91´ÎÔª

Common Questions About Student Loan Repayment

• Do I have to pay loans back while I am in school?

  As long as you are enrolled at least half-time as a student (UM students: that means you need to be taking at least six credits per semester), your loan will be in a status called "In-School Deferment." This means you will not have to make payments on your loans while taking classes.  

  Even while you are in In-School Deferment, interest will still be accumulating on some of your loans. If you have a Subsidized Loan, the Department of Education will pay for the interest for you while you are attending school at least half-time. Perkins loans will also not accrue interest while you are taking at least six credits per semester. If you have any other type of loan, you are responsible for the interest that accrues while you are in school. You do not have to make payments toward that interest while in school but you can choose to to do so, if you wish. 

• Is there a penalty for paying toward my loans even if I have an in-school deferment?

  There is no penalty for paying toward your loans while you are a student!  

  We encourage students to start paying toward their loans while they are still in school. Even $5 a month can make a difference!  

  A $2,000 unsubsidized loan earns about $9 in interest a month. By putting that amount toward your loans, you can pay off your monthly interest on a loan!

• My loan servicer is requesting an Enrollment Verification Certificate. How do I obtain that?

  Occasionally, students will need to obtain an Enrollment Verification Certificate in order to prove their enrollment status to loan servicer. This information is housed in the National Student Clearing House, which is a verification and reporting organization.  

  UM students can get an Enrollment Verification Certificate thru National Student Clearinghouse by going to their GrizPortal account. The Registrar's Office provides additional instructions on Enrollment Verification.

• When do I start repaying my loans?

  If your academic credit load drops below half-time (six credits a semester for UM students), the grace period on your loans will start. For Subsidized, Unsubsidized and PLUS loans the mandatory grace period is six months. For Perkins Loans, the mandatory grace period is nine months. 

  Once your grace period is over, you will be in repayment on your loans. At this point, you need to contact your servicer, as they initiate your repayment process. 

• When I begin loan repayment, who do I pay?

  For federal student loans, the government has contracts with loan servicers to handle billing, repayment plans and customer service. To find your student loan servicer, start by logging in to with your FSA ID. Your dashboard will list all federal loans and the company that manages them. If you don’t see your loans there, check your credit report for lender or servicer names, especially for private loans. You can also review recent billing statements or emails, or contact Student Financial Services for help tracking down who services your loans.

  For Perkins Loan related questions, contact UM Perkins Loan Representative:

  • Joneal Szwedkowicz
  • Phone: (406) 243-5593
  • joneal.szwedkowicz@mso.umt.edu 
• How do I repay my loans?

  The good news is you have a lot of repayment options for your federal student loans and you can switch your repayment plan at any time. Below you will find a basic outline of each plan; apply for each plan.

  *Keep in mind that Perkins Loans do not have these repayment options.  

  Standard Repayment Plan: Payments are a fixed amount of at least $50 per month and the loan is paid off in 10 years.

  Graduated Repayment Plan: Payments are smaller at first and then increase gradually, usually every two years, and the loan is paid off in 10 years.

  Extended Standard Repayment Plan: Requires a principal balance totaling at least $30,000. Payments are a fixed amount and the loan is paid off in 25 years.

  Extended Graduated Repayment Plan: Requires a principal balance totaling at least $30,000. Payments are smaller at first and then increase gradually, usually every 2-4 years, and the loan is paid off in 25 years.

  Revised Pay As You Earn (REPAYE) Repayment Plan: Your maximum monthly payments will be 10 percent of discretionary income (the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence). Other conditions apply.

  Pay As You Earn (PAYE) Repayment Plan: Your maximum monthly payments will be 10 percent of discretionary income (the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence). Other conditions apply.

  Income-Based Repayment (IBR) Plan: Your maximum monthly payments will be 15 percent of your discretionary income (the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence). Other conditions apply.

  Income-Based Repayment (IBR) Plan for New Borrowers: Your maximum monthly payments will be 10 percent of your discretionary income (the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence). You're considered a new borrower on or after July 1, 2014, if you had no outstanding balance on a Direct Loan or FFEL loan when you received a Direct Loan on or after July 1, 2014. Other conditions apply.

  Income-Contingent Repayment (ICR) Plan: Payments are the lesser of 20 percent of your discretionary income (the difference between your adjusted gross income and 150 percent of the poverty guideline for your family size and state of residence) or what you would pay under a 12-year standard plan, whichever is greater. Other conditions apply.

  Income-Sensitive Repayment Plan: Your monthly payment is based on annual income, but will never drop below monthly interest accrual. Available for FFEL loans only.

   for all repayment plans you are eligible for. .  

