By Jeremy Mahmood, WGU Financial Aid
If you are currently a financial aid recipient or are considering financial aid to help you earn your degree online and reach your educational goals, you will want to look down the road at repayment both before you begin and to help you make decisions along the way. Here are some hints to make sure you’re planning for your repayment:
- Complete exit counseling at the National Student Loan Data Systems (NSLDS).
- Know your loan servicer(s) and set up online accounts with them. Under Financial Aid Review, NSLDS will show you not only your loan servicer(s) but your aggregate loan amount and interest rate(s).
- Choose the right repayment plan. If you need assistance choosing a repayment plan, contact me (Attn: Jeremy Mahmood at email@example.com) or your loan servicer(s).
- Standard Repayment. You pay a fixed monthly amount for a loan term of up to 10 years. Depending on the amount of the loan, the loan term may be shorter than 10 years. There is a $50 minimum monthly payment.
- Extended Repayment. This plan is similar to standard repayment, but allows a loan term of 12 to 30 years, depending on the total amount borrowed. Stretching out the payments over a longer term reduces the size of each payment, but increases the total amount repaid over the loan term.
- Graduated Repayment. Unlike the standard and extended repayment plans, this plan starts off with lower payments, and then gradually increases every two years. The loan term is 12 to 30 years, depending on the total amount borrowed. The monthly payment can be no less than 50% and no more than 150% of the monthly payment under the standard repayment plan. The monthly payment must be at least the interest that accrues, and must also be at least $25.
- Income-Based Repayment. This is available in both the Direct Loan and FFEL programs. Income-based repayment caps the monthly payments at a lower percentage of a narrower definition of discretionary income.
- Consolidation. A Direct Consolidation Loan allows a borrower to consolidate (combine) multiple federal student loans into one loan. The result is a single monthly payment instead of multiple payments. The Consolidation Loan(s) plan has a fixed interest rate for the life of the loan. The fixed rate is based on the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth of 1%. However, the rate will not exceed 8.25%.
- Use the online calculator for all repayment plans considered. Contact your loan servicer(s) once you have decided on a repayment plan. Repayment plans can be changed as often and as many times needed.
- Paying your loans on time could qualify you for an interest deduction.
- Interest paid on student loans may be tax deductible.
- Having trouble paying? Contact me (Attn: Jeremy Mahmood at firstname.lastname@example.org) or your loan servicer(s) to discuss the different deferment and forbearance options to keep your loan(s) current without making payments.
- Please remember that student loans cannot be written-off or discharged in a bankruptcy.
WGU students and graduates are welcome to contact me with your questions at any time during the repayment process. You can reach me at (877) 435-7948 x 4362 or email me at email@example.com.