management allows you (1) to maximize the money you do receive in aid, (2) to understand the financial obligations to repay any money borrowed, (3) to keep borrowing low, (4), to assist in reducing financial stress, and (5) to support your financial well-being in college and beyond.
The Financial Literacy & Education Program would be happy to provide you with more information and guidance on the topics of basic budgeting, building and managing credit, as well as student loan repayment. If you’re interested in scheduling an appointment, please visit the Student Success Center website.
Maintain regular payments.
While deferment and forbearance provisions definitely have their place, do your very best to remain positive in your repayment habits. Even a smaller payment is reflective of repayment success. Missing payments altogether will only extend your repayment and lead to increased cost and potentially damage your credit.
Communicate with your loan servicer.
Don't hesitate to contact your servicer with any questions or to disclose repayment concerns, and be sure to keep contact information up to date. Successful loan repayment experiences often require interventions, and servicers will typically work hard to assist, in the most positive fashion available, the borrower whose efforts in repayment cannot be questioned.
Understand starting salaries.
It's a good idea to understand your career goals and work to achieve them. Salary information can be important to student loan borrowers when budgeting for living expenses. Learn more about South Carolina Occupational Employment and Wage Estimates and National Salary Estimates.
Work part-time while in school.
A wide range of part-time employment opportunities exist both on and off-campus. The Career Center maintains an online database that includes part-time positions. They also host an Opportunity Knocks Part-Time Job Fair during Welcome Week each fall. In addition to the Career Center, the financial aid office offers employment opportunities through the Federal Work-Study Program.