Loans are a form of financial aid that must be paid back with interest. Student loans can come from the federal government, private banks or other organizations. Before you decide to take out a loan, make sure you understand who is offering the loan and what the terms and conditions are.
Federal Direct Loans
The University of Central Florida participates in the Federal Direct Loan Program. Under the Direct Loan Program, all funding comes directly from the U.S. Department of Education rather than a bank or financial institution. The U.S. Department of Education will be the one source for lending and repayment.
Direct Loans are low-interest educational loans administered through the U.S. Department of Education, which consist of the following:
Optional or Private Loans can vary in terms, conditions and eligibility requirements. For these reasons, Optional Loans should be considered as a last resort for educational purposes after all other federal aid options have been exhausted.
How much should I borrow so that I know I can afford to pay it back?
Planning ahead is essential to managing debt. If you plan to borrow each year you are in school, estimate the total amount you will borrow. Then use a sample loan repayment estimator to estimate how much you will have to pay each month. Then decide how much to borrow, you can use the criteria lenders use when they consider an applicant’s ability to repay.
The total monthly payment for all debts should not exceed 8% of your gross monthly salary.
Should I consolidate my loans? If I borrowed from more than one loan program, may I consolidate my payments? How and when can I apply to consolidate? Which loans can be consolidated?
What if my educational or career plans change, or something happens after I’m out of school and working?
A change in career goals, the loss of a job, or other unexpected changes in your situation could make repaying your loan more difficult than you expected. In some cases, and at the lender’s option, you may be permitted to temporarily stop making your payments, or your lender may accept smaller payments than scheduled. This is called a forbearance. In addition, for some loans, you may defer repayments temporarily which may help. The promissory note outlines the specific terms under which you may be granted a deferment. Contact your loan servicer if you think you may need to make arrangements. To view your servicer’s contact information, please visit the National Student Loan Data System (NSLDS).
Where can I find information about the interest rates for Federal Direct Loans?
The Federal Government sets the interest rate July 1st of each year.
The interest rates are the same for Stafford Loans in the Federal Direct Loan Program and FFELP, but the Direct Loan Program offers lower interest rates in the PLUS and Grad PLUS programs.
For interest rates, please visit the Loan Comparison Chart or select a specific loan program to view.
Where can I go to see my loan history?
What happens if I don’t pay back my loan?
Not paying back your student loan can have serious consequences. If you go into default your lender can require you to repay the entire amount immediately, including all interest plus collection and late payment charges. The lender can sue you and can ask the federal government for help in collecting from you. The Internal Revenue Service may withhold your income tax refund and apply it toward your loan. You cannot receive any additional federal student aid until you make satisfactory arrangements to repay your loan. Your grades and official transcripts will be held until you resolve the default status. Also, the lender may notify credit bureaus of your default. This may affect your credit rating which will make it difficult to obtain credit cards and car loans in the future.
How to View Your Loan History
The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s secure central database for student aid, where students can view:
- Federal student loan history
- Summary of Disbursed Federal Student Loans
- Total amount borrowed
- Contact Information of Lenders and Loan Servicers
It is the student’s responsibility to keep track of all federal student loans borrowed using NSLDS, including Federal Stafford, Perkins, PLUS and Grad PLUS loans. Optional/Private loan history is not stored on NSLDS.
In order to log on to the NSLDS website, students will need to provide the Social Security number (SSN), the first two letters of the last name, the date of birth, and the PIN. Students who do not remember their PIN may request a duplicate from the official PIN site.