Your loan responsibilities and repayment
Direct loans - your responsibilities
If you have borrowed a direct loan to study at London Metropolitan University and you graduate, withdraw or cease to attend for any other reason, you must complete exit counselling. Exit counselling is mandatory, and is designed to make you aware of your repayment responsibilities, familiarise you with your loan servicer and provide you with examples of repayment plans. Visit the FSA website to complete counselling.
Repayment of your loan
When you completed your master promissory note (MPN), you agreed to repay all the loan funds paid to you. You are legally obliged to comply with the MPN conditions. Take a look at the video on How to manage your student loans. There are a number of repayment options (See Key terms about your responsibilities below) and you should explore the one that best suits your circumstances. Your loan servicer will be happy to discuss these with you too.
In-school status changes
You must notify London Metropolitan University and your loan servicer or lender of any changes in your status, including withdrawal, graduation, changes to your address, telephone number and email.
Status changes after graduation
You must notify your loan servicer or lender of any changes in your circumstances, including any change of address, telephone number and email.
Remember, you are required to make your student loan payments even if you:
- Do not complete your education
- Are not employed upon completion of your studies
- Do not find employment in your field of study
- Feel that the education you received did not meet your expectations
- Do not receive a bill from your loan servicer
Repayment: key terms about your responsibilities
GRACE PERIOD Each loan has a grace period of six months (excluding graduate PLUS loans). This means that six months from the date you graduate or that you cease to attend, you will be required to begin loan repayments on any current loan and deferred loans. You should receive repayment information from your loan service provider approximately three months after you leave school. If you do not receive this information, it is your responsibility to contact your loan service or lender before the end of your grace period to arrange for the repayment of your loan. Note that PLUS loans do not have a grace period: they enter repayment once you have completed your studies. See the FSA webpages on understanding repayment.
LOAN SERVICER The loan servicer is a company that handles the billing and other services on your federal student loan. Your loan is assigned to a loan servicer by the US Department of Education after your loan amount is first disbursed (paid out) and they will contact you after your first payment. It is important to keep in touch with your loan servicer, and you should contact them if your circumstances change at any time. See the FSA webpages on loan servicers.
REPAYMENT PLANS There are six types of repayment plan and you need to consider which one best suits your circumstances in liason with your loan servicer. Loan repayment options are: (1) Standard (2) Graduate (3) Extended (4) Consolidated (5) Income-driven and (6) Income sensitive. See the FSA information on repayment plans and take a look at the video Repayment - what to expect. Failure to meet scheduled repayments will result in additional charges. These can be avoided by contacting your loan servicer in good time to discuss any changes to your circumstances and repayment options.
DELINQUENT LOAN A loan is delinquent when loan payments are not received by the due dates. A loan remains delinquent until the borrower makes up the missed payment(s) through payment, deferment, or forbearance. If the borrower is unable to make payments, he or she should contact his or her loan servicer to discuss options to keep the loan in good standing. Contacting your loan servicer in good time can help prevent your loans being defined as delinquent and going into default. Default is a serious matter and must be avoided.
DEFAULT To default on your payment means you fail to make your payments on your student loan as scheduled according to the terms of your promissory note, the binding legal document you signed at the time that you took out your loan. If you default on your loan (fail to make payments) and are delinquent there are consequences. Initially a report is made to all the national credit bureaux which will result in an inability to secure other forms of credit including credit cards, cell phone plans, mortgages or other loans. You will also remain ineligible for all other types of financial aid. Your loan servicer will proceed with actions in order to recover defaulted loan funds. Some other serious consequences of default are (1) a damaged credit rating for seven years (2) exclusion of repayment and deferment options listed above (3) defaulted loans are also reported to internal revenue services and can lead to possible seizure of federal or state income tax refunds and wage garnishment (4) exposure to civil suit (5) referral of your account to a collection agency (6) liability for collection costs and attorney’s fees. See the FSA webpages on understanding default.
DEFERMENT If you are in school and you have previous loans in repayment, you must ensure that you have deferred payment on these loans. You should contact your loan servicer to discuss deferment of your loan payments. If you do not defer your previous loan you risk going to into default and becoming ineligible for further direct loan funding. See the FSA webpages on deferment and forbearance.
LOAN CONSOLIDATION Grouping your federal loans together into a consolidation loan may make loan repayment easier. If you consolidate (combine multiple federal loans into one), you will have just a single monthly payment and it will allow you to take advantage of certain benefits that are offered only in the direct loan programme. To learn more about consolidating your previous loans, see the FSA webpages on repayment and consolidation or contact your loan servicer for further advice.