Understand Your Loan(s)
Student Loans Come with Repayment Obligations
When you signed the promissory note(s) on your student loan(s), you committed to specific terms and obligations. If ECMC has called you about a defaulted loan, contact us at 855-810-4922.
Student Loans Types
What's the difference between federal and private loans? Subsidized and unsubsidized loans? Understanding the kind of student loan(s) you have is very important, but it can be confusing. We can help.
Know Your Loans
Knowing the terms and obligations of your student loan(s) makes managing it easier and may save you money over the life of the loan(s). We have information about student loan types, plus links to additional resources.
Find Information About Your Loan(s)
Not sure what type(s) of loan(s) you have? You have options. Go to the Federal Student Aid (FSA) website, which is the central database for all federal student loan information. You can also visit the U.S. Department of Education's Federal Student Aid website for details about student loan types.
Federal Direct and FFELP Loans
The federal government funds federal student loans. If you took out a loan(s) before July 1, 2010, depending on your college's choice for participation in either the Direct Loan Program or the Federal Family Education Loan Program (FFELP), you may also have a loan(s) through a lender.
Federal Stafford Loan Program
College students attending an eligible, participating school at least half-time may qualify for Stafford loans. Stafford loans can be subsidized or unsubsidized and as of July 1, 2010, all originate from the Direct Loan Program. Most federal student loans are Stafford loans.
Subsidized Versus Unsubsidized Federal Loans
Federal Stafford loans come in two types: subsidized and unsubsidized. The federal government pays the interest on subsidized loans while you're in school and during your grace period, or if you are in deferment. For Stafford loans taken out between July 1, 2012 and July 1, 2014, the federal government did not pay the interest during the grace period. The federal government does not pay interest on unsubsidized loans and interest begins to accrue when the loans are disbursed.
Subsidized Stafford Loans
- The federal government pays the interest while you're in school.
- The federal government also pays the interest for authorized periods of deferment. One example of how you can defer your loan(s) is if you return to school at least half-time.
- The government makes interest payments for other deferments as well. See our Postpone payments section for more information.
Unsubsidized Stafford Loans
- The federal government does not make interest payments on your loan(s).
- You must pay any interest that accrues on your loan(s).
- You pay interest during any deferment period.
If you don't make interest payments while you're in school, in your grace period or in deferment, the interest that accrues during those times is typically added to the principal balance (known as capitalized interest). Capitalized interest can significantly increase your loan balance.
To avoid capitalized interest, you can make interest payments when you are in school, during your grace period or while you're in deferment. To find out how much you can save, use our Value of making interest payments calculator.
Federal PLUS and Grad PLUS Loan Programs
PLUS loans allow parents to borrow money to pay for their dependent children's undergraduate education. In addition, graduate and professional degree students may obtain Grad PLUS loans to help pay for their own education.
Direct Consolidation Loan Program
You can combine one or more federal student loans into a single, consolidated loan with one monthly payment. However, consolidation extends the term of repayment, which can lead to higher costs over the life of the loan. It is worth considering loan consolidation carefully before deciding if it works for you. See our Consolidation section for more information.
Federal Perkins Loan Program
Perkins loans are need-based, fixed-rate loans available to students with exceptional financial need. Perkins loans are typically made by your college using a combination of their own funds and federal dollars. Perkins loans have no origination fees, a longer grace period than Stafford loans and are repaid to the school.
State Student Loans
You may also have student loan(s) provided by your state. State program student loans are non-federal loans managed by each state. To find out more about your state program student loans, consult the promissory note and contact the state entity that services the loan(s).
Student Loans at a Glance
Loan Program Types
Loan Program Eligibility Interest Grace Period Lender Length of Repayment Subsidized Direct* Stafford Loan -Undergraduate students enrolled at least half-time
-As of July 1, 2012, graduate students arel no longer eligible for the Subsidized Stafford Loan
-Must demonstrate financial need
**4.66% for undergraduate 6 mo. Dept.of Education Between 10 and 25 years
Interest is paid by the U.S. Department of Education while the borrower is in school and during grace periods and deferment.
Unsubsidized Direct* Stafford Loan Undergraduate and graduate students enrolled at least half-time **4.66% for undergraduate; 6.21% for graduate/professional 6 mo. Dept.of Education Between 10 and 25 years Direct* PLUS Loan -Parents of dependent undergraduate students enrolled at least half-time
-Must have good credit history
**7.21% NA Dept.of Education Between 10 and 25 years Direct* Grad PLUS Loan -Graduate and professional students enrolled at least half-time
-Must have good credit history
**7.21% NA Dept.of Education Between 10 and 25 years Direct* Consolidation Loan Parents and students borrowing federal student loans Fixed interest rate for the life of the loan, rates are based on a weighted average of the interest rates on the loans being consolidated NA Dept.of Education Up to 30 years Federal Perkins Loan Undergraduate and graduate students 5% 9 mo. Your school Up to 10 years Federal Perkins Loan All details are subject to the individual state's requirements. Federal Perkins Loan All details are subject to the individual lender's requirements.
* Loans administered through the William D. Ford Federal Direct (Direct) Loan Program.
**Interest rates are for loans first disbursed 7/1/14 – 6/30/15.
Keeping Your Promise
Take an active role in your student loan(s). When you took out your loan(s), you made a commitment—part of that commitment is taking active responsibility for managing your loan(s).
Don't wait for your servicer(s) to contact you when you have a question or concern.
If you don't understand something about your loan(s), contact your servicer(s). If you just graduated and aren't sure when you need to start paying, find out. Call to discuss your repayment schedule.
Waiting to hear from your servicer(s) can cost you money. Your servicer(s) may not contact you until they see that something is wrong, like when a letter comes back as "return to sender" or a payment is missed. By the time they finally reach you, you may be facing late fees.
To successfully manage your student loan(s) you should:
- Know the servicer(s) and their contact information for each of your loans
- Keep track of your payment due dates and the amount due
- Know which repayment plan you're on
- Talk to your servicer(s) when you have questions or concerns
- Keep your servicer(s) informed about changes in your address, email and phone numbers
- If you haven't made payments to your lender or are behind, your loan may be in default. Find out about default.
If you don't know who your servicer(s) is, go to the Federal Student Aid (FSA) website, which is the central database for all federal student loan information.
Repaying Your Federal Student Loan(s)
If you're worried about how you're going to repay your loan(s), explore these options:
Armed Forces Student Loan Benefits
The U.S. Department of Education created a brochure that details the "special student loan benefits and repayment options available from the U.S. Department of Education and the U.S. Department of Defense." The brochure includes information on the Servicemembers Civil Relief Act (SCRA) interest rate cap, deferments, Public Service Loan Forgiveness, income-driven repayment plans, the HEROES Act waiver and other education benefits for servicemen and servicewomen. For additional information on military aid, visit the Federal Student Aid website at https://studentaid.gov/understand-aid/types/military.