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Alumni-Loan Repayment FAQ's


INTRODUCTION:

This set of frequently asked questions is the result of real questions posed by graduating students at Midwestern University. It has been organized into nine different categories; as additional topics are developed, more content will be added. The topics are:

Deferment, Forbearance and Grace Period Questions
General Issues
Income-Based Repayment (IBR) Questions
Loan Consolidation
Public Service Loan Forgiveness Program (PSLF)
Repayment Plans
Servicer and Lender Issues
Tax Benefits
Tracking Your Loans

If you have specific comments, suggestions or additions, please send a message to ilfinaid@midwestern.edu or azfinaid@midwestern.edu with the "Alumni FAQs" as the subject.


Deferment, Forbearance and Grace Period Questions

1. Do we qualify for the intern/resident forbearance?

Yes. You are eligible for a medical / dental forbearance when going into an approved internship or residency. You may find it easier to use your servicer's website to apply or download an application. Get your servicer's contact information at www.nslds.ed.gov

2. If so, does it benefit us more to do an alignment forbearance first or just proceed with the intern/resident forbearance?

Good question! Once you are ready to begin repaying your loans it makes a lot of sense to bring your loans into alignment just to simplify life. We'd suggest getting the internship or residency forbearance in place first; while you may want to discuss the alignment forbearance, you will probably want to do this later.

3. Do the Grad PLUS loans disbursed prior to July 1, 2008 qualify for the residency deferment?

Yes, if you're entering an approved residency, you can apply for a forbearance of your Grad PLUS loans. Lenders and servicers have residency forbearance forms specifically for that purpose; when you call your lender or servicer, request the form from them.

4. I have a disabled child. Her therapy is expensive. Is there a deferment for that?

Unfortunately, there are no deferments for your child's situation. You might call your servicer, explain the situation and then see if there might be some forbearance options that might be granted. Really expensive treatments might have an impact on your Adjusted Gross Income (AGI) so you might qualify for IBR as well. With IBR and a multitude of variables, payments can sometimes be reduced dramatically. See if you qualify or what your payments would be at www.ibrinfo.org

5. How do you apply for economic hardship deferment? What are the requirements to qualify?

Economic Hardship deferment is granted one year at a time for a maximum of three years. You can qualify based on your income if you are working full-time and your monthly income does not exceed the larger of A) The federal minimum wage rate or B) 150% of the poverty line income for your family size and state. (In 2012, the poverty line for a family of two living in the 48 contiguous states is $15,130). Other eligibility requirements apply.

An economic hardship calculator that will help you determine if you may be eligible is online at: www.finaid.org/calculators/economichardship.phtml.

6. Should we wait until after grace period to get deferment?

Yes. Remember that different types of loans have different grace periods so you will need to track these by loan type. As your grace period is nearing completion, then apply for your deferment or forbearance. Be sure to allow sufficient time for the servicer to process your request. As always, monitor your account to make sure that the deferment or forbearance is in place.

8. I am wondering if I will have six months after I complete my residency where I won't need to make payments and if the interest on my subsidized loans will be taken care of for me?

You do not have a grace period after you complete your residency. The grace period pertains only to the time after you graduate or are enrolled less than half time.

9. When is the deadline for a forbearance for Grad PLUS loans before July 1, 2008?

There is no deadline to apply; what we recommend is that you apply for the forbearance as soon as possible by contacting your servicer. You do not want to have late payments on your credit history. You should explain the situation and ask that the forbearance be granted as of the last date of attendance.

10. I got a bill for $640 for my Grad PLUS due June 12th. Is it too late for a forbearance? Also, would I go into default if unable to pay by tomorrow?

As noted above, we would highly encourage you to contact your servicer immediately and request a forbearance; they can backdate your forbearance and cover your $640 as long as it's not in default.  For servicer contact information, go to www.nslds.ed.gov

11. Are Grad PLUS loans disbursed after July 1, 2008 eligible for a deferment? How are my two Grad PLUS loans disbursed before that date handled?

If you have two loans prior July 1, 2008, those don't have the deferment option; for these, you will need to request a loan forbearance from your servicer. As a reminder, Grad PLUS loans are unsubsidized so these loans will accrue interest whether you have a grace period or forbearance in place.

12. You said only the Grad PLUS disbursements after July 1, 2008 can be deferred for six months. I think the first disbursement for our program was in June of 2008. So, must we begin paying on those loans right away or does the June 2008 disbursement counts as a July 1st disbursement?

