Loan Repayment Information
FAME is here to help you throughout the loan repayment process and provides repayment counseling and debt management solutions to borrowers throughout Maine. In the event you are temporarily unable to make your student loan payment(s), FAME can help you identify a solution to prevent delinquency, including alternative repayment options or possibly payment postponement. It is important that you understand all of your rights and responsibilities. Successful loan repayment is a key element in ensuring a strong financial future!
Keeping track of your student loans can sometimes be difficult. Many borrowers have multiple loans that are serviced at different locations and are owned by different lenders. In some cases, the Federal Government may be the holder of your loan. It's also not uncommon for loans to be transferred from one servicer or lender to another. Knowing who to contact is critical to successful repayment, so if you’re not sure who to contact, here’s a good place to start:
The primary resource for information regarding your Federal Student Loans is The National Student Loan Data System (NSLDS). NSLDS maintains a central database of student aid for the US Department of Education. NSLDS allows you to access your Stafford Loan(s) and Perkins Loan(s) outstanding balances, loan statuses, and disbursements. The Direct Loan Program, PELL Grant Program and other US Department of Education programs are also on file at the NSLDS website.
You can also request a free annual credit report, as your federal loan history and any alternative/private loan history will be listed in your credit report. In fact, your credit report is one of the best resources for locating your alternative/private loan information.
FAME has created a brochure titled “Locating Your Federal Loans”. This publication is designed to assist you with using NSLDS and accessing your free annual credit report.
As a borrower of a federal student loan, you have certain rights and responsibilities:
You have a right to:
- Be informed by your lender, servicer or school of the contact information of the lender or servicer that holds your loan and the amount of your total loan debt including principal, interest and any other fees or charges.
- A grace period and an explanation of what this means.
- A maximum of ten years to repay your student loan (unless you are approved for a deferment, forbearance, or make other payment arrangements).
- Prepay your loan in whole or in part at any time without an early repayment penalty.
- Request a deferment or forbearance for a certain defined period, if you make the request and qualify.
You are responsible for:
- Repaying your entire student loan according to the terms of your promissory note even if you do not complete your academic program, are dissatisfied with the education you received or are unable to find employment after you graduate.
- Making your monthly loan payments even if you do not receive a billing statement from the servicer of your loan.
- Completing and submitting all requested forms and documents to your school, lender or servicer.
- Maintaining copies of all your loan documents for your records.
- Notifying your school, lender or servicer of changes to your name, address, telephone number or enrollment status.
There are six basic repayment plans available for your Stafford loans:
Standard Repayment requires equal monthly payments at a minimum of $50. The monthly payment may be higher depending on your loan balance. The maximum repayment period is 10 years.
Graduated Repayment begins with smaller monthly payments that will increase over time. This option tends to work best for borrowers who are just starting out and are likely to see increases in earnings over time.
Income Sensitive Repayment (non-Direct Loans only) allows your monthly loan payment to be based on your annual income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years.
Income Contingent Repayment Plan (Direct Loans only) allows your monthly loan payment to be calculated based on your adjusted gross income (AGI, plus your spouse's income if you're married), family size, and the total amount of your Direct Loans.
Extended Repayment is available to borrowers with a first disbursement on or after October 7, 1998 and whose total outstanding principal and interest balance exceeds $30,000. Payments can either be fixed or graduated. The maximum repayment period is twenty-five years.
Income-Based Repayment (IBR) requires that the monthly payment on your student loan be based on your income during any period when you have a partial financial hardship. Your monthly payment amount may be adjusted annually. The maximum repayment period under this plan may exceed 10 years. If you repay under this plan and meet certain other requirements over a specified period of time, you may qualify for cancellation of any outstanding balance on your loans. Contact your loan servicer for more information.
Sample Monthly Payment Chart - Federal Stafford & Grad PLUS Loans:
*Please note: The amounts listed are estimates using an interest rate of 8.25%. You will receive exact payment amounts before you begin repayment.
In the Federal Perkins Loan program, your payment depends upon the amount of the loan. Generally, your minimum monthly payment will be $40. However, your payment may be higher depending on your loan balance.
Sample Perkins Loan Repayment Chart
||Number of Payments
||Total Interest Charges
*Please note: The amounts listed are estimates using an interest rate of 5%. You will receive exact payment amounts before you begin repayment.
Are you repaying student loans? If so, you may be eligible for the Maine Educational Opportunity Tax Credit. Continue on to learn more about the program and be sure to share the information with those who are repaying student loans.
