Frequently Asked Questions about Stafford loans for undergraduate students

1. How do I go about getting a federal student loan?
2. What if I drop out of school?
3. What if I default on my loan?
4. What if I miss a payment on my loan?
5. What if I foresee difficulty in making my payments?
6. What is a deferment and how do I apply?
7. What is forbearance and how do I apply?
8. How can I change my repayment plan?
9. How are my payments applied to my account?
10. How is the interest calculated on my account?
11. Does Nelnet own my student loan?
12. May I get additional student loans from Nelnet?

Click here to learn even more about Stafford loans.

1. How do I go about getting a federal student loan?
A student loan is a loan that the federal government insures. In other words, you do not need collateral as with a traditional loan. In addition, the interest rates are often lower, and in many cases the government will actually pay the interest on the loan for the entire time you are enrolled at least half-time in college. In order to apply for and be eligible for a student loan, you must first submit a Free Application for Federal Student Aid (FAFSA) - see www.fafsa.ed.gov for more information and to apply on line. This form will help the government determine your financial need. Upon approval, you may then apply for a number of other federally-supported financial aid programs. The most common type of student loan is the Stafford Loan. The Stafford loan is a low-interest loan and comes in two categories:

1. Subsidized Stafford Loan -- in which the federal government pays the interest while you are enrolled at least half-time in school, during your grace period, and during authorized deferments. Subsidized Stafford loans are based on financial need.
2. Unsubsidized Stafford Loan -- in which you are responsible for all the interest that accrues on the loan. Unsubsidized loans are not based on financial need.

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2. What if I drop out of school?
If you withdraw from school, drop below a half-time status or graduate, you enter into your Grace Period. Your grace period begins the day after your last official date of attendance as noted by your school's registrar. Your school will notify the lender of this date. Your grace period is the time before you must begin making payments on your loans. All Federal Stafford Loans have a six (6) month grace period. Other loans have different grace periods, so it's important to know your loan type and your grace period. This grace period is a very advantageous time for you! It can give you time to prepare for your loan repayment, to apply for a deferment, to re-enroll in school, or to contact your lender if you foresee difficulty in making your payments (see What if I foresee difficulty in making payments?). If you decide to return to school any time during this six-month period, the calendar stops and you begin another six-month grace period when you leave school, graduate, withdraw or drop below half-time status again.

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3. What if I default on my loan?
When you fail to make payments on your loans - usually by being delinquent, or late, for 270 days (about 9 months) - you are in default on your student loan. If your lender cannot communicate with you, your loans can go into default and you may not even know it. That's why it is so important to keep an updated address and phone number on file with your lender. After default occurs, the lender may be reimbursed for the unpaid balance of your loan. Then the guaranty agency and/or federal government will come after the money you owe. They can be relentless, and they can take drastic actions now and in the future. Consequences of Default:

• The entire amount of your loan, including interest, will become immediately due and payable.
• They can refuse all deferments and forbearances.
• They can stop you from obtaining more student assistance.
• They can take your federal and state tax refunds.
• They will report your default to credit agencies and ruin your credit rating for up to seven years - which practically eliminates any chance of new bank credit or loans (including auto loans, credit cards, even store credit!).
• They can use collection agencies and force you to pay attorney fees, court costs, penalties, and additional interest.
• They can garnish (or keep) your wages.
• They can take legal action against you.

If you do default, start immediately to repair the damage before it gets worse! Contact your guaranty agency and work with them to establish a workable repayment schedule. Starting July 1, 2006 by making nine (9) on-time payments in ten (10) months, you could obtain rehabilitation. That will restore your status (and benefits) as a good borrower.

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4. What if I miss a payment on my loan?
If you miss a payment on your loan, contact your lender immediately! You may incur late charges. If you miss one payment, you may have a double payment plus your late charge due on your next due date. If you miss two payments, you will have a triple payment, plus two late charges due on your third due date. So as you can see, if you miss payments, you'll have a substantially larger amount due at one time! If you are having trouble making your payments, or foresee trouble ahead (see What if I foresee difficulty in making my payments?).