Grad PLUS loans are eligible for a six-month deferment as long as the disbursements were after July 1, 2008. If you have loans with a disbursement prior to July 1, 2008, those don't have the grace deferment option; for these, you will need to request a forbearance from your servicer. There is no deadline to apply.

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General Issues

1. Where can we get a copy of our MPN?

If you have misplaced your original MPN, you can get a sample at the USA Funds website www.usafunds.org/forms/stafford_mpn.pdf. The content of the MPN is dictated by the US Department of Education so it is standard; in this case, the Borrowers Rights and Responsibilities are on pages 4 - 7.

2. How can we obtain a copy of the graduation exit PowerPoint presentation for future reference?

A copy of the PowerPoint is typically posted to our website.

3. Will the presentation and links be available after the graduation exit webinar? Also, are we able to schedule an appointment with Midwestern's Financial Aid Office after we graduate?

Yes, the presentation is available - both the PowerPoint and the recorded webinar. A great feature of the webinar recording is the option to go to the exact slide of interest; this should be a valuable reference.

We would be pleased to set up an appointment after you graduate; for Glendale graduates, you can call 623.572.3321 to schedule this or send us an email at azfinaid@midwestern.edu. Graduates of the Downers Grove campus can call 630.515.6101 or contact us by email at ilfinaid@midwestern.edu.

4. Do you have any links/references to financial planners (Chartered Financial Planners - CFP's) in the area?

While we can't recommend any particular certified financial planners, there are some websites that you can go. Two options include:

www.fpanet.org - this is the Financial Planning Association website
www.napfa.org - this is the National Association of Personal Financial Advisors

In both instances if you use Phoenix or Chicago in the search feature you should be able to find locally qualified financial advisors to select from.

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Income-Based Repayment Questions

1. Is there a minimum balance you need to initiate an IBR repayment plan?

No minimum required.  You can get detailed IBR information and calculators to help you determine eligibility at www.ibrinfo.org.  

2. What about my situation of two married graduates from this school? How does this work with IBR? The calculator says that it considers household INCOME but not household DEBT.

Great question! Sallie Mae has advised that there was a "marriage penalty" under the current law; this was eliminated July 1, 2010. To assist borrowers, Sallie Mae is currently enhancing their calculator to accommodate situations like this. After July 1st, using total household income, you can determine student loan payments on a pro-rated basis based upon the total debt. To qualify (and the calculator will borrowers through a decision tree on this), borrowers must be married, file a joint federal tax return and both individuals have eligible debt.

One strong suggestion is to make sure both individuals apply for IBR at the same time so no one is penalized by applying later in the process. The repayment calculator can be accessed at www.salliemae.com. Once on the website, click on "Repaying Student Loans" to be redirected to their calculator.

3. You mentioned for the IBR plan that Subsidized loan plans can continue to be Subsidized. Can you please explain further?

Based upon the factors that are included in the IBR calculation (i.e., debt levels, Adjusted Gross Income, family size and the federal poverty level for your state), your monthly payment may be insufficient to cover the interest charges that accrue on your subsidized loans for that month. If this occurs, the government will pay the difference between your actual interest charges and what you are paying each month. The interest subsidy can be paid for up to three consecutive years from when you enter the IBR plan. Since your IBR payment is recalculated each year, the amount of the subsidy may vary from year to year.

4. IBR is a serious consideration - but how do I know that there won't be changes that nullify the forgiveness and I would have a large sum left to pay indefinitely? Is there a contract I sign that guarantees forgiveness if there is a balance?

The whole student loan program is dictated by federal law and regulations. Every five years the original Higher Education Act of 1965 is "reauthorized." Generally speaking, benefits have been liberalized and expanded for borrowers over the years. While there are no guarantees, the programs have their own constituency with millions of borrowers in repayment. In our opinion, it would be very difficult to rescind or change these benefits once they are in place. There is no contract that guarantees forgiveness.

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Loan Consolidation

1. Can I consolidate Stafford loans with Grad PLUS loans?

Yes you can. We'd suggest going to the Department of Education's website, www.loanconsolidation.ed.gov for full details.

2. The consolidation plan doesn't sound so great, but what I am wondering is, how many different payments should I be expecting to make each month? I have Sub/Unsub/Grad PLUS loans.

Check with your loan servicer. Sometimes they can combine all of your separate loan payments into one payment without consolidating them. A consolidation may be required if you have multiple servicers and want just one loan payment.

