How Do I Receive And What Can I Use The Funds For?
If you apply for the first time, before you collect the funds, you’ll have to attend an entry consultation session. If eligible, your student account with your school will receive the funds.
The Federal Government ideally transfers the funds directly to the student account in two installments. The total sum will be transferred in the following order:
- Tuition and fees
- Room and board
- Additional school fees
If there are extra funds in your school account after all of the aforementioned charges have been applied, your school is liable to transfer this amount directly to you within 2 weeks, unless you authorize the school to hold it for future expenses.
What Are The Eligible Repayment Terms?
Several repayment plans are available to meet the individual needs of borrowers. Your federal loan service provider will help you understand the choices for eligible repayment options. In general, depending on the repayment term you choose, you will have 10 to 30 years to repay your loan.
Depending on your financial health, other available repayment terms are :
- Standard Repayment Plan where you’ll be making fixed payments to ensure you pay off the loan within 10 years.
- Graduated Repayment Plan where you’ll be making comparatively lower payments at the beginning. This monthly payment will gradually increase, ideally every two years.
- Extended Repayment Plan where you’ll be making standard or graduated repayments ensuring that you clear off the total outstanding within 25 years.
- REPAYE Plan where your monthly payments will only be 10% of your discretionary income.
- PAYE Plan where your monthly payments will only be 10% of your discretionary income, but never more than what you would ideally pay with a standard repayment plan.
- IBR (Income-Based Repayment) Plan where your monthly payments range between 10-15% of your discretionary income.
- ICR (Income-Contingent Repayment) Plan where your monthly payment will be less than 20% of your discretionary income.
- ISR (Income-Sensitive Repayment) Plan where you’ll pay based on your monthly income, but with the stipulation that you’ll clear the loan within 15 years.
When Do I Have To Make The Payments?
You will have a six-month grace period until you are forced to begin the refunds after you graduate or leave school, or drop below half-time enrollment. During this time your loan representative will provide you with repayment details and notify you of your first due date for payment. Typically, you have to make consistent monthly payments.
Keep in mind that interest accrues during this grace period or if you request deferment while in school, and it will be added to the principal (also called capitalization).