Page 7 of 9
changes, your payments may change. If you do not repay your loan after 25
years under this plan, the unpaid portion will be forgiven. You may have to pay
income tax on any amount forgiven.
In addition to the repayment plans listed above, you may also choose the
following repayment plan to repay a Direct Consolidation Loan if you are not
consolidating a parent Direct PLUS Loan or a parent Federal PLUS Loan (see
Note below):
x Income-Based Repayment (IBR) Plan – Under this plan, your required
monthly payment amount will be based on your income. To initially qualify for
this plan and to continue to make income-based payments, you must have a
partial financial hardship. Your monthly payment amount may be adjusted
annually. The maximum repayment period under this plan may exceed 10
years. If your loan is not repaid in full after you have made the equivalent of 25
years of qualifying payments and at least 25 years have elapsed, you may
qualify for forgiveness of any outstanding balance on your loans. You may
have to pay income tax on any amount forgiven.
NOTE: A parent PLUS loan is a PLUS loan that you obtained to help pay for your
dependent child’s undergraduate education. Direct Consolidation Loans that
repaid parent Direct PLUS Loans or parent Federal PLUS Loans may not be
repaid under the IBR Plan. However, such loans may be repaid under the ICR
Plan.
If you can show to our satisfaction that the terms and conditions of these
repayment plans are not adequate to meet your exceptional circumstances, we
may provide you with an alternative repayment plan.
If you do not choose a repayment plan, we will choose a plan for you in
accordance with the Act.
You may change repayment plans at any time after you have begun repaying
your loan. There is no penalty if you make loan payments before they are due, or
pay more than the amount due each month.
Except for payments made under the IBR Plan, we apply your payments in the
following order: (1) late charges and collection costs, (2) outstanding interest, and
(3) outstanding principal. For payments made under the IBR Plan, we apply your
payments in the following order: (1) outstanding interest, (2) late charges and
collection costs, and (3) outstanding principal.
When you have repaid your loan in full, your servicer will send you a notice telling
you that you have paid off your loan. You should keep this notice in a safe place.
11. Transfer of loan. We may transfer one or all of your loans to another servicer
without your consent. If the address to which you must send payments or
correspondence changes, you will be notified of the new servicer’s name,
address and telephone number, the effective date of the transfer, and the date
when you must begin sending payments or directing communications to that
servicer. Transfer of a loan to a different servicer does not affect your rights and
responsibilities under that loan.
12. Late charges and collection costs. If you do not make any part of a
payment within 30 days after it is due, we may require you to pay a late charge.
This charge will not be more than six cents for each dollar of each late payment. If
you do not make payments as scheduled, we may also require you to pay other
charges and fees involved in collecting your loan.
13. Demand for immediate repayment. The entire unpaid amount of your loan
becomes due and payable (this is called “acceleration”) if you:
x Make a false statement that causes you to receive a loan that you are not
eligible to receive; or
x Default on your loan.
14. Defaulting on your loan. Default (failing to repay your loan) is defined in
detail under “Acceleration and Default” on page 4 of this Note. If you default:
x You will be required to immediately repay the entire unpaid amount of your
loan.
x We may sue you, take all or part of your federal tax refund or other federal
payments, and/or garnish your wages so that your employer is required to
send us part of your wages to pay off your loan.
x You will be required to pay reasonable collection fees and costs, plus court
costs and attorney fees.
x You will lose eligibility for other federal student aid and assistance under most
federal benefit programs.
x You will lose eligibility for loan deferments.
x We will report your default to national consumer reporting agencies (see Item
15).
15. Consumer reporting agency notification. We will report information about
your loan to each national consumer reporting agency on a regular basis. This
information will include the disbursement dates, amount, and repayment status of
your loan (for example, whether you are c
urrent or delinquent in making
payments). Your loan will be identified as an education loan.
If you default on a loan, we will report the default to national consumer reporting
agencies. We will notify you at least 30 days in advance that we plan to report
default information to a consumer reporting agency unless you resume making
payments on the loan within 30 days of the date of the notice. You will be given a
chance to ask for a review of the debt before we report it.
If a consumer reporting agency contacts us regarding objections you have raised
about the accuracy or completeness of any information we have reported, we are
required to provide the consumer reporting agency with a prompt response.
16. Deferment and forbearance (postponing payments). If you meet certain
requirements, you may receive a deferment that allows you to temporarily stop
making payments on your loan. If you cannot make your scheduled loan
payments, but do not qualify for a deferment, we may give you a forbearance. A
forbearance allows you to temporarily stop making payments on your loan,
temporarily make smaller payments, or extend the time for making payments.
Deferment
You may receive a deferment:
x While you are enrolled at least half time at an eligible school;
x While you are in a full-time course of study in a graduate fellowship program;
x While you are in an approved full-time rehabilitation program for individuals
with disabilities;
x While you are unemployed (for a maximum of three years; you must be
diligently seeking, but unable to find, full-time employment); or
x While you are experiencing an economic hardship (including Peace Corps
service), as determined under the Act (for a maximum of three years).
x
While you are serving on active duty during a war or other military operation or
national emergency, or performing qualifying National Guard duty during a war
or other military operation or national emergency, and if you were serving on
or after October 1, 2007, for an additional 180-day period following the
demobilization date for your qualifying service; or
x If you are a member of the National Guard or other reserve component of the
U.S. Armed Forces (current or retired) and you are called or ordered to active
duty while enrolled at an eligible school, or within 6 months of having been
enrolled at least half time, you are eligible for a deferment during the 13
months following the conclusion of the active duty service, or until you return
to enrolled student status on at least a half-time basis, whichever is earlier.
You may be eligible to receive additional deferments if, at the time you received
your first Direct Loan, you had an outstanding balance on a loan made under the
Federal Family Education Loan (FFEL) Program before July 1, 1993. If you meet
this requirement, contact your servicer about additional deferments that may be
available.
You may receive a deferment while you are enrolled in school on at least a half-
time basis if: (1) you submit a deferment request form to your servicer along with
documentation of your eligibility for the deferment; or (2) your servicer receives
information from the school you are attending that indicates you are enrolled at
least half time. If your servicer processes a deferment based on information
received from your school, you will be notified of the deferment and will have the
option of canceling the deferment and continuing to make payments on your loan.
For all other deferments, you (or, for a deferment based on active military duty or
qualifying National Guard duty during a war or other military operation or national
emergency, your representative) must submit a deferment request form to your
servicer, along with documentation of your eligibility for the deferment. In certain
circumstances, you may not be required to provide documentation of your
eligibility if your servicer confirms that you have been granted the same
deferment for the same period of time on a FFEL Program loan. Your servicer
can provide you with a deferment request form that explains the requirements for
the type of deferment you are requesting. You may also obtain deferment request
forms and information on deferment eligibility requirements from your servicer’s
web site.
If you are in default on your loan, you are not eligible for a deferment.