3. I consolidated my undergraduate student loans. Will there not be a grace period for these loans upon my graduation from grad school?

Loan Consolidation has many positive benefits; unfortunately, once the consolidation occurs, there is no grace period. but you can request loan forbearance if you're unable to make payments.

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Public Service Loan Forgiveness Program

1. In regards to the Public Service Loan Forgiveness (PSLF), how do I apply? I can't find an application.

There isn't a PSLF application, per se. First you complete a Direct Loan Consolidation and request Income-Based Repayment. Once you receive confirmation of your consolidation, complete the "Employer Certification Form" (ECF) to verify your employer is eligible through the FedLoan Servicer at: http://www.myfedloan.org/manage-account/loan-forgiveness-discharge-programs/public-service-loan-forgiveness.shtml. Your loans will be transferred to FedLoan once they receive your ECF; FedLoan will monitor your loans thereafter for consideration of the PSLF program.

It is very important to keep accurate records as to your public service employment and make sure you do not terminate your public service position until you have official notice that any balance is forgiven.

2. I spoke with the Department of Education yesterday and they told me that all doctors are eligible for the public service loan forgiveness, even working at private hospitals as an attending. Is this true?

You must always verify if the private hospital is an eligible non-profit employer and has a 501 (c) (3) designation from the IRS. The hospital you will be working for can easily answer that question; additionally the IRS has a database you can check, http://www.irs.gov/app/pub-78/, for a listing of eligible employers.

3. There aren't a lot of residency programs at 501(c) (3) institutions. Then your years in residency can count toward public service in the forgiveness plan. Some of us with 6-7 year residencies will only have 3-4 years in a 501 (c) (3) institution to participate.

Indications are that more and more students with high debt levels and lower starting salaries will be examining options combining the attractive lower monthly payments with the IBR Program and the Public Service Loan Forgiveness Program. Qualified employers include federal, state and local government, military service as well as the public service organizations noted above. As suggested, keep meticulous records documenting your employment; another point to remember is that the 120 months need not be consecutive.

Two excellent FAQ documents from the US Department of Education on both the Public Service Loan Forgiveness Program and the Income Based Repayment program are easily accessible on the www.ibrinfo.org website. We think this will be a great website to monitor as the programs evolve.

4. Considering Public Service Loan Forgiveness - do I talk with the consolidating agency to confirm that my employment with Indian Health Services (US Public Health Services) qualifies?

Complete the "Employer Certification Form" to verify your employer is eligible through the FedLoan Servicer at: http://www.myfedloan.org/manage-account/loan-forgiveness-discharge-programs/public-service-loan-forgiveness.shtml

 

Public Service Loan Forgiveness - Qualifying Employment

5. How do I know if my employer is a "public service organization" that is an eligible employer for the PSLF Program?

Complete the "Employer Certification Form" to verify your employer is eligible through the FedLoan Servicer at: http://www.myfedloan.org/manage-account/loan-forgiveness-discharge-programs/public-service-loan-forgiveness.shtml

6. What public (government) employers qualify as eligible employers for the PSLF Program?

Any federal government, state government, local government, or tribal government entity (including the military, public schools and colleges, public child and family services agencies, and special governmental districts) is an eligible employer for the PSLF Program.

7. How many years of service are needed to participate in Public Service Loan Forgiveness Program (i.e., working at a non-profit medical center)? Is it two years or more?

Once you've begun making "income-based" payments on your consolidated loan, you're already participating in the Public Service Loan Forgiveness Program. You first consolidate your loans through the Federal Loan Consolidation program www.loanconsolidation.ed.gov. Then you complete the "Employer Certification Form" at: http://www.myfedloan.org/manage-account/loan-forgiveness-discharge-programs/public-service-loan-forgiveness.shtml. FedLoan Servicer will verify your employer; you begin making your income-based payments; then after 120 eligible payments you may be able to consider applying for forgiveness.

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Repayment Plans

1. When and where can we choose a repayment plan? I have not been able to yet when I contact lenders. When does that become available? They still don't allow it yet.

At the time you graduate, once you're in your grace period, you can choose your repayment plan before your grace period ends. At the time you graduate if you have any loans that do not have a grace period, then choose a payment plan or ask the servicer for a forbearance to give you time to decide on what you want to do. But it all happens after you graduate; lenders or servicers won't put you into a payment plan before you graduate.

2. Can you switch between options? Choose Extended at one time then change it to Income-Based Repayment (IBR) later?

Yes, most repayment options are incredibly flexible, except IBR. Once you're on an IBR repayment plan you must remain on the IBR plan or go to a Standard Repayment Plan.

