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New Undergraduate Federal Stafford Loans

Borrowers of subsidized Stafford Loans first disbursed on or after July 1, 2014 are once again eligible for an interest subsidy during the 6-month grace period.

(Subsidized Stafford loans made from July 1, 2012 to June 30, 2014 were not eligible for subsidized interest benefits during the six-month grace period after a student graduates or falls below half-time enrollment.  For loans made during those two years, interest accrues during the grace period and will be capitalized if unpaid by the borrower.)

Click here for comprehensive information about loan repayment.

The Budget Control Act of 2011 changed some aspects of student loans for graduate students.

As of July 1, 2012, graduate students no longer receive the interest subsidy on the Subsidized Stafford loan. The graduate Stafford loan program is entirely unsubsidized, which means the loan accrues interest while a student is in school. The maximum amount a student can borrow is $20,500 per academic year.

You may use a federal loan repayment calculator to better understand your total loan amounts and repayment options. We recommend the following website: Finaid Loan Calculators

Extension of Loan Repayment Option: Pay As You Earn

President Obama has announced an extension of the Pay As You Earn (PAYE) repayment option to approximately 5 million additional borrowers, who first took out loans between 2007 and 2011, and whose dates of borrowing exclude them currently. The PAYE option caps monthly payments at 10 percent of discretionary income, setting monthly payments on a sliding scale based upon income. Any remaining balance is forgiven after 20 years of payments, or 10 years for those in certain public service jobs. The PAYE plan will be available to these additional borrowers by December 2015.

For additional information please review the Presidential Memorandum – Federal Student Loan Repayments and the Presidential Fact Sheet: Making Student Loans More Affordable

Income-Based Repayment

There are multiple loan repayment programs based on income.  The two main plans have been Income-Based Repayment (IBR) and Income-Contingent Repayment (ICR). Both IBR and ICR provide affordable monthly payment amounts. Under both plans, any remaining loan balance is forgiven after 25 years, and payments made can count toward the 120 payments required for Public Service Loan Forgiveness.

There are important differences between IBR and ICR. IBR applies to both the Federal Family Education Loan Program (FFEL) and the Federal Direct Loan Program, while ICR is only available for Federal Direct Loans. IBR does not apply to PLUS Loans or consolidation loans that include PLUS loans, while ICR does include Direct PLUS loans that are part of a Federal Direct Consolidation Loan.

As of December 21, 2012, eligible borrowers of federal student loans may enroll in the new “Pay as You Earn” program. The new income-based repayment plan caps monthly loan payments at 10 percent of a borrower’s discretionary income. After 20 years of payments, the government will forgive the loans. (The Education Department’s older income-based repayment program currently caps monthly loan payments at 15 percent of discretionary income, with loan forgiveness after 25 years.) The new program will accept enrollees who were new borrowers after October 1, 2007, and who also took out a loan on or after October 1, 2011.

For more detailed information about the multiple federal student loan repayment options, please visit the following sites:

Federal Student Aid Understanding Repayment

Federal Student Aid Repayment Plans

Federal Student Aid Repayment Estimator

Student Loan Consolidation

With the change from Federal Stafford Loans through multiple lenders to Federal Direct Loans through the U.S. Department of Education, some borrowers are considering loan consolidation. For more information, visit the Federal Direct Consolidation Loan website.

Navy Baccalaureate Degree Completion Program

The Navy Baccalaureate Degree Completion Program offers up to $85,000 to complete your degree. Your service obligation can be fulfilled in four years. To be eligible, you must have completed 30 semester hours, have at least a 2.7 GPA, be younger than 34 years old, and meet the Navy’s physical requirements. For more information, call 800-USA-NAVY.