Types of Aid

Grants

Scholarships

Work Study

Loans

This section of the site is focused on the needs of Alumni and other students needing help with their loans after school.  Otis Alumni are always welcome back to the financial aid office for help on their student loan needs.  Even if you just want to check if you are doing everything possible or if you are completely lost on what to do, then the financial aid office is here for you.

The current interest rates for federal student loan is on the Financial Aid Homepage.

TOPICS that concerns our Alumni:

• Strategy for Paying Off Your Student Loans
• Consolidation
• Loan Forgiveness Programs
• Still Lost...
• Last Thing To Do

Step 1: Identify all your loans, their interest rates and benefits.  Start by pulling your NSLDS records.

You will need your Department of Education pin number.

Step 2: Pull your credit report to verify that the federal loans you have in step 1 is complete. 

            This is the only way to find out all of your private loan obligations.

Step 3: Check your lender's website and enroll in the lender or servicer's free on-line loan

             management program.  This will allow you to have access to your account anytime. 

             You can check out that your payments are credited accurately.

Step 4: Target loans with higher rates to pay off quickly.

            (Typically private loans have higher rates, but even private loans will have different rates from each

              other so identify your rates every quarter)

            Another strategy is to target loans with a smaller balance to close the particular loan.

There are two types of consolidation that you need to be aware of: 

• Federal Loan Consolidation
• Private Loan Consolidation

It is typically not advisable to combine both federal and private into one consolidated loan.  It might be easier to only have one check to write but you might be paying more in the long run.  The only way to consolidate both is to make your federal loan into a private loan.  You would suffer a variable rate that is typically higher than federal rates and you may have to pay another processing fee.  Keeping the two loans apart is much safer.

Alternatives to consolidation:

• Change repayment plans to either be Extended, Graduated, or Income Sensitive
• If you have loans from the same federal loan lender then you can Serialize your loan.  This will align payments for the same date.

Consolidation comes with a few pros and cons.  Read and understand the following carefully so that you can make a sound decision regarding consolidation.

Pros

• Lowering your payment by extending your payment period from 10 years up to 30 years
• Lock in the rates for loans taken out previous to the 0607 school year
• Make all your payments to only one lender therefore making things easier to manage
• No pre-payment penalty
• No processing fees

• You lose current benefits that you are eligible for or could have in the future (Examples are interest rates reductions or principal reduction)
• Lenders may have minimum amounts and will vary by lenders
• You can only consolidate your loans once unless you took out brand new loans or have other loans not in consolidation. 
• You may lock in interest rates at higher amounts than amounts later on.
• You lose your grace period if you consolidate before or during your grace period.  Some lenders may arrange to wait until the grace period is over before you consolidate.
• You may end up with the 1/8% higher rate than your regular loans

Defaulting means that you have gone past the delinquent status on your student loans.  Defaulting has a terrible consequence to your credit history.  Your future employer could check your credit to determine if they wish to hire you or you could get a notice through your employer that garnishment of wages from the federal government is going to occur.

If you are already in default status you have three options:

Option 1:  Rehabilitate your loan.  The most ideal option since after fulfilling the requirement will restore your credit to looking like the default did not occur.  Nine consequetive on-time full monthly payments is required.  This can be arranged with your lender.

Option 2: Consolidation through Lender.  Consolidition through your lender on the defaulted or delienquint loan may be possible after a satisfactory payment arrangement.  Consolidation will keep your defaulted status on your credit report.

Option 3: Consolidation through Direct Loans.  If you have defaulted and your other lenders cannot consolidate your loans then Direct Loans will consolidate your loan only if you sign an income sensitive payment arrangement.

Private loan consolidation is a relatively new product so be cautious in entering this program.

A few things to look for:

• Make sure lenders are not charging you another set of origination, repayment or any other fee.
• Make sure you understand that your rate is most probably still going to be variable.
• Know the terms and conditions of your new loan.  You lender benefits may be lost if you do not follow up with lenders.
• Make sure you have filled out any appropriate forms for benefits.

The point of default on your private loan may not be the same as your federal loan since individual lenders may have their own standards.  Getting a forbearance on your private loan is also up to each lender.

What should you do?

• Pull all three of your credit report.  Your private loans will be on your report and contact information will also be on the report.
• Find out the interest rates for all your private loans
• Contact each lender to arrange payments

After deciding if consolidation is right for you then picking a lender is your next hardest task. 

When evaluating a lender keep ask the following questions:

• What are the lender benefits?
• How do I get the benefits?
• How can I lose the benefits?
• Are the benefits automatic or do I have to apply?
• Can I get online access to my account?
• What are your hours for me to call?
• Is there a specific phone number for me to call about payments?

Check with the lenders who holds your current loans if they have good benefits.

There have been an interest in loan forgiveness information.  A good website to visit is: www.ibrinfo.org

Keep in mind that most loan forgivemess programs only applies to federal loans.  Parents already working in "public service" fields should take a look at the Public Service Loan Forgiveness section.