The credit for educational opportunity is a component of the Job Creation Through Educational Opportunity program available after 2007. The purpose of the program is to provide an income tax credit for education-related costs for Maine residents who obtain an associate or bachelor’s degree from a Maine college or university and who, after graduation, live, work and pay taxes in Maine. The credit is available to qualifying graduates and employers making eligible education loan payments.
To claim the Educational Opportunity Tax Credit, qualifying individuals must file a Maine Income Tax Return. Using the Credit for Educational Opportunity worksheet found on the Maine Revenue website here
when completing the income tax return will provide the necessary information to determine eligibility and claim the credit, if eligible.
It's possible to have your student loan debt discharged (canceled) or reduced, but only under certain specific circumstances, such as in the case total and permanent disability. Your loan could also be discharged if your school closes before you complete your program. For more information, visit the Federal Student Aid Web site.
If you're a teacher serving in a low-income or subject-matter shortage area, it may be possible for you to cancel or defer your student loans. For more information, visit the Federal Student Aid Web site.
Under the Loan Forgiveness for Public Service Employees Program, the borrower must be employed full-time in a public service job during the same period in which the qualifying payments are made and at the time that the cancellation is granted. The amount forgiven is the remaining outstanding balance of principal and accrued interest on an eligible Direct Loan for a borrower who is not in default and who makes 120 monthly payments on the loan after October 1, 2007. For more information, visit the Federal Student Aid Web site.
There are numerous options that exist for borrowers who are struggling to make their loan payment. Contact your loan servicer if you experience any financial hardship such as unemployment or reduced income, or if you simply need to inquire about reducing your monthly loan payment or changing your repayment plan. They key to successful loan repayment is communication! Don’t become delinquent or default on your loans simply because you didn’t reach out for help.
Deferment allows you to temporarily suspend your regular loan payments. Eligibility depends on when and what type of loan(s) you received. Possible reasons for deferment include in school at least half-time, unemployment, economic hardship, and qualifying military service. Depending on the type of loan, interest may be charged; however, you can choose to pay the interest as it accrues. In order to receive a deferment, you must request and complete deferment forms from your servicer and return them promptly with all required documentation. You will have separate forms for each type of loan and lender. Be sure to continue making your payments until you receive written notification that you no longer need to do so.
Forbearance is a period of time during which your lender temporarily reduces or suspends your regular payments. You may request a forbearance if you are unable to make your full payment. You are responsible for the interest that accrues during the forbearance period. You may choose to pay the interest as it accrues. Contact your servicer for more information.
Federal Stafford and Grad PLUS Loans are considered to be in default after 270 days of non-payment. Your Perkins Loan may be considered to be in default if you fail to make a full payment on the due date. Your servicer will report your past-due loan status to all national credit bureaus and will initiate collection actions against you if you fail to make full, timely payments.
Defaulting on your student loan can result in:
- Long-term damage to your credit rating, which could impact your ability to qualify for other types of loans such as car loans and mortgages;
- Referral of your account to a collection agency;
- Collection costs that you are responsible to pay;
- Garnishment of your wages (money deducted from your paycheck);
- Withholding of your state or federal tax refunds to be applied to your defaulted loan balance;
- A civil lawsuit against you, which may result in court costs and legal expenses that you have to pay;
- Loss of deferment and forbearance options;
- Loss of eligibility for financial aid.
Failure to repay your loan will impact your financial future in many ways. Your ability to purchase a car, or a home and in some cases, receive a tax refund, will be in jeopardy. Luckily, there are numerous ways to avoid loan default. Follow these three basic guidelines to follow to avoid delinquency and default:
- Inform your servicer of changes to your name, mailing address or telephone number so that all correspondence is promptly directed to you.
- Read and keep all documents you receive pertaining to your student loans and be sure to understand your loan amount and the payments that will be required.
- If you are experiencing financial hardship and are unable to make your payments, call your servicer for information regarding deferment or forbearance.
For the State of Maine, FAME’s Federal Loan Program Manager serves in the role of Ombudsman; dedicated to assisting students with problem resolution and disputes related to their federal loans. Contact FAME’s Student Loan Ombudsman at firstname.lastname@example.org.
The U.S. Department of Education Ombudsman’s Office also provides assistance to borrowers who may have problems with their student loans and have not been able to resolve them through their lender, servicer, or guarantor.