How long do I have to repay my federal student loans?

The chart below provides general guidance of what is currently available for each of the loan programs listed.

What repayment options are available on my federal loans?

Sallie Mae offers a wide array of repayment options:

• Standard repayment
• Graduated repayment
• Income-sensitive repayment
• Extended repayment

Where can I find information on what my monthly student loan payment could be?

If your loans are in repayment, Manage Your Loans, Sallie Mae’s online account management tool, displays the repayment options, the monthly payment amount, and deferment and forbearance options that are available on your federal loans.

Standard, graduated, and extended repayment options may be requested online. No application is required to enroll in these repayment plans. You may also request an income-sensitive repayment plan online, however, there are certain documentation requirements that must be satisfied before you can be approved.

None of these repayment plans require a credit check. If your loans are not yet in repayment, you can estimate what your monthly payment amount could be under various repayment plans by using Sallie Mae’s loan repayment calculator.

I have more than one loan with Sallie Mae. Does that mean I have to make multiple payments each month?

No. Sallie Mae simplifies student loan repayment by presenting you with one monthly bill for all of your federal and private student loans serviced by Sallie Mae so you only have to make one monthly payment.

How do I change or lower my monthly student loan payment?

To change or lower your monthly student loan payment, simply access your Manage Your Loans account where you may change your repayment option online or call Sallie Mae at 1-866-913-6089. You also may increase your monthly payment by decreasing the repayment term on your federal loan(s), which can result in you paying your loan off quicker.

Can I prepay my loans?

Yes, you may prepay your loans in part or in full at any time without any prepayment penalty regardless of repayment plan. By prepaying your loans you can help reduce the total loan cost.

How is a prepayment applied to my loan balance?

Payments that are received in excess of the monthly payment amount due will be applied to the next payment. When the prepayment amount is equal to or in excess of the monthly payment amount due, your next payment due date is advanced.

Sallie Mae customers who want to submit a prepayment and have it applied to a specific loan(s) should provide written instructions on how to apply the prepayment. For example, if you have both subsidized and unsubsidized Stafford loans, you could instruct Sallie Mae to apply any extra payment against the balance of your unsubsidized Stafford loans.

What are my options if I can not afford my monthly payment amount?

If you are interested in lowering your monthly payment amount, you should first review the repayment options that are available on your loans. To view available options, visit your Manage Your Loans account or call Sallie Mae at 1-866-913-6089.

• You may be able to lower your monthly payment to as low as an interest-only for specified periods followed by standard payments of principal and interest.
• Another option may be to select an extended repayment plan that can lower your monthly payment through a lengthened repayment term of up to 25 years, if eligible.
• In addition, if you are unable to make your monthly payment, you may be eligible for either deferment or forbearance, both of which allow the temporary postponement of payments.

Please note selecting a repayment plan that offers interest-only payments or a repayment plan that lengthens the repayment term (e.g., extended repayment), or deferment and forbearance that suspends your payments are likely to increase the total cost of repaying your loan(s). The lower your payment amount, the longer it will take you to repay your loans and the more total interest you will pay.

I am delinquent on my student loan payment and would like to lower my monthly payment amount to an amount that works better for my budget. Can I change my repayment plan?

Sallie Mae welcomes the opportunity to work with borrowers to develop a repayment strategy and help borrowers find a repayment plan that will fit their individual financial needs and goals.

If you are delinquent on your student loan(s), before changing your repayment plan, you will first need to bring your student loan(s) current. This can be done by making a payment or requesting deferment or forbearance, if applicable, to cover the delinquent payment(s).

Do deferment and forbearance impact my repayment term?

No. Deferment and forbearance do not count against the repayment term on your loan. For example, if you have 90 months remaining in your repayment term at the effective start of your deferment or forbearance, you will still have 90 months remaining in your repayment term at the end of your deferment or forbearance period.

Keep in mind, however, that by using deferment or forbearance, you will increase your principal balance on any unsubsidized student loan due to interest that is capitalized during and/or at the end of your deferment or forbearance unless you make payments to cover the accruing interest. You are responsible for all interest that accrues on the unsubsidized portion of your student loans.

How often can I change my repayment plan?

When in active repayment on your Sallie Mae loans, you may change your repayment plan from one repayment option to another whenever you want. Please note, the availability of some repayment options may vary, depending on the outstanding loan balance, interest rate, and/or repayment term remaining.

You may prepay your loan at anytime without penalty, regardless of repayment plan.

Will switching repayment plans or using deferment or forbearance hurt my credit history?

No. The type of repayment plan used to repay a student loan is reported to the credit bureaus. What’s more, using deferment or forbearance for your federal education loans will not adversely affect your credit history. Being late in making a payment, however, will hurt your credit history. So if you’re having trouble making your current monthly student loan payment, visit www.ManageYourLoans.com or call us at 1-866-913-6089 to explore your options for reducing or postponing your payments.

Should I consolidate my federal loans?

