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)Federal Family Education Loan Program (FFELP)A federal student loan program in which funds came from private lenders, such as banks and credit unions. Schools worked with both student loan guaranty agencies and lenders to approve and receive student loan funds. As of July 1, 2010, new federal student loans are no longer guaranteed or disbursed through this program., 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 loansStafford loanA type of federal student loan available under the Federal Family Education Loan Program (FFEL) prior to July 1, 2010, to students enrolled at least half-time. The two types of Stafford loans are subsidized (based on financial need) and unsubsidized (borrower pays all interest), both offering a six-month grace period after graduation, withdrawal or dropping below half-time enrollment.. Stafford loans can be subsidizedSubsidizedThe federal government pays the interest on subsidized federal student loans while the borrower is in school, during authorized deferments, and during the grace period. The federal government will also pay unpaid accrued interest for borrowers making payments under Income-Based Repayment (IBR) or Pay As You Earn (PAYE) for up to three consecutive years, if the monthly payment amount does not cover accrued interest. or unsubsidizedUnsubsidizedFederal student loans (unsubsidized, PLUS and unsubsidized Stafford) for which the government does not subsidize, or pay, the interest at any point in the life of the loan. and as of July 1, 2010, all originate from the Direct Loan ProgramDirect Loan ProgramThe William D. Ford Federal Direct Loan Program provides subsidized, unsubsidized, PLUS and consolidation loans. These loans are funded directly by the federal government. Schools work directly with the U.S. Department of Education to receive loan funds on behalf of borrowers. As of July 1, 2010, all new federal student loans are originated through this 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 interestInterestA percentage that is calculated against a dollar amount and then added to the total balance. Where loans are concerned, interest is the amount charged to borrow funds and is therefore the primary cost associated with borrowing money. The percentage amount, or interest rate, can be fixed (unchanging) or variable (changing with the market). on subsidized loans while you're in school and during your grace period, or if you are in defermentDefermentAn authorized postponement of student loan repayment in situations where borrowers meet certain requirements. While in deferment, borrowers do not make principal payments on their loans. There are several types of deferments, covering a variety of situations like unemployment, active military service and parental leaves from school.. 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 accrueAccrued interestInterest on the loan that has accumulated since disbursement or the last payment made. 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 periodGrace periodThe period of time after graduation, withdrawal from school or dropping below half-time enrollment, during which borrowers are not obligated to make payments on student loans. The grace period is six months for Stafford loans and nine months for Perkins loans. Repayment commences at the conclusion of the grace period. While PLUS loans do not have a grace period, borrowers may request a six-month, post-enrollment deferment or forbearance. or in deferment, the interest that accrues during those times is typically added to the principal balance (known as capitalized interest). Capitalized interestCapitalized interestThe unpaid interest that accrues on a loan and is added to the principal balance. 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 loansPLUS loanA PLUS Loan is a student loan offered to parents of dependent students enrolled at least half-time in eligible programs at participating and eligible postsecondary institutions or graduate and professional students at participating and eligible postsecondary institutions. 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 loanConsolidation loanA loan that results from consolidating multiple student loans into one. The interest rate on a consolidation loan is typically the weighted average of the rates for the individual loans. The federal government offers a Direct Consolidation Loan Program. 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 loansPerkins loanA federal loan that is awarded based on financial need and other factors. The interest rate is fixed and there are no fees. Because this is a federally subsidized loan, no interest accrues until repayment begins. The repayment period is 10 years and the loan is repaid directly to the school. 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.

  Private Student Loans
  Private loansPrivate loansFunds issued to borrowers by lenders outside of any federal or state loan program. The terms, conditions and any lender information are provided on the promissory note. are non-federal loans issued by a lender. To find out more about your private loans, consult your promissory notePromissory noteA legally binding contract that defines the loan agreement between a lender and a borrower. The promissory note discloses loan terms, such as interest rates, conditions and repayment schedules, and provides information on a borrower's rights and responsibilities. or contact your lender(s)LenderAn institution that provides loans, or borrowed funds, to other individuals or institutions for a fee. Under the Federal Family Education Loan Program (FFELP), the lender could be a bank, credit union or other private lending institution. In the Federal Direct Loan Program, the lender is the federal government. for details.

  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:

  Budgeting Strategies
  Repayment Options with Your Lender/Servicer
  Loan Forgiveness and Cancellation
  Student Loan Basics

• 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 (PDF) 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 .