  If you wish to change your repayment plan to one of the Income Driven Repayment Plans, log into and click "Apply/Re-Certify/Change an Income-Driven Repayment Plan." You will need your in order to log in; if you are married your spouse will need an FSA ID as well.

• What if I can't make my payment?

  If you cannot make your current payment, consider these options:

  • Switching to another repayment plan with a lower minimum payment 
  • Requesting a deferment
  • Requesting a forbearance

  What is a deferment?

  A deferment is a period during which repayment of your loan is temporarily delayed. During a deferment, the federal government will pay the interest on your Perkins and Subsidized loans; you will be responsible for any interest accrued from Unsubsidized or PLUS loans.  Contact your servicer if you need a deferment for your student loans. 

  What is a forbearance?  

  A forbearance is a period during which repayment of your loan is temporarily reduced or delayed. But unlike deferment, you are responsible for all the interest that accrues on your loans. This means that deferment is a better option than forbearance! If you have to take a forbearance, contact your servicer.   

  If you do not make any payments on your loans they can go into Default.

  A federal student loan enter default when your last payment is over 270 days (that's nine months) late.  

  The penalties that come along with default are pretty severe:

  • Collections costs are added at 24% on the principle and interest of your loan
  • The federal government will take 15% of your paycheck as a wage garnishment 
  • Even if you receive Social Security, those will be garnished at 15% as well.
  • You will not receive a federal and state tax refund while your loans are in default
  • All of this information goes on your Credit Report

  So clearly Default is a place we do not want to be!
  
  

  Loan Rehabilitation

  If you do happen to be in default, there are certainly ways to get out. You can rehabilitate your loans through the collections agency that holds your loans.  

  • For Federal Direct Loans: The  of the Department of Education can tell you which collections agency has your loans. They can be contacted at (800) 621-3115
  • For Loans Serviced by Aspire: These loans were guaranteed by the state of Montana (instead of the federal government as they now are). Aspire can be contacted at: (800) 243-7552

  Working with your agency can rehabilitate your loans and get back into repayment a process which can take nine months. After rehabilitation, the collections fee drops from 24 percent to 16 percent and the information is dropped from your credit report, making loan rehabilitation a worthwhile process to go through.

• What is student loan consolidation?

  Many people think they have to consolidate their loans after leaving college. This is not true. Don't consolidate to save money, it doesn't work that way.

  Borrowers should actually be very careful when consolidating as consolidation never saves you money, it actually costs you more in the long run. When you consolidate federal loans, the interest rate of your new loan is a weighted average of the interest rates you already have with that average rounded up to the nearest 1/8 th of a percent. Also, the consolidation will buy out both the principle and interest of the loan as principle for the new loan. Between the rounded-up interest rate and this capitalization of your interest, consolidation always costs the borrower more in the long run. 

  There are some instances in which you might benefit from consolidation:

  1. Borrowers receive one bill per servicer, not one bill per loan. If you have multiple loan servicers (find out through ) a consolation can bring you down to one servicer a.k.a. one bill per month.
  2. If you need to have access to a longer repayment term than the 25-year term you have in the Extended Standard Repayment Plan, a consolidation can give you a 30-year term. However, we rarely advise you take this route as the interest costs over a 30-year term are very high.
  3. If you have non-Direct loans but want to be eligible for Public Service Loan Forgiveness (PSLF), you will need to consolidate those non-Direct loans to make them eligible for PSLF. Be very careful when doing a consolidation for PSLF; you want to make sure you are consolidating only your non-Direct loans. If you consolidate a loan that is already Direct, you may loose previously qualifying months toward PSLF.  

  If you decide that you would benefit from consolidation by one of the three reasons listed above, you can consolidate . Log in with your and click "Complete a Consolidation Loan Application and Promissory Note."

• What kind of student loan forgiveness programs are there?

  Public Service Loan Forgiveness (PSLF)

  After 10 years (120 months) of full-time employment with a government entity or nonprofit while making full, on-time payments on a qualifying repayment plan, you may qualify to have the remaining balance of your loans forgiven.

  There are several other qualifiers that have to be meet in order to be eligible for this type of loan forgiveness such as having only Direct Loans, having Mohela as your servicer and having a specific type of repayment plan. .  

   This form (which is submitted to Mohela) will certify that your employer does in fact qualify your loans for the PSLF program. Using the will fill out the PSLF form electronically and give you the option to have your form electronically sign by you and your employer. If you elect to have your form electronically signed by your employer, your PSLF form will be sent to your employer through . Mentioning to our employer to expect an email from DocuSign will help them watch for it. 91´ÎÔª employees can have their forms sent to askHR@mso.umt.edu.

