Leaving Concordia
Exit Counselling
You must complete an Exit Counselling session at www.mappingyourfuture.org before you leave the University or graduate. You will be counselled on your obligations, rights and options under the terms of your loan. This session will cover repayment options, deferments and other important information you may need during your repayment term. During this session you will need to provide the following information:
- Name and address of closest living relative.
- Two references (different from closest living relative) and with different addresses.
Once this has been completed, an email notification will be automatically sent to the FAAO.
Interest
When you begin repaying your loan, you will notice that you owe more than you borrowed. This is because interest has accumulated. The interest rate for FFELP loans varies each year, but will never exceed 8.25%. The rate is adjusted each year on July 1st. You'll be notified of any interest rate changes throughout the life of your loan.
If you borrowed an unsubsidized loan, interest starts accruing (accumulating) from the time the funds were disbursed to you. You choose to either pay it while you were in school or let it accrue. If you let the interest accrue, it has been capitalized (that is, added to your principal balance). This means that the total amount you repay will be greater than if you paid the interest all along. Click here to calculate the amount of capitalized interest you could accrue.
Interest is calculated on a simple daily basis. It can be explained by the following formula:
Average daily balance between payments
X Interest rate
X (Number of days between payments/365.25)
For example, here is how interest accrues between payments made on April 15th and May 15th:
Average daily balance $10,000 Interest rate x.08 Days between payments (30/365.25) x.08214
Monthly interest $65.71
Repayment Plans
When you leave Concordia University or drop below half-time enrolment status, your grace period for Stafford subsidized and unsubsidized loans will begin. This gives you up to six months before you must start making monthly principal and interest repayments on your loan. Remember that there is no grace period for PLUS loans.
Before repayment starts, you will be provided with Repayment Options and a Repayment Schedule from your lender or servicer for each type of loan you have. If you do not receive these schedules towards the end of your grace period, contact your lender because repayment begins whether or not you are aware of it. All borrower benefits will only apply if you make your first payment on time.
If you plan ahead, the repayment process will go smoothly. Start by knowing all your options. Here are the repayment options you will have to choose from if you start repaying on or after July 1st, 2006:
Standard Repayment. Under this plan, your monthly payment will remain the same over the entire repayment period. The minimum monthly payment is $50 and you will have up to 10 years to pay.
Graduated Repayment. As the name suggests, this plan typically begins with smaller payments, followed by a gradual increase in payments at specified intervals. The monthly payment must be large enough to cover accrued interest charges. This plan also may increase the amount of interest you pay over the term of your loan. The term is for a maximum of 10 years. In order to qualify for this plan, you must have over $30,000 in outstanding FFELP loans.
Income-Sensitive Repayment. This plan ties the size of your payment to your income level, with annual adjustments made to your payment. The monthly payment must be large enough to cover accrued interest charges. This plan also may increase the amount of interest you pay over the term of your loan. The term is up to 10 years. However, your lender can use forbearance to lengthen the term for up to five additional years (15 years total).
Extended Repayment. This option is available for those who first borrowed on or after October 7, 1998, and who then accumulated loans that totalled more than $30,000. If you are one of these borrowers, you may extend your Standard or Graduated Repayment plan for up to a total of 25 years.
For more information about your repayment options, and to view a sample repayment schedule, click here. You can calculate your repayment based on different options at http://www.ed.gov/offices/OSFAP/DirectLoan/calc.html.
Loan Consolidation
By the time you finish university, you may have a number of loans. These loans may be with more than one lender and may have different terms. Repayment can become complicated if you have to make different payments at different times of the month. Consolidation is a way to make repayment of multiple loans less complicated.
How it works. You can consolidate all your federal student loans into one loan with a fixed rate and a single, possibly lower, monthly payment. You pay no additional fees to consolidate your loans. More importantly, you may reduce the amount of each monthly payment by extending your repayment term. Always remember that a longer repayment term increases the amount of interest you pay over the term of your loan.
Consolidation loans offer terms ranging from 10 to 30 years. Repayment options on consolidation loans include: Standard, Graduated and Income Sensitive repayment plans. To be eligible for a consolidation loan, you must be in a grace period, repayment, deferment, or forbearance.
The interest rate on a consolidated loan is determined by taking the weighted average of your current loans interest rates and rounding up to the nearest 1/8% (this means that the interest rate on a $10,000 loan 'counts' more towards the bottom line than a $5,000 loan's interest rate). This interest rate is fixed, which means it will not change throughout the life of the loan, whereas your current loans are variable and can either increase or decrease on an annual basis.
As of July 1st, 2006 students are not allowed to consolidate while they are in school.
Pros and Cons. Although you can have a longer period of time to repay your consolidation loan than you do for the individual student loans you're repaying, but this means you'll also double total interest expense. If you don't need the monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidated loan. To help you figure the costs, contact your lender or loan servicer, or use the online calculator here.
You should first discuss consolidation with your existing lenders. If your lender does not consolidate, they will probably be able to recommend another lender.
While interest rates and length of repayment will not vary between lenders, some may offer incentives (such as interest rate reductions for on-time repayments) to their customers that others do not. It is highly recommended that you shop around for those incentives before deciding on a consolidating lender.
