Your student loans are a major responsibility and they should be taken very seriously. First and foremost, stay in contact with your lender(s) (or holder/services of your loan) to take full advantage of the student loan program benefits. The successful repayment of your student loans will prove to be very beneficial. This will help establish a good credit rating which, in turn, will allow you to borrow in the future for things such as a home.
You need to be familiar with the repayment process, your rights and responsibilities, and what benefits or options are available to you. Remember, even if you do not graduate, you are still responsible for repaying your loan.
Federal Direct Loan Exit Interview
If you have borrowed under the Federal Direct Loan program, you are required by federal regulation to complete an exit counseling session when you graduate, stop attending, or are enrolled less than half-time (5 credits per semester). Exit Loan Counseling reviews your rights and responsibilities as a federal student loan borrower and can be completed online at studentaid.gov. You will need the following information to complete the Exit Loan Counseling session:
- Your expected employer, address and phone number (if you will be employed upon graduation).
- Your nearest living relative's name and complete address and phone number.
- Two other references with complete addresses and phone numbers.
Repayment of your student loans begins once you graduate, leave school or drop below half-time. However, most loans have a six or nine month grace period from the point at which you become less than a half-time student to the point at which your first payment is due.
Both subsidized and unsubsidized Federal Direct loan borrowers are entitled to receive a grace period. A grace period gives you time to get your finances together before your first loan payment is due. Your grace period begins the day you drop below half-time enrollment status and lasts six months.
During the grace period, the federal government continues to pay the interest on subsidized Federal Direct loans. Unsubsidized Federal Direct loan borrowers, however, are responsible for payment of the interest from the first day funds are disbursed. Therefore, payment of the interest can be made in a couple of different ways. You can pay the interest on a monthly or quarterly basis, or allow the interest to accrue and be capitalized into the principal balance of your loan. During repayment your payment must be at least $50 a month and you have a minimum of five years and a maximum of 10 years to repay your student loan. The exact amount of your payment and number of months to repay depends on the total amount you borrowed.
Rights and Responsibilities
You have the right to prepay part or your entire loan at any time without penalty. This can help reduce the total cost of your borrowing. You may have the right to have your loan canceled in part or in its entirety if you: are unable to continue in your program of study because your school closed and no teach-out agreement was established; participate or participated in the National Service Trust Program; or become totally and permanently disabled or pass away.
You must notify your lender(s) immediately if any of the following occur: you change your address; you change your name; you change your telephone number; you change your Social Security Number; you change employment; your employer's address changes; or you make any other changes that will affect your loan status.
If you do not repay your loan on time, it will become delinquent and possibly default. This has serious consequences and can be very damaging to your credit rating.
Defaulted loans are reported to national credit agencies, which can negatively affect your credit rating and your ability to purchase a car or home in the future. In addition, the following can occur: you may lose future eligibility for financial aid and/or educational loans; the references you supplied on your loan application may be contacted; additional fees and interest may be charged to you; you may lose deferment and forbearance options; your federal and state tax refunds may be applied to your loan balance; your professional license renewal may be denied; your employer may withhold part of your salary for payment of your loan; and legal action may be taken against you.
If you are unable to make your scheduled loan payments, do not wait to ask for help – contact your lender(s) immediately.
Deferment and Forbearance
If you qualify, you can receive deferment of payments. If your circumstances change such that they affect your ability to make your payments, contact your lender(s) immediately to see if you qualify for a deferment or forbearance. Letting your lender(s) know your situation can help prevent your loan from becoming delinquent or going into default.
A deferment allows you to postpone your payment (principal, and in some cases, interest) for a certain period of time for specific reasons recognized by the federal government.
Forbearance allows you to temporarily postpone or reduce your principal payments for periods of up to one year at a time. Payment of the interest which accrues during forbearance is your responsibility. You have the option to either pay the interest on a monthly or quarterly basis, or have it accrued and be capitalized into the balance of the loan.
Many situations allow you to defer your loan payments. Your eligibility for a specific deferment is determined by the date your loan was disbursed. The most common reasons borrowers receive a deferment include returning to school or being unable to find employment of at least 30 hours per week. If you are currently making student loan payments, it is very important that you continue making payments until your deferment request is approved by your lender.
If your first subsidized or unsubsidized Federal Stafford or Federal SLS loan was disbursed before July 1, 1993, service in a volunteer organization may qualify you for a deferment. You will need to complete the borrower's section of a deferment form, specific to the type of deferment you are requesting. Your lender or holder will provide you with the correct form. You may also be required to provide supporting documentation and/or certification, depending upon the deferment you are requesting.
If you are requesting an in-school deferment and applying for a new student loan for the same period of enrollment, you may request an in-school deferment on the application and promissory note.
If you become too delinquent in your scheduled payments, you will default and lose the option to defer future payments. In order to receive the deferment you may be required to provide supporting documentation and/or certification, depending upon the type of deferment you are requesting.
In the event you do not qualify for a deferment, you can request forbearance. Forbearance allows you to temporarily postpone or reduce your principal payments for periods of up to one year at a time.
There are four types of forbearance: discretionary, administrative, mandatory and mandatory administrative. Contact your servicer to discuss the type of forbearance for which you may be considered.
Hofstra Law Loan Repayment Assistance Program (LRAP)
Upon graduation, students who enter qualified areas of public interest employment may be eligible to apply for the Hofstra Law Loan Repayment Assistance Program (LRAP). This program, if approved, will forgive portions of outstanding Hofstra Law Loan debt.
- You must have official state bar membership and be employed as an attorney by a government agency (local, state or federal) or by a non-profit employer satisfying Internal Revenue Code §501(c) (3) or (4) for at least 6 months prior to application.
- You must be employed full-time in such a job during the entire calendar year. As in similar programs, judicial clerkships will not be included in this program.
- Your current income cannot exceed $65,000. The graduate’s income is calculated on the greater of (a) his or her income or (b) half the joint income of the graduate and his or her spouse. On calculating income, we will take a deduction of $3,500 per child for dependent care.
Required Items to Apply for the Program
- A completed Hofstra Law LRAP application form.
- Employer Certification Form for the applicant, completed by the employer and indicating dates of employment, job title and annual salary.
- A signed photocopy of the applicant’s (and spouse’s) most recently filed Federal income tax return, with all accompanying schedules, and photocopies of all W-2 forms.
- A photocopy of the Hofstra Law Loan billing statement.
Hofstra Law reassesses the program guidelines in accordance with the available resources each year. If a student is already in the Hofstra Law Loan Repayment Assistance Program, the student will be required to reapply each year by resubmitting an application with required forms to review eligibility. If while in the program, the student makes any changes that no longer fit the criteria of the program, he/she must contact the Law School’s Office of Financial Aid.