Prepaid Tuition 
Repayment of Stafford Loans
Note that details provided on this page reference loans made under the Federal Family Education Loan Program (FFELP). Effective July 1, 2010, all new federal student loans will come directly from the U.S. Department of Education (ED) under the William D. Ford Federal Direct Loan Program (Federal Direct Loans). For information regarding Federal Direct Loans, refer to ED's Direct Loan Program Web site or contact the college's financial aid office.
Student loans offer multiple payment options based on the borrower's financial situation. You won’t need to start repaying your loan until you’ve graduated, unless you’ve dropped out or have fallen below half-time enrollment. Before your first payment is due, you typically will be given a grace period of six to nine months, starting the day you drop below half-time enrollment status. This will give you time to find a job and get your finances together. However, with an unsubsidized loan, the interest will begin to accrue as soon as your loan is disbursed. It may be wise to set up a payment plan that allows you to pay just the interest while in college. This will help lower your future monthly payment and the total cost of the loan. Otherwise, you can choose to add the interest that accrues while in school to the balance of your loan and pay it as part of your monthly payment after your grace period expires.
When the time comes to begin repaying your loans, it's important that you speak with your lender about a repayment plan. Use this chart to review information about effective interest rates.
If you miss or fall short of a payment, your loan will become delinquent and may even default. A defaulted loan will have a negative impact on you, costing you more money and leaving you with a bad credit rating for up to seven years after the loan is paid in full. A bad credit rating can affect your opportunities for employment, credit approval, future loans and buying or renting property. Avoid default altogether by discussing alternative payment arrangements with your lender. Remember, if you are experiencing extreme financial difficulty, are back in school, or have other extenuating circumstances, you will need to contact your lender to discuss if you are eligible for a deferment or forbearance. To bring a loan out of default, you can either pay the loan in full, agree to repay it through a loan rehabilitation program, or apply for loan consolidation.
Loan forgiveness is an option that allows you to cancel all or part of your loan(s) due to volunteer work (AmeriCorps, Peace Corps), military service, teaching in certain low-income communities, medical or law practice for certain groups/areas, a closed school, false certification or an unpaid refund. Your loan will be forgiven if you are totally and permanently disabled, or upon your death.
To help you manage your student loan debt and to repay your loan, stay in touch with your lender, financial aid office or ISAC, if your loan is guaranteed by the Illinois Student Assistance Commission. Also, read any mail you receive regarding your loan, keep records in a safe place, stay current with your payments, and write your loan-account number on all correspondence pieces with your lender, and on your payments.
If you have any questions about your loan and/or grant amounts, outstanding balances, disbursements or loan statuses, check with the National Student Loan Data System (NSLDS).
Repayment Options
One of the benefits of a student loan is the variety of repayment options available. Most student loan payments are set up on a standard repayment plan with monthly payments that remain the same throughout the repayment period. However, other plans are available that may make your payments more manageable.
The information below compares the "monthly payments" and the "total amount repaid" of the standard and graduated repayment plans using identical 10-year terms and a 6.8 percent interest rate. Additional information is also provided regarding other payment plan options. Repayment calculators are useful tools that can help you estimate your monthly payments. Remember that changes in interest rates and federal regulations that govern the loan programs can affect your payments.
Standard Repayment Option
This option allows you to make monthly payments of principal and interest, excluding periods of deferment and forbearance. Depending on the amount borrowed, $50 is the minimum monthly payment.
| Amount Borrowed | Monthly Payment for 10 Years | Total Amount Repaid |
|---|---|---|
| $10,000 | $115 | $13,810 |
| $15,000 | $173 | $20,714 |
| $20,000 | $230 | $27,619 |
Graduated Repayment Option
Borrowers choosing this option can start with reduced payments and gradually increase the payments over time.
| Amount Borrowed | Monthly Payment for 10 Years | Total Amount Repaid |
|---|---|---|
| $10,000 |
|
$14,812 |
| $15,000 |
|
$22,220 |
| $20,000 |
|
$29,626 |
Income Sensitive Repayment Option
Monthly payments are based upon a percentage of your gross monthly income.
| Amount Borrowed | Monthly Gross Income | % of Income | Required Monthly Payment |
|---|---|---|---|
| $10,000 | $1,000 | 4% | $57 |
| $20,000 | $2,000 | 4% | $113 |
Income-Based Repayment Option (effective July 1, 2009)
Borrowers who meet the conditions of partial financial hardship (based on income and family size) may qualify for an income-based repayment plan.
The payment amount will not be more than 15% of the amount by which the borrower's adjusted gross income exceeds 150% of the poverty line for the family size. If the monthly payment amount is not sufficient to pay accrued interest on a subsidized Stafford loan, the U.S. Department of Education (ED) will pay the remaining interest for a period of 3 years; any outstanding loan balance after 25 years will be forgiven.
More information about income-based repayment, including a chart of examples of IBR payments, is available on the Student Aid on the Web and IBR info Web sites.
Extended Repayment Plan Option
Depending on the amount borrowed, eligible borrowers can lengthen their repayment terms to a maximum of 25 years. Borrowers have a choice of either standard or graduated payment plans.
Early Payoff Option
Paying off your student loan in full carries no prepayment penalties and keeps interest costs to a minimum.
Loan Consolidation Option
You can find more information on repaying your student loans at the U. S. Department of Education's Federal Student Aid Student Web Portal.
Federal Consolidation Loans allow you to combine any number of existing federal educational loans into a single, more manageable loan.
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