  Mohela will then tell you how many qualifying months you have and how many months you have left to complete. Note that this is NOT an application for loan forgiveness; it just certifies that you will qualify for PSLF and verifies how many qualifying months you currently have. Once you have accrued 120 qualifying payments, you will need to complete and submit the in order to receive forgiveness of your federal student loans.  

  If you would like assistance with PSLF or have questions about the process, please schedule an appointment with Student Financial Services.

  **UPDATE**  On May 23, 2018 the Department of Education released information about a "fix", called Temporary Expanded Public Service Loan Forgiveness (TEPSLF). Congress created TEPSLF to assist borrowers who had their PSLF application denied because they did not make all 120 payments on the correct repayment plan. .   

  Teacher Loan Forgiveness 

  The federal government has loan forgiveness for up to a total of $17,500 on Subsidized and Unsubsidized loans for individuals who teach full-time for five consecutive years at a school that serves low-income families and meets other qualifications.  Check that website to see if you a eligible for this forgiveness.

  Note that for most teachers, this program does not cover a substantial amount of their loans and thus many choose to use PSLF instead of Teacher Loan Forgiveness.  

  VA Student Loan Repayment Program

  The Department of Veterans Affairs has loan forgiveness of up to $10,000 per year, with a lifetime maximum of $60,000, to help employees repay their student loans. Any VA employee is eligible, except those occupying a position excepted from the competitive civil service. An employee receiving this benefit must sign a service agreement to remain in the service of the VA for a period of at least three years. .  

  National Health Service Corps Loan Repayment Program 

  This loan repayment program helps licensed primary care clinicians in eligible disciplines have the opportunity to receive loan repayment assistance through the NHSC Loan Repayment Program (NHSC LRP). In exchange for loan repayment, clinicians serve at least two years of service at an NHSC-approved site in a designated Health Professional Shortage Area (HPSA). NHCS Loan Repayment funds are exempt from federal income and employment taxes, see the .

  Who is eligible? Those in the medical, dental, behavioral health, social work, therapy and counseling service industries. .

  Service Options/Award Amounts (For more information )

  1. 2 Year Full-Time Clinical Practice
     1. HPSA scores of 14 or higher, up to $75,000
     2. HPSA scores of 13 or lower, up to $50,000
  2. 2 Year Half-Time Clinical Practice
     1. HPSA score of 14 or higher, up to $37,500
     2. HPSA scores of 13 or lower, up to $25,000

  Note that half-time practice is not available to those serving under the Private Practice Option. See "Practice Types" in the .

   

  1. U.S. Citizen
  2. Provider in the Medicare, Medicaid, and Children’s Health Insurance Programs
  3. Licensed, Certificate or Registered
  4. Eligible for federal employment
  5. Submit a complete application before deadline, for more information 

  Priority can be given to applicants who are:

  1. Current/Former NHSC Scholarship Awardees
  2. Likely to remain in a HPSA plus Disadvantaged Background in HPSA

   Applicants who have a history of not honoring prior federal legal obligations will not be selected. 

  Note: A credit check will be performed as part of the application review process.

  What happens after you apply (For more information )

  1. Review your application status through the  
  2. Learn how NHSC  
  3. Complete your acceptance if you are an Award Finalists. For more information 
  4. Know your contract and service obligations. For more information 

  For additional questions, contact the Bureau of Health Workforce (BHW) at (800) 221-9393 and Select Option #1 and review the 

  Nurse Corps Loan Repayment Program

  The purpose of the Nurse Corps Loan Repayment Program (LRP) is to provide loan repayment assistance to professional registered nurses (RNs), including advanced practice nurses (APRNs), in return for a commitment to work at eligible health care facilities with a critical shortage of nurses or serve as nurse faculty in eligible schools of nursing.

  Who is eligible? The Nurse Corps LRP offers RNs and APRNs substantial financial assistance to repay a portion of their qualifying educational loans in exchange for full-time service either at a Critical Shortage Facility or an eligible school of nursing. .

  Benefits of the Nurse Corps LRP (For more information )

  1. Fulfill your passion to care for underserved people in some of the neediest communities across the country.
  2. Loan Repayment - funds are provided to participants to repay a portion of their outstanding qualifying educational loans
     1. 60% of Total Qualifying Nursing Educational Loan Balance - for initial two-year service commitment (30% for each year)
     2. Additional 25% of Total Qualifying Nursing Educational Loan Balance- for an optional third year of service

  For information on the following characteristics of the Nurse Corps Loan Repayment Program, see the .

