Loan Repayment

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Federal Direct Stafford and Graduate PLUS Loans both have six-month grace periods after graduating, withdrawing, or dropping below half-time enrollment. During the grace period, payment is not due although interest continues to accrue. Loans previously in repayment and put into an in-school status while attending law school will go back into repayment immediately after graduating, withdrawing, or dropping below half-time enrollment.

For federal student loan borrowers graduating in May, repayment typically begins in November for the law school loans. In the months leading up to the first payment, the loan servicer(s) contacts the borrower to notify of upcoming payment. By default, borrowers are put into a standard repayment plan (10 years or 120 fixed payments), which is based upon the amount of debt and interest. To request a plan based upon discretionary income, the borrower must complete the required application on studentloans.gov after receipt of the first bill. Please allow extra time for processing this request.

All personal federal loan information can be found online through the National Student Loan Data System (NSLDS). An FSA ID and password are required to log in to the site. A borrower’s entire loan history, including amounts, interest rates, and servicer contact information are readily available.

For more general information on student loan repayment, please click here.

There are numerous types of repayment plans for federal student loans. Some are based on debt but the more manageable payments are found in those plans based on income. Eligibility for the different plans is impacted by the types of loans and when they were borrowed. The loan servicer makes the final determination of repayment plan eligibility so early research to determine plan availability and repayment amounts are encouraged.

The standard repayment plan is the default plan with fixed payments over 10 years. The payments are inclusive of the debt and calculated interest and remain the same over the repayment period. Variances of this plan exist with an extended repayment period or a graduated repayment amount with both costing more over the lifetime of the loan.

Most recent borrowers should be eligible for plans based on income; not the total amount of debt. These income-driven plans require an annual application and the payment amount can fluctuate yearly based on the updated information. Payments under these plans are typically lower and more manageable with a repayment period of 20 or 25 years depending on the plan. At the conclusion of the repayment period, the remaining balance is forgiven; however, it will be considered taxable income.

The Department of Education offers an online Repayment Estimator that helps determine eligible repayment plans, and estimates the monthly and total payment amounts.

For more information about the loan repayment plans, please click here.

The majority of AUWCL federal loan borrowers do not need to consolidate their loans as they should be eligible for the numerous income-driven plans and forgiveness options. Students who borrowed previously under the Federal Family Education Loan Program (FFELP) should consider loan consolidation for the reasons outlined below. Before starting a loan consolidation application, borrowers are strongly encouraged to contact the AUWCL Financial Aid Office.

A Direct Consolidation Loan combines federal education loans from multiple servicers into one loan resulting in one monthly payment and provides additional loan repayment plan and forgiveness options, including income-driven plans and Public Service Loan Forgiveness (PSLF). Consolidation can also lower the monthly payment by giving a longer period of repayment (up to 30 years depending on the size of the loan) and can switch any variable interest rate loans to a fixed interest rate. Potential negative impacts of consolidation include paying more over the lifetime of the loan, losing borrower benefits from the original loan(s), and/or losing credit for payments made under PSLF or toward income-driven repayment plan forgiveness.

Most federal student loans are eligible to be consolidated. Private education loans, including bar study loans, are not eligible for consolidation with federal loans. Eligible loans can be consolidated any time after graduation, withdrawing, or dropping below half-time enrollment. The interest rate on a consolidation loan is a weighted average of the interest rates being consolidated; rounded up to the nearest one-eighth of one percent. The interest rate is fixed for the life of the loan. Repayment of consolidation loans typically begins within 60 days of the new loan disbursing. Existing loan grace periods can be factored into the timing of the consolidation loan application.

For more information about consolidation loans, please click here.

Under certain circumstances, a borrower can request a deferment or forbearance of loan payments, which allows for a temporary stop or temporary reduction in monthly payment amount. The primary difference between a deferment and forbearance is that during a deferment interest payments may not be required but during a forbearance all interest payments are required. If responsible for interest during either, the payment can be made as it accrues, or it can accrue and be capitalized (added to the loan balance) at the end of the deferment or forbearance period.

Only the loan servicer(s) can determine eligibility for a deferment or forbearance, as they make the final determinations on loan repayment periods and amounts. The most common type of deferment is for those attending school. Enrollment of at least half-time (six credits) in a degree-seeking program result in an automatic in-school deferment.

For those encountering difficulty making payment, a deferment or forbearance may be a good temporary solution. Borrowers are encouraged to contact their servicer(s) immediately if they are struggling to make payment. The servicer(s) will explore these options, as well as income-driven repayment plans, to help reduce the burden.

For more information about deferments and forbearances, please click here.

Public Service Loan Forgiveness (PSLF) is available to those borrowers making qualifying payments in a qualifying repayment plan while working full-time for a qualifying public service employer. After 120 qualifying monthly payments, the remaining balance is forgiven with no taxable income implications. Only the loan servicer (FedLoan Servicing) can determine all of the above requirements. It is strongly recommended for borrowers to submit the Employment Certification form on an annual basis, as well as when there is a change in employer, to ensure that forgiveness is properly being tracked by the loan servicer. Failure to submit the form may result in qualifying payments not being counted toward forgiveness.

For more information about PSLF, including eligible employment and the loan and repayment requirements, please click here.

AUWCL offers a Public Interest Loan Repayment Assistance Program (PILRAP) to eligible alumni meeting program rules and criteria. The purpose of PILRAP is to offer loan repayment assistance to JD graduates who have entered into careers for the public interest, carrying forward the institution’s long-standing commitment to use the law as a tool for positive change in our society. For more information about PILRAP, please click here.

Numerous states and organizations offer other types of loan repayment assistance programs (LRAP). For more information about other LRAPs, please contact the AUWCL Office of Public Interest.

The AUWCL Financial Aid Office is available to assist with questions about loan repayment. External resources on the various loan repayment subjects are found through the above sections. Additionally, the following resources are recommended:

Salt – American Student Assistance and AUWCL partner to offer loan repayment and financial literacy information to students free-of-charge. A valid AU email address is required to activate the student account.

NSLDS – National Student Loan Data System provides loan information for borrowers, including loan amounts, interest rates, and servicer contact information. An FSA ID and password are required.

StudentLoans.gov – A Department of Education website containing a repayment estimator, income-driven repayment plan application, loan consolidation application, entrance/exit counseling, and numerous other loan resources.

Student Loan Repayment Webinar – Presented by Dr. Jeffrey Hanson, Ph.D., a nationally-recognized student loan and finance expert.

Repaying Your Student Loans – A Department of Education resource detailing loan repayment.

Student Loan Repayment Checklist – A Department of Education resource offering loan repayment quick tips for before and after repayment begins.