3. Is there ever a pre-payment penalty on federal loans?

There is no prepayment penalty on ANY federal student loans; if you can pay anything faster, then that is always a huge benefit.

4. For Extended, why does it say >$30k on Stafford - we can still use that plan and consolidate Grad PLUS loans, correct?

Yes, the requirement is that you have at least a balance of $30,000 in FFEL or Direct loans; all of the loans must have been made on or after October 7, 1998.

5. If I borrow Stafford and Grad PLUS loans and I choose not to do anything, does that mean my lender will automatically calculate my repayment amount based on the Standard Plan? Also, do I need to make separate payments for Stafford loans and Grad PLUS loans?

Yes, your servicer, lacking any requests or direction from you, will automatically place you in the Standard 10 Year Repayment Plan.

Regarding payments, ask your servicer if they can offer combined billing which means you would make only one payment for a specified amount; the servicer will then apportion the funds received between the Stafford and Grad PLUS loans.

6. Do we have to make a decision (about repayment) if we are starting school again in the fall?

If you are continuing as at least a half-time student this fall at an eligible school, you do not need to make a decision regarding repayment at this time.

7. When you say we will be automatically enrolled in the Standard 10 year repayment program if we do nothing, is that something that we need to do before our graduation date or will we have time after graduation to take care of it? Am I correct to understand that you can change your repayment option annually? So if we are auto-enrolled into the Standard 10 Year Repayment Plan upon graduation, will we be stuck in that for one year?

You should request repayment plan while in your grace period after graduation.  No, you are not stuck in the Standard 10 Year Repayment Plan for one year. You can change your repayment plan as you need to meet your changing circumstances.

8. I have a lot going on this next year and was thinking that the Graduated Repayment Plan would be a great option to start, since I can save a little more money for my upcoming wedding. Can I do the plan, paying only interest, for just one year instead of two?

Yes, you can switch plans after a year. The Graduated Plan may be your least expensive monthly payment, but you should use the loan calculators or speak with your loan servicer to make sure. It depends on a lot of variables - and if your payments end up higher than you can afford that first year, you can still get one-year forbearance and make interest-only payments during that time on your own. You can always choose a plan for a period of time and later switch if you want a different plan.

9. If I plan to do IBR (Income Based Repayment) and Public Service Loan Forgiveness, what do I have to do with my $24k private loan? Is it consolidated or kept separate from the IBR consolidation loans?

Private student loans cannot be consolidated or included in any of the five repayment plans under the federal student loan program. You will need to contact your private loan lender and arrange for the repayment of this loan separately.

The www.ibrinfo.org website has excellent information on both the IBR and PSLF programs.

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Servicer and Lender Issues

1. Does every lender that bills interest annually offer a chance to pay it before it capitalizes?

Yes, you will get periodic interest statements from your lender, and you can pay interest at that time. It is a good practice to check with the lender as to how frequently you will be billed and insure they have your most current address. Always specify on your check what it's for (interest or principal) unless you are paying with a coupon book.

2. When is the deadline to pay the interest that has accrued until graduation (i.e., Stafford loans) to avoid that interest being added to the loan principal?

It is always best to call your lender and determine their exact policy and payment due dates; lenders may have different rules in terms of due dates, applying payments and interest capitalization. On your unsubsidized loans, interest accrues on a daily basis in school and is added to the principal when your loan enters repayment. To insure that the payment is received on time, it is best to set up a bill payment option with the lender or your bank.

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Tax Benefits

1. Could you talk about the tax deduction benefits of paying down interest during residency? What is the maximum amount of student loan interest that can be deducted each year ($2,500?), and is this advisable to pay for the tax benefit as well?

Up to $2,500 of interest on your student loans may be tax deductible each year. If single and your income is $60,000 or less, the maximum of $2,500 can be deducted; if married, you can utilize the full deduction up to $120,000 of income. The deduction phases out as your income increases; for single borrowers, it phases out at $75,000 and at $150,000 for married borrowers. For full details, go to page 41 of the IRS Publication 970 at http://www.irs.gov/pub/irs-pdf/p970.pdf

Obviously, this tax deduction is valuable while in residency if you can pay the interest. We would suggest you consult your tax advisor or financial consultant to develop a plan to maximize this benefit.

