UNDERSTANDING THE LIFE CYCLE OF A LOAN WILL HELP YOU IN THE LONG RUN WHEN MAKING DECISIONS ABOUT YOUR STUDENT LOANS. VIEW THE SIX STAGES OF A LOAN'S LIFE CYCLE SO YOU MAY UNDERSTAND HOW THEY WORK.
#1. YOU TAKE OUT LOANS
The U.S. Department of Education
Processes the FAFSA and you sign your Master Promissary Note
The Department then notifies each school listed on your FAFSA so the school can determine how much aid you could receive. Once you are accepted, you will receive an award letter from that school.
This letter details the types and amounts of student aid the school is offering you.
#2. LOAN FUNDS ARRIVE AT YOUR SCHOOL AND YOU'RE ASSIGNED A SERVICER
The Department Assigns You A Servicer
You receive the money to help you during your time in college. Even though you don't have to start paying immediately, you are still assigned a servicer.
#3 YOU'RE IN SCHOOL SO NO PAYMENTS ARE REQUIRED
Interest & Unsubsidized Loans
If you have an unsubsidized loan or lose subsidy on your subsidized loan, you are responsible for the interest. If you can, paying the interest while in school could save you money over the life of your loan.
Learn all you need to know about the benefits
of paying interest!
YOU GRADUATE AND ENTER YOUR GRACE PERIOD
Once you leave school or drop below half-time enrollment, you enter a six-month grace period where you are not required to make any payments. However, if you are able to make payments, we encourage that you at least make payments towards any interest that you are responsible for. It's also a good time to prepare for when your loans enter repayment.
YOU ENTER YOUR REPAYMENT PERIOD
Your student loan servicer will send you your bill about 20 days before your due date so you have enough time to prepare.
You can change your repayment plan to an option that better meets your needs at any time.But keep in mind, serious consequences can happen if you miss payments or don't pay.
YOUR LOANS ARE PAID IN FULL
You send in your last payment
After your account has a zero balance, your student loan servicer will send you a Paid In Full letter for your records.