If the default fee is paid by the borrower, it must be deducted proportionally from the proceeds of the loan prior to payment to the borrower. The default fee may also be paid by other non-federal sources (e.
Lenders in the FFEL program have often competed for borrowers by offering different packages of interest rate and fee discounts. To attract borrowers, lenders might pay origination fees or default fees without passing on fast cash Rhode Island the cost to students. Similarly, to attract loan business, guaranty agencies might opt to pay the default fee. The practice of waiving fees may have started as the FFEL loan industry began fast cash Rhode Island experiencing competition from the DL program, although lenders also compete with each other for business. Likewise, under the DL program, the Secretary is authorized to offer borrowers interest rate reductions as a means of encouraging on-time repayment. This section briefly describes examples of the types of loan discounts and interest rebates that have commonly been offered to borrowers of loans made under the FFEL and DL programs. An exception to this rule is that a lender may assess a lesser origination fee for a borrower whose EFC is equal to or less than the maximum qualifying EFC for a Pell Grant. A wide variety of student loan discounts have typically been offered by lenders making loans under the FFEL program — for example, paying fees on behalf of a borrower, or offering interest rate reductions. Some benefits might be structured such that they may only be realized if the borrower successfully makes a specified number of consecutive on-time payments (e. Benefits that are not provided until well into the repayment period, however, may not be beneficial to borrowers who desire to pay off their loans early or who consolidate their loans, as in such instances, these benefits may be lost.
Some of the most common types of loan discounts offered by FFEL program Washington State payday loans online lenders are described below.
Otherwise, as described above, when borrowers are required to pay origination and default fees on their loans, their net disbursement, or the amount of loan proceeds that may be applied toward education expenses, is less than their gross disbursement, or the total amount borrowed which must be repaid. Interest Rate Reductions Lenders may offer interest rate reductions to borrowers who reach certain milestones. For example, a lender may provide a borrower an interest rate reduction at graduation, or an interest rate reduction after making a specified number of consecutive on-time payments (e. Principal Balance Reductions Some lenders offer principal balance reductions or account credits to borrowers who reach certain milestones. For example, a principal balance reduction of a certain amount (e. Principal balance reductions might also be offered upon making a series consecutive of on-time payments (e. Up-front Interest Rebate Borrowers of Stafford Loans and PLUS Loans made under the DL program currently receive a 1. Interest Rate Reduction for EDA Repayment Borrowers may opt to make payments on their student loans using EDA repayment.
This option helps ensure that borrowers make their student loan payments on time. While repaying under the EDA repayment option, borrowers receive a 0.
The interest rate reduction for EDA repayment does not apply during in-school, grace, deferment, or forbearance periods. The repayment period for Stafford Loans, PLUS Loans, and Consolidation Loans excludes any periods of authorized deferment and forbearance (described below). The first payment on Stafford Loans, PLUS Loans, and Consolidation Loans is due no later than 60 days after the beginning of the repayment period. For a borrower who is exiting a period of deferment or forbearance, the first or next subsequent payment is due no later than 60 days after the end of the deferment or forbearance period. Treatment of Interest Before Entering Repayment For borrowers of Subsidized Stafford Loans, the federal government pays the interest that accrues while borrowers are enrolled in school on at least a half-time basis, during a six-month grace period thereafter, and during periods of authorized deferment (discussed below). In fast cash Rhode Island contrast, borrowers of Unsubsidized Stafford Loans and PLUS Loans are responsible for paying this interest. Prepayment Borrowers of FFEL and DL program loans may repay their loans ahead of schedule and may not be assessed a penalty for doing so. Repayment Plans Borrowers of FFEL and DL program loans are given the opportunity to choose from among a series of repayment plan options for the repayment of their loans.
The particular repayment plans available to borrowers depend on the type of loan borrowed and under which program the loan was made. The availability of certain repayment plans to individual borrowers also may depend on when they fast cash Rhode Island became new borrowers or when they entered repayment. The standard repayment plan, graduated repayment plan, and extended repayment plan options are available to borrowers of both FFEL and DL program loans. The income-sensitive repayment 41 The six-month grace period excludes any period of up to three years during which a borrower who is a member of a reserve component of the Armed Forces is called or ordered to active duty for a period of more than 30 days, as well as any additional period necessary for such a borrower to resume enrollment at the next available regular enrollment period. The income-contingent repayment (ICR) plan and alternative repayment plans are available only to borrowers of DL program loans. On July 1, 2009, the income -based repayment (1BR) plan will become available to borrowers of loans made under both the LLEL and DL programs (except parent borrowers of PLUS Loans and borrowers of Consolidation Loans containing PLUS Loans made to parent borrowers). Prior to the enactment of the HERA, there were many differences between the repayment plans available to borrowers of LLEL program loans and the corresponding repayment plans available to borrowers of DL program loans. If a borrower fails to select a repayment plan, the borrower is provided a standard repayment plan. Under the standard repayment, graduated repayment, extended repayment, and income-sensitive repayment plans, payment amounts may not be less than the interest due. The repayment plans available to borrowers of LLEL and DL program loans are discussed below.
Standard Repayment Plan Repayment according to a standard repayment plan presents a borrower with a predictable monthly payment amount. For additional information on these changes and the fast cash Rhode Island characteristics of pre-HERA repayment plans for DL program loans, see U.