With a Federal Consolidation Loan, you bundle one or more eligible federal loans into a new loan. The consolidation loan will receive new terms. Due to recent rule changes, consolidation is definitely not a one-size-fits all strategy for repaying student loans. In fact, consolidation can be the most expensive way to repay your loans.

• Consolidation can lock in a higher rate than the rate(s) you are paying now. The rate on a consolidation loan is the weighted-average rate rounded up to the nearest one-eighth of a percent, subject to a cap of 8.25%. Consolidating Stafford loans with a rate of 6.8% will result in a consolidation loan with a rate of 6.875%.
• Consolidating any variable-rate loans now will prevent you from taking advantage of a future decrease in variable rates. The rate for most variable-rate Stafford loans currently is 7.22%. At the start of 2008, short-term interest rates were trending downward. If this trend continues, the rates on variable-rate Stafford loans could drop substantially on July 1, which, in turn, will reduce monthly student loan payments. The new rates will be in effect through June 2009. On July 1, 2009, variable rates will adjust again, so consolidating before then could be premature.
• Consolidation will increase your total interest costs by lengthening the payback period. With federal loan consolidation, the repayment term is based on your total outstanding education loan balance with terms ranging from 10-30 years. If you need short-term monthly payment relief, you should explore other repayment options available to you, such as graduated repayment plans that offer monthly payments that may be as low as interest-only for two to four years.
• You can lose valuable borrower benefits by consolidating. If you consolidate, you will lose valuable repayment incentives available on your current Sallie Mae loans. Before you consolidate, make sure you check the benefits your existing Stafford, PLUS, or Grad PLUS loans are offering. There’s a very good chance that your existing loans have better benefit terms than the modest automatic debit benefit currently available on federal consolidation loans. Reconsolidating an existing consolidation loan could be very costly. Sallie Mae offered significant rate discounts for consolidation loans issued before October 1, 2007. In addition, by consolidating Perkins, Federal Nursing, and other health-education loans, you will lose the ability to defer the interest that accrues on those loans during a subsequent period of deferment. You’ll also sacrifice forgiveness benefits offered by Perkins loans.
• Consolidation requires extra paperwork. To obtain a federal consolidation loan, you must complete an application. The disbursement process typically takes three to four weeks. Requesting a different repayment option such as extended repayment or a graduated plan offering interest-only payments only takes a few minutes, and the new schedule can be established right away. To switch repayment plans, all you have to do is call Sallie Mae at 1-866-913-6089 or go to www.manageyourloans.com.
• Consolidation is irreversible. Once you consolidate your loans, you can't "undo" the consolidation. That means, if you find yourself in need of deferment, you’ll lose the interest subsidy available on the Perkins loans you consolidated. Moreover, you won’t be able to take advantage of any future decrease in the rates on any variable-rate Stafford and PLUS loans that were included in the consolidation.

What is the difference between loan consolidation and an extended repayment plan?

With extended repayment, you can lengthen the repayment term on your existing Federal Stafford, PLUS, Grad PLUS, and/or Federal Consolidation loans if your total outstanding eligible federal student loan balance exceeds $30,000. Extended repayment allows you to take as long as 25 years to repay the debt. You also will be able to continue to take advantage of any borrower benefit programs available for your individual loans. There are no applications to submit.

Extended repayment can be easily arranged by calling 1-866-913-6089. Or you can make the request online at www.ManageYourLoans.com.

Consolidation allows you to bundle one or more eligible loans into a new loan with new terms. The individual loans are paid off and no longer exist. Your new consolidation loan will have new terms, including a fixed interest rate based on the rates of the loans consolidated (capped at 8.25%). The repayment term will range from 10 to 30 years, depending on the amount of your education indebtedness. Frequently, borrowers consolidate to simplify the repayment of their education debts. Sallie Mae already offers the convenience of combined monthly billing for education loans serviced by Sallie Mae. Borrowers who have multiple lenders can take advantage of Sallie Mae’s consolidation program to consolidate all of their loans or consolidate only their non-Sallie Mae loans, thus preserving the current terms and benefits for their existing Sallie Mae loans.

Either way, our customers can still enjoy the convenience of a combined monthly payment. For details, please call us at 1-866-913-6089.

When should I consider consolidating my loans?

Consolidation is a debt management tool designed to meet the needs of borrowers who are having trouble managing their monthly payments. Consolidation may be a good option for:

• Borrowers who need long-term monthly payment relief and none of the other repayment options, including deferment and forbearance, meet their needs.
• Borrowers who have multiple loans with multiple lenders.
• Borrowers who have variable-rate loans and want to lock in a low rate. The only way to get a low fixed consolidation rate, however, is to consolidate when variable rates are low. In July 2007, variable rates rose to their highest levels in seven years. In addition, many borrowers entering repayment today do not have any variable-rate loans. All new Stafford and PLUS loans issued since July 2006 carry fixed rates, and a very large share of the variable-rate loans issued before 2006 have already been consolidated.