William D. Ford Federal Direct Loan Program
Direct Subsidized Loan and Direct Unsubsidized Loan Borrower’s Rights and Responsibilities Statement
Page 3 of 5
grace period will be delayed until after the end of the
excluded period. If the call or order to active duty occurs
during your grace period, you will receive a full six-month
grace period at the end of the excluded period.
15. Repaying your loan. The repayment period for each
Direct Subsidized Loan and Direct Unsubsidized Loan that
you receive begins on the day after your grace period
ends. The Direct Loan Servicing Center will notify you of
the date your first payment is due.
You must make payments on your loan even if you do not
receive a bill or repayment notice. Billing information is
sent to you as a convenience, and you are obligated to
make payments even if you do not receive a notice or bill.
You may choose one of the following repayment plans to
repay your loan:
• Standard Repayment Plan – Under this plan, you
will make fixed monthly payments and repay your
loan in full within 10 years (not including periods of
deferment or forbearance) from the date the loan
entered repayment. Your payments must be at
least $50 a month and will be more, if necessary, to
repay the loan within the required time period.
• Graduated Repayment Plan – Under this plan, you
will usually make lower payments at first, and your
payments will gradually increase over time. You will
repay your loan in full within 10 years (not including
periods of deferment or forbearance) from the date
the loan entered repayment. No single payment will
be more than three times greater than any other
payment.
• Extended Repayment Plan – Under this plan, you
will repay your loan in full over a period not to
exceed 25 years (not including periods of deferment
or forbearance) from the date the loan entered
repayment. You may choose to make fixed monthly
payments or graduated monthly payments that start
out lower and gradually increase over time. If you
make fixed monthly payments, your payments must
be at least $50 a month and will be more, if
necessary, to repay the loan within the required time
period. You are eligible for this repayment plan only
if (1) you have an outstanding balance on Direct
Loan Program loans that exceeds $30,000, and (2)
you had no outstanding balance on a Direct Loan
Program loan as of October 7, 1998 or on the date
you obtained a Direct Loan Program loan after
October 7, 1998.
• Income Contingent Repayment Plan – Under this
plan, your monthly payment amount will be based
on your annual income (and that of your spouse if
you are married), your family size, and the total
amount of your Direct Loans. Until we obtain the
information needed to calculate your monthly
payment amount, your payment will equal the
amount of interest that has accrued on your loan
unless you request a forbearance. As your income
changes, your payments may change. If you do not
repay your loan after 25 years under this plan, the
unpaid portion will be forgiven. You may have to
pay income tax on any amount forgiven.
• Income-Based Repayment Plan (effective July 1,
2009) – Under this plan, your required monthly
payment amount will be based on your income
during any period when you have a partial financial
hardship. Your monthly payment amount may be
adjusted annually. The maximum repayment period
under this plan may exceed 10 years. If you meet
certain requirements over a specified period of time,
you may qualify for cancellation of any outstanding
balance on your loans.
If you can show to our satisfaction that the terms and
conditions of the above repayment plans are not adequate
to meet your exceptional circumstances, we may provide
you with an alternative repayment plan.
If you do not choose a repayment plan, we will place you
on the Standard Repayment Plan.
The chart at the end of this Borrower’s Rights and
Responsibilities Statement (“Repaying Your Loans”)
allows you to estimate the monthly and total amounts you
would repay under the Standard, Graduated, Extended,
and Income Contingent repayment plans based on various
initial loan amounts.
You may change repayment plans at any time after you
have begun repaying your loan. There is no penalty if you
make loan payments before they are due, or pay more
than the amount due each month.
Except as provided by the Act for payments made under
the Income-Based Repayment Plan, we apply your
payments and prepayments in the following order: (1) late
charges and collection costs first, (2) outstanding interest
second, and (3) outstanding principal last.
When you have repaid a loan in full, the Direct Loan
Servicing Center will send you a notice telling you that you
have paid off your loan. You should keep this notice in a
safe place.
16. Late charges and collection costs.
If you do not
make any part of a payment within 30 days after it is due,
we may require you to pay a late charge. This charge will
not be more than six cents for each dollar of each late
payment. If you do not make payments as scheduled, we
may also require you to pay other charges and fees
involved in collecting your loan.
