Loan Repayment Question and Answers
The subsidized loan's outstanding interest is covered by the federal government while...
Explanation:
The federal government covers the interest on federally subsidized Stafford loans while the borrower is enrolled in school, as well as during grace periods and permissible deferment periods.
When the borrower has applied the following to his or her federal student loan, the government will cover any outstanding interest for the first three years on a subsidized federal student loan:
Please select 2 correct answers
Explanation:
During allowed deferment periods, the Federal Government will cover any unpaid interest on subsidized loans. The government will pay any unpaid accrued interest on the Subsidized Stafford Loans (either Direct Loan or FFEL) for up to three consecutive years from the date the student started repaying his or her loans under IBR if the student's monthly IBR payment amount is insufficient to cover the interest that accrues on his or her loans each month.
Which payment plan with the servicer will apply to the account if a student doesn't respond to a letter from the servicer warning that the IBR on his or her account will expire in 45 days and a new plan is necessary when the IBR is about to expire?
Explanation:
According to current laws, students who exit the IBR program must enter a 10-year normal payment plan (or a longer period for a combined debt), less the number of years they participated in the program. The student may change to another plan if a standard plan is unaffordable, but s/he may only return to the IBR Program if s/he meets the requirements and experiences a "partial financial hardship."
True/False: A student's repayment strategy is subject to alter once a year.
Explanation:
The Federal Family Education Loan Program (FFELP) gives students the option to select their own repayment schedule and to adjust it once a year if their financial circumstances change. If the maximum loan term for the new plan is longer than the time the loans have already been in repayment, the borrower may switch from one plan to another once per year. (In other words, the borrower cannot convert to the income-based repayment plan and have the remaining sum written off if the borrower is in year 26 of a 30-year extended repayment plan.)
True or False: To be eligible for the Graduated Repayment Plan, a student must be a graduate student.
Explanation:
The student's payments under this arrangement begin modestly and rise every two years. The repayment period could last up to ten years. This plan can be the best option for the student if they anticipate their income to rise steadily over time. Never will the monthly payment be less than the interest that accumulates in between installments. No one payment under this plan will be more than three times more than any previous payment, even if the monthly amount will steadily rise. This repayment plan does not require graduation status.
The servicer can approve and submit the following repayment options over the phone.
Please select 2 correct answers
Explanation:
To ensure that the student is given projected monthly payment adjustments to complete total loan payoff, the majority of servicers prefer to process Graduated and Extended Repayment Plans over the phone.
DERP is an acronym for...
Explanation:
Determine Date Entered Repayment DERP) = plus six months plus one day from the date of separation The student's grace period will start on the date of graduation, withdrawal, or less than half-time status, plus one additional day.