  Perkins Loans

  Perkins Loans are eligible for cancellation depending on they type of employment you have. A certain percentage of your Perkins Loans can be canceled for each year of service you complete in a variety of employment areas including but not limited to:

  • Volunteer in the Peace Corps or ACTION program (including VISTA)
  • Teacher
  • Member of the U.S. armed forces (serving in area of hostilities)
  • Nurse or medical technician
  • Law enforcement or corrections officer
  • Head Start worker
  • Child or family services worker
  • Professional provider of early intervention services

   Since Perkins Loans are issued by the University you attend, you must contact your campus to request Perkins Loan cancellation. For Perkins Loans issued by the 91´ÎÔª, contact Joneal Szwedkowicz by email or call 406-243-5593.   

  Repayment Plans that Contain Loan Discharge

  Many of the Income-Driven Repayment Plans contain loan discharge however **in these cases you may be taxed on the discharged portion as income.** Be aware that you could see a significant increase in that year's income tax if you have a large amount of loans discharged from one of these plans! Because of this fact, we do not advise that borrowers use this as a long-term solution for their debt.

  (for those who are NOT new borrowers* on or after July 1, 2014)

  If you have not repaid your loan in full after making the equivalent of 25 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven and you may have to pay income tax on that amount.

  (for those who are new borrowers* on or after July 1, 2014)

  If you have not repaid your loan in full after making the equivalent of 20 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven and you may have to pay income tax on that amount.

  If you only have eligible loans that you received for undergraduate study, any remaining balance is forgiven after 20 years of qualifying repayment. If you have any eligible loans that you received for graduate or professional study, any remaining balance is forgiven after 25 years of qualifying repayment on all of your loans. Forgiveness may be taxable.

  If you have not repaid your loan in full after making the equivalent of 20 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven and you may have to pay income tax on that amount.

  If you have not repaid your loan in full after making the equivalent of 25 years of qualifying monthly payments, any outstanding balance on your loan will be forgiven and you may have to pay income tax on that amount.

  *For the IBR Plan, you are a new borrower on or after July 1, 2014, if you had no outstanding balance on a William D. Ford Federal Direct Loan (Direct Loan) Program Loan or Federal Family Education Loan (FFEL) Program Loan when you received a Direct Loan on or after July 1, 2014. (Because no new FFEL Program loans have been made since June 30, 2010, only Direct Loan borrowers may qualify as new borrowers on or after July 1, 2014.) 

• Beware of student loan repayment scams

  There are several types of student loans scams that you should avoid. Some common scams are:

  Third-Party Corporations

  These corporations repeatedly contact borrowers about "services" they can offer on behalf of the borrower. They typically require maintenance fees in addition to the loan payment in order to "consolidate" your loans, "manage repayment," etc. Some cases we have seen even had borrowers erroneously sign over Power of Attorney to the company in order to "maintain" their student loans.

  You do not have to pay anyone to do a consolidation, repayment plan change or loan rehabilitation for you! There are no additional fees for any of these procedures. You have worked hard for the money you have and any money spent on your student loans should go to your student loans. You do not need any other company to work for you in order to successfully pay off your student loans; always work directly with your servicer to see what options you have available.   

  Loan Consolidation Scams

  Recent graduates are being hit with student loan consolidation scams promising to consolidate their loans for a fee (processing fee, administrative fee, consolidation fee, etc.). Some scams will tell you it lowers your minimum monthly payment. These companies will take your money and either do nothing, or they will move your federal student loans into a private loan (losing all the consumer protection benefits that come with federal loans).

  Loan consolidation is when several loans are lumped into one loan so the borrower has one payment to make instead of many. This can be a good option for some borrowers. However, you should never pay money to have your student loans consolidated. And consolidation just puts all of your loans into one place, it won't lower your balance or interest rate.

  If you choose to consolidate, do so through the official . It is free and takes only 30 minutes. 

  Refinancing Fee Scams

  This scam involves a company approaching borrowers and saying that they will negotiate on your behalf with your servicer in order to get you a better interest rate on your student loans. They will show you cases where other clients have saved thousands of dollars by working with them. They will as for a fee in exchange for these services.

  This is a scam not only because real lenders will not charge fees up front (they will instead take a fee when they close the loan, typically from the loan amount), but because you cannot refinance your federal student loans. Currently, there is no way to change the interest rate on your student loans (other than loan consolidation, see above) and the only way that could change is if Congress passes a law allowing borrowers to refinance their loans. 

  Loan Elimination Scams

  These scams involve a company contacting you saying that, for a fee, they can negotiate the settlement of your student loans (that is, paying a lump sum of money that is less than the amount you owe, usually pennies on the dollar). They will take your money and nothing will change with your loans, because settlement is not an option with federal student loans.

  Your federal student loans are a contract between you and the federal government. There are only three ways to get rid of your student loans: the borrower pays them off (or some combination of payment with loan forgiveness); the borrower becomes totally and permanently disabled; or the borrower pass away. You cannot negotiate the terms of the loan because they are set in federal law.