Federal Student Loan Consulting
  • STUDENT LOANS 101

Student Loans 101 /
The Life Cycle Of Student Loans
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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 

(The Department) 

Processes the FAFSA and you sign your Master Promissary Note 

(MPN)


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.


What If The School Received Too Much Money?

There are times when you may qualify for more money in student loans than what is actually needed for school. If this happens, you are still required to return the money, based on the terms of your agreement. 

#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.