Welcome to the “Educational Loans” section of our Website, and join us for an overview of one topic that most college students have to consider while financing their education.  An educational loan is one of the most valuable resources for students and parents, and it has been since it was first introduced into federal legislation to the Congress of the United States in the late 1950’s, in response to the launch of  “Sputnick.”

Educational loans were developed specifically for college students and parents and are repayable at competitively low interest rates.  They are simple to apply for (via the FAFSA), are readily available, and generally offer a variety of repayment options.  The majority of loans that are based on financial need, the subsidized ones, require no repayment of principle or payment of interest while the student is in school, as long as he/she is attending at least half-time (generally six credits per term).  Unsubsidized loans require quarterly interest payments (not principle) while the student is in attendance.  The principle on both a type of loans become repayable after a grace period, generally after the student graduates or enrolls for less than six credits per term. 

For college students and parents, the two largest educational loan programs are the William D. Ford Federal Direct Student Loan Program, and the Federal Family Educational Loan Program (FFELP).  Long Island University offers loans through the Federal Direct Student Loan Program, and also offers loans through the Federal Perkins Student Loan and for pharmacy majors, the Health Professions Student Loan Programs.  The federal government guarantees all of these loans, and most are based on demonstrated financial need.

To help our students and parents become informed borrowers, we offer the following information on the educational programs.  We have provided information that we hope will explain loan borrowing from the application process through the repayment process, and hope that we can help families make the best loan choices for their student. This and additional information is also available in our publication “Financial Aid Guide” which is sent to all students with their award notices each year.

Repaying Educational Loans:

As students enter the repayment phase of their educational loans, there are several options available to them.  Loan repayment may be “delayed” and this is termed “deferment” and there are many options for this status.  Once the repayment phase begins, there are many loan repayment options available for students and www.dl.ed.gov is an excellent source of information.    

Grace Period:

The repayment phase of loan borrowing begins with the grace period which, for most loans, is six-months after graduation, termination of studies, or enrollment for less than six credits. Once the grade period is over, the student is expected to select a repayment plan with the federal government or the lender who issued the loan.    

Changing Schools or Returning to School Before the End of The Grace Period:

If a student decides to transfer from one school to the next, or “stop” out for a while and return in another term, before the grace period ends, the student’s federal loans can revert to a “in-school” status, and repayment will be delayed until six months after the student graduates, leaves school, or drops below half-time enrollment.
To request an in-school deferment, a student must notify the holder of the loan(s) if he/she plans to transfer, or will be enrolled for less than 6 credits.  The student should complete the borrower’s section of the deferment form, and submit it to the their school’s Registrar’s Office.  They will send enrollment information to the Loan Servicing Center (or guarantee agency for the Federal Family Educational Loan Program [FFELP] loans). The Servicing Center will send the student an acknowledgement that the form was received and that the loans are still in an in-school status.

Returning to School After The Grace Period Has Ended:

If a student returns to school as a half-time student after a six-month grace period has ended, and federal loans have entered repayment, he/she may qualify for a deferment. Follow the directions above under “Changing Schools or Returning to School.”

For an on-line deferment form, click here: www.dlservicer.ed.gov, or request one from the lender. After the form is completed by the student, it should be submitted to the Registrar’s office.

Remember that no school will certify a deferment form until a student has been enrolled for a few weeks.  Therefore, students may receive notices from their lenders(s) about payments that are due, and should advise them that they are back in school.  Students should continue to make payments until the deferment is processed.  Accounts are updated daily by the Loan Service Centers, and students will be notified by mail once the deferment form is received.

Students should always check with their lender to confirm receipt of the deferment form, and the fact that their loan account is in good standing.  Also, if there is a change of address, this is a good time to update the lender.

Deferments:

Deferments are for periods of time during which a student doesn’t have to repay loans.  During deferments of subsidized loans, principal payments are postponed, and interest is not charged.  For unsubsidized loans, principal payments are postponed, but interest is charged during the deferment period.  You may qualify for a deferment if any of the following conditions exist and you are:

• Pursuing at least half-time studies at an eligible school;
• Conscientiously seeking but are unable to find full-time employment (for up to three years);
• Experiencing economic hardship (for up to three years);
• In a graduate fellowship program approved by the U.S. Department of Education;
• In a rehabilitation training program for individuals with disabilities, approved by the U.S. Department of Education

If a student also has an outstanding balance on a Federal Stafford Loan, Guaranteed Student Loan (GSL), Federal Insured Student Loan (FISL), Federal PLUS Loan, Federal Supplemental Loans for Students (SLS), Auxiliary Loans to Assist Students (ALAS), or Federal Consolidation Loan (borrowed before July 1, 1993), he/she can also apply for deferment benefits if the following conditions are met:
                       

• Teaching full-time in a public or nonprofit private elementary or secondary school in                                             an area the U.S. Department of Education has determined to be a teacher shortage                                            area (for up to three years);
• A mother of a pre-school age child and you have entered or re-entered the workforce within the preceding year in a full-time position at a salary not more  than $1 above the minimum wage (for up to one year);
• Pregnant and/or are caring for your newborn or adopted child (for up to six months).  You must be unemployed, must not be a student, and must apply within six months after you leave school or drop below half-time status;
• “Temporarily totally disabled” according to the certification of a qualified physician, or while you are unable to work because you must care for a spouse or other dependent who is temporarily totally disabled (for up to three years);
• Serving in an internship or residency required to begin professional practice (for up to two years);
• Serving in the U.S. Armed forces, in Commissioned Corps of the Public Health Service, or in the Peace Corps (for up to three years);
• Serving in the National Oceanic and Atmospheric Administration Corps (for up to three years);
• Serving as a full-time paid volunteer for the ACTION programs, or any approved tax exempt organization (for up to three years)

In order to receive a deferment for a Federal Direct Student Loan, a student must do the following:

• Download a deferment form at www.dlservicer.ed.gov at the Loan Servicing Center                            
• Complete the form with all required documentation (this may require school certification of                                     enrollment by the Registrar’s Office). 
• Return it promptly to the Loan Servicing Center.

Forbearance:

Forbearance is a temporary postponement or reduction of loan payments mainly related to financial or medical reasons.  You may qualify if you are:

1. Obligated to make loan payments on federal student loans that are equal to or greater than 20 percent of your total monthly gross income (for up to three years);
2. Unable to make loan payments due to poor health or other acceptable reasons, and you do not meet a deferment condition;
3. Serving in a medical or dental internship or residency;
4. Serving in a position under the National and Community Service Trust Act of 1993

Cancellation of Loans:

Under severe circumstances, a loan may be totally cancelled and the debt absolved.  For example:

1. Total and permanent disability (this cannot be for a condition that existed at the time you applied for Direct Loans/FFELP Loans, unless a doctor certifies that the condition substantially deteriorated after the loans were made);
2. Bankruptcy (in certain cases); or
3. Death of the borrower.

You are still obligated to repay your loans even if you:

• Did not complete the program of study at the school (for reasons other than school closure or false certification of loan eligibility);
• Did not like school or the program of study;
• Did not obtain employment after completing the program of study.