Deferment
A deferment is a period of time during which no payments are required and interest does not accrue, unless you have a Stafford unsubsidized loan or a PLUS loan. In those cases, you must pay the interest or capitalize it when deferment ends.
Eligibility. In order to qualify for deferment under the FFELP, you must be in school at least half-time, unable to find work (for up to three years) or suffering economic hardships (up to three years). Parent PLUS loan borrowers may not receive a deferment based on a dependent student's half-time enrolment, but graduate and professional PLUS borrowers may defer based on enrolment status. Active duty military personnel, those studying in an approved rehabilitation training program for the disabled and some others in special circumstances are also eligible.
Applying. In most cases you aren't just granted deferment automatically; you have to formally apply to your lender. The following forms are provided by the US Department of Education:
Form Completed by Economic Hardship Deferral Student In-school Deferral Student and School Parental Leave Deferral Student and School Public Service Deferral Student and Supervisor Temporary Total Disability Deferral Student and Physician Unemployment Deferral Student
Forbearance
Forbearance occurs when your lender agrees to either temporarily reduce or postpone your loan payments. Interest continues to accrue, however, and you are responsible for paying it no matter what kind of loan you have. Interest can also be capitalized if you choose not to pay it during forbearance.
Eligibilty. Forbearance is available to those who don't qualify for deferment but are still temporarily unable to meet their repayment schedule. Unlike deferment, which you are entitled to receive, your lender does not have to grant forbearance except in certain mandatory circumstances, such as a medical or dentistry residency or internship, or borrowers whose monthly payments are 20% or more of their monthly income. For complete information about forbearance eligibility, contact your lender.
Loan Discharge and Cancellation
In rare circumstances, your loan may be discharged or cancelled. This releases you from all obligations to repay the loan. Note that your loan can't be discharged because you didn't like your school or program of study, or because you didn't get a job after graduation.
Eligibility. The following chart from the US Department of Education is a summary of valid reasons for the discharge/cancellation of your loans.
Cancellation Conditions Amount Forgiven Notes Bankruptcy 100% In rare cases, only possible if the court rules that repayment would cause undue hardship Closed School 100% If occurs before the program of study was completed. Borrower's total and permanent disability or death 100% For a PLUS Loan, includes the death, but not disability, of the student for whom the parents borrowed Full-time teacher in a designated elementary or secondary school serving students from low-income families Up to $5,000 (or up to $17,500 in certain specialties) Detailed information available at www.federalstudentaid.ed.gov/tc. False loan certification and identity theft 100% Effective July 1st, 2006 School does not make required return of loan funds to the lender Up to the amount that the school was required to return
Delinquency and Default
Delinquency. When your monthly payment is 30 days or more overdue, you are considered to be delinquent on your loan. Most lenders and servicers will contact you directly about delinquent payments and begin collection activity. Your delinquency may be reported to a credit bureau which could damage your credit rating. If you expect to have a problem making a monthly payment, contact your lender immediately. It is always easier to discuss alternatives before the due date rather than after a payment is late.
Default. If you fall 270 days behind on a scheduled payment, you are legally in default on your loan agreement. The lender can assume that you are not going to repay; and the lender may declare the entire amount you owe, including interest, immediately due and payable.
Defaults are reported to credit bureaus and stay on your credit record, whether or not you eventually pay off the loan. The consequences of default are severe:
- You are liable for late charges which can be added to the principal of your loan, and on which you will then pay interest.
- When your loan is in default, your US federal income tax refunds can be withheld to repay the loan.
- Your wages may be garnished (a portion withheld for repayment).
- You may have to pay attorney's fees and court costs.
- You lose eligibility for all federal and state financial aid until you have made satisfactory repayment arrangements on the defaulted loan.
- In a profession that requires a license to practice, that license can be denied renewal until you make satisfactory payment arrangements on your student loan.
Refunds and Withdrawal
Withdrawing from Concordia. You are responsible for notifying the FAAO, the school, and your lender if you choose to withdraw. If you are an undergraduate and you choose to withdraw from Concordia, you must comply with the guidelines given in Sections 16.1.6 and 15.3.1 of the Undergraduate Calendar. If you are a graduate student, you should consult the Financial Regulations Section of the Graduate Student Calendar.
If you withdraw from courses before the official withdrawal (DNE) deadline, you will receive a full refund of your tuition and compulsory fees. If you withdraw after the DNE deadline, you will be responsible for the full payment of your tuition and compulsory fees.
If you withdraw from the University, you may be required to repay part of or all your loan(s). You may also owe the University any loan funds returned on your behalf. US Department of Education regulations state that your school must return loan funds if you have not completed a minimum of 60% of the payment/enrolment period. If you received more loan funding than was "earned", the excess funds must be returned by your school and/or yourself. The amount of money to be returned is determined by a specific formula that is used in a calculation called a "Return to Title IV." If you did not receive all of the funds that were earned, you may be eligible for a post-withdrawal disbursement. Further information is available at www.studentaid.ed.gov.