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5. What if I foresee difficulty making my payments?
If you encounter hardship and are concerned that making your payments may become difficult, contact your lender or guaranty agency immediately - while you can still take advantage of other options! By taking early action to help yourself, you will encourage your lender or guaranty agency to help you avoid default. Some options that are available to you are:

• Deferments - which let you postpone monthly payments
• Forbearance - which allows you to reduce or delay payments
• Forgiveness - which eliminates your obligation to repay all or part of your loan (Forgiveness is primarily granted for permanent and total disability or death)
• Changing your repayment plan - to either Standard Repayment, Income Sensitive, Graduated Repayment , or Extended Repayment (if eligible)
• Consolidation Loan - which allows you to combine your loans, often extending your repayment and offering smaller monthly payments

The most important thing to do is to contact your lender or guaranty agency before any problems arise! This will allow you to work together to find a suitable solution.

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6. What is a deferment and how do I apply?
A deferment entitles you to postpone monthly payments on your student loan. Deferments are important because they give you flexibility - and save you money! For example, on Federal Subsidized Stafford Loans, the federal government pays your interest during a deferment. And the time your loan is in deferment is not counted in the maximum period you have to pay the loan back. So it is worthwhile to protect your deferment rights, just as you would be careful with your grace period. (Your grace period is the time after you leave school, withdraw, graduate or drop below half-time until you have to start making payments on your loan. A Federal Stafford Loan has a six-month grace period.) You can apply for a deferment for a number of reasons, such as:

• Education (continuing your education)
• Public Service
• In-School
• Family/Parental Leave
• Disability
• Unemployment
• Economic Hardship
• Military or National Guard Service

To obtain a deferment timely, submit your request a month or two before you want the deferment to start. A deferment may be renewed, but not for longer than the time limit for that specific deferment. For example, a deferment for economic hardship may be renewed for a maximum of three years.

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7. What is forbearance and how do I apply?
A borrower who is willing but unable to make payments, and who does not qualify for a deferment, may request forbearance from the lender. Forbearance allows payments to stop temporarily or decrease in amount for a specific length of time. The lender may grant forbearance of principal, interest or both. The borrower is always responsible for repayment of accrued interest charges. The borrower can make interest-only payments, or the interest will be capitalized (added on to the principal). Unlike deferment, forbearance is not an entitlement. It is something the lender may choose to do for the borrower if the borrower is sincere in meeting his/her loan obligation and if the borrower's circumstances indicate forbearance would be helpful. Forbearances are processed for a maximum of twelve months. Forbearance will not eliminate any prior derogatory credit history. Our online calculator can help you estimate the cost of a forbearance or an unsubsidized deferment.

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8. How can I change my repayment plan?
There are three standard repayment plans offered on Federal Stafford Loans; they are:

1. Standard Repayment - requires you to pay a set amount monthly (with a minimum of at least $50) for up to a maximum of 10 years. However, this set amount may be changed depending on your interest rate, number of payments and total principal balance. Don't let the $50 minimum lull you into believing that would be your payment. If you borrowed $10,000.00 for 10 years at 8.25% interest, your monthly payments would be $122.65.
2. Income Sensitive - is adjusted yearly - for up to 10 years - according to your annual income and the amount of your loan. If this plan requires more than 10 years to complete your repayment, your lender can put your loan in forbearance to lengthen your repayment time up to five additional years.
3. Graduated Repayment - begins with smaller monthly payments, and then enlarges the payments over 10 years. The amount of your loan determines how often and by how much your payments increase.

• NOTE: First-time Stafford borrowers (as of 10/7/98) who accumulate outstanding FFELP loans totaling more than $30,000 may choose to use an Extended Repayment Plan, which allows borrowers to take up to 25 years to repay their loans. Borrowers may choose from either a Standard or Graduated Repayment Plan.

Other payment options include prepaying on your loan. You can make prepayments on your loan at anytime without penalty. You benefit significantly if you make prepayments on Federal Subsidized Stafford Loans because no interest accrues on these loans. So you are paying off the principal faster. Some lenders offer other special benefits or incentives. For example, if you pay each month with an automatic withdrawal from your checking account, or if you make payments on time for several years, you may be able to obtain a lower interest rate or fee refund. To change your repayment type, you must contact your lender.

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9. How are my payments applied to my account?
Payments are first applied to any outstanding late fees (if applicable), then to any outstanding accrued interest and lastly to the principal balance. If you choose to make payments during a deferment period and you have a Federal Subsidized Stafford Loan, the government pays all interest on your loan. Therefore, any payments you make will go directly to your principal