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Tracking Your Loans

1. Is there a website that details your government loans AND your private loans?

Not that we are aware of. The NSLDS data base includes Federal Stafford, Grad Plus and Consolidation loans; unfortunately, it does not include Federal Perkins loans and Primary Care Loans. To follow up on your private loans, you will need to contact each lender and track the details separately.

We have provided a screen shot of what the NSLDS record looks like for one borrower below:

First you get this summary. Click on the #1 on the far left and see the information below for the lender, guarantor and servicer for loan 1:

Loans

Please click on number in first column to see details

 

Type of Loan

Loan Amount

Loan Date

Disbursed Amount

Canceled Amount

Outstanding Principal

Outstanding Interest

1

STAFFORD UNSUBSIDIZED

$8,786

12/10/2008

$8,786

$0

$9,325

$52

2

STAFFORD SUBSIDIZED

$8,500

12/10/2008

$8,500

$0

$8,500

$47

3

STAFFORD SUBSIDIZED

$2,833

04/04/2008

$2,833

$0

$2,824

$15

4

STAFFORD UNSUBSIDIZED

$3,174

04/04/2008

$3,174

$0

$3,523

$19

5

STAFFORD SUBSIDIZED

$5,667

01/10/2008

$5,667

$0

$5,667

$0

6

STAFFORD UNSUBSIDIZED

$6,347

01/10/2008

$6,347

$0

$6,347

$869

7

FFEL CONSOLIDATED

$8,799

07/30/2007

$8,799

$0

$8,831

$344

8

FFEL CONSOLIDATED

$8,076

07/30/2007

$8,076

$0

$8,899

$347

9

FFEL CONSOLIDATED

$56,543

07/17/2007

$56,543

$0

$58,735

$976

10

STAFFORD UNSUBSIDIZED

$1,722

03/28/2006

$1,722

$0

$0

$0

11

STAFFORD SUBSIDIZED

$2,833

03/28/2006

$2,833

$0

$0

$0

12

STAFFORD SUBSIDIZED

$8,500

02/15/2006

$5,667

$2,833

$0

$0

13

STAFFORD UNSUBSIDIZED

$4,568

02/15/2006

$3,046

$1,522

$0

$0

14

FFEL CONSOLIDATED

$53,828

11/03/2005

$53,828

$0

$0

$0

15

STAFFORD SUBSIDIZED

$8,500

06/09/2005

$5,667

$2,833

$0

$0

16

STAFFORD UNSUBSIDIZED

$5,168

06/09/2005

$3,446

$1,722

$0

$0

17

STAFFORD UNSUBSIDIZED

$8,369

06/17/2004

$8,369

$0

$0

$0

18

STAFFORD SUBSIDIZED

$5,561

06/17/2004

$5,561

$0

$0

$0

19

STAFFORD UNSUBSIDIZED

$1,283

03/03/2004

$1,283

$0

$0

$0

20

STAFFORD SUBSIDIZED

$5,666

03/03/2004

$5,666

$0

$0

$0

 

Type of Loan: 1 STAFFORD UNSUBSIDIZED
Loan obtained while attending the XYZ UNIVERSITY
Date Entered Repayment: 03/02/2010
Loan Period Begin Date: 01/12/2009
Loan Period End Date: 09/11/2009

Amounts and Dates 

Loan Amount

Outstanding Principal Balance

Outstanding Principal Balance As of Date

Outstanding Interest Balance

Outstanding Interest Balance As of Date

Interest Rate

Canceled Amount

Canceled Date

$8,786

$9,325

04/26/2010

$52

04/01/2010

VARIABLE

$0

 

Disbursement(s) and Status(es) 

 

Disbursement Date

Disbursement Amount

Loan Status

Status Description

Status Effective Date

 

06/29/2009

$2,928

RP

IN REPAYMENT

03/02/2010

 

04/06/2009

$2,929

IG

IN GRACE PERIOD

09/02/2009

 

01/12/2009

$2,929

IA

LOAN ORIGINATED

12/10/2008

 

 

Servicer/Lender/Guaranty Agency Information 

Contact Type

Contact

Current Servicer:

DEPT OF ED/SALLIE MAE
P.O. BOX 9635
WILKES-BARRE
PA 187739635
800-722-1300
www.salliemae.com

Current Lender:

U.S. DEPT OF ED/2008-2009 LPCP
830 FIRST ST., NE
WASHINGTON
DC 202020000

Current Guaranty Agency:

DEPT OF ED/SALLIE MAE
P.O. BOX 9635
WILKES-BARRE
PA 187739635
800-722-1300
www.salliemae.com

 

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