17. Demand for immediate repayment. The entire
unpaid amount of your loan becomes due and payable (on
your MPN this is called “acceleration”) if you:
• Receive loan money, but do not enroll at least half-
time at the school that determined you were eligible
to receive the loan;
• Use your loan money to pay for anything other than
expenses related to your education at the school
that determined you were eligible to receive the
loan;
• Make a false statement that causes you to receive a
loan that you are not eligible to receive; or
• Default on your loan.
18. Defaulting on your loan. Default (failing to repay
your loan) is defined in detail in the Terms and Conditions
section of your MPN. If you default:
• We will require you to immediately repay the entire
unpaid amount of your loan.
• We may sue you, take all or part of your federal and
state tax refunds and other federal or state
payments, and/or garnish your wages so that your
employer is required to send us part of your salary
to pay off your loan.
• We will require you to pay reasonable collection
fees and costs, plus court costs and attorney fees.
• You may be denied a professional license.
• You will lose eligibility for other federal student aid
and assistance under most federal benefit
programs.
• You will lose eligibility for loan deferments.
• We will report your default to national credit bureaus
(see #19, “Credit bureau notification”).
19. Credit bureau notification. We will report
information about your loan to one or more national credit
bureaus. This information will include the disbursement
dates, amount, and repayment status of your loan (for
example, whether you are current or delinquent in making
payments).
If you default on a loan, we will also report this to national
credit bureaus. We will notify you at least 30 days in
advance that we plan to report default information to a
credit bureau unless you resume making payments on the
loan within 30 days. You will be given a chance to ask for
a review of the debt before we report it.
If a credit bureau contacts us regarding objections you
have raised about the accuracy or completeness of any
information we have reported, we are required to provide
the credit bureau with a prompt response.
20. Deferment and forbearance (postponing
payments)
If you meet certain requirements, you may receive a
deferment that allows you to temporarily stop making
payments on your loan. If you cannot make your
scheduled loan payments, but do not qualify for a
deferment, we may give you a forbearance. A
forbearance allows you to temporarily stop making
payments on your loan, temporarily make smaller
payments, or extend the time for making payments.
Deferment
You may receive a deferment while you are:
• Enrolled at least half-time at an eligible school;
• In a full-time course of study in a graduate
fellowship program;
• In an approved full-time rehabilitation program for
individuals with disabilities;
• Unemployed (for a maximum of three years; you
must be diligently seeking, but unable to find, full-
time employment); or
• Experiencing an economic hardship (including
Peace Corps service), as determined under the Act
(for a maximum of three years).
• Serving on active duty during a war or other military
operation or national emergency or performing
qualifying National Guard duty during a war or other
military operation or national emergency and, if you
were serving on or after October 1, 2007, for the
180-day period following the demobilization date for
your qualifying service.
Effective October 1, 2007, if you are a member of the
National Guard or other reserve component of the U.S.
Armed forces (current or retired) and you are called or
ordered to active duty while you are enrolled at an eligible
school or within 6 months of having been enrolled, you are
also eligible for a deferment during the 13 months
following the conclusion of your active duty service, or until
you return to enrolled student status, whichever is earlier.
You may be eligible to receive additional deferments if, at
the time you received your first Direct Loan, you had an
outstanding balance on a loan made under the Federal
Family Education Loan (FFEL) Program before July 1,
1993. If you meet this requirement, you may receive a
deferment while you are:
• Temporarily totally disabled, or unable to work
because you are required to care for a spouse or
dependent who is disabled (for a maximum of three
years);
• On active duty in the U.S. Armed Forces, on active
duty in the National Oceanic and Atmospheric
Administration (NOAA), or serving full-time as an
officer in the Commissioned Corps of the Public
Health Service (for a combined maximum of three
years);
• Serving in the Peace Corps (for a maximum of three
years);
• A full-time paid volunteer for a tax-exempt
organization or an ACTION program (for a
maximum of three years);
• In a medical internship or residency program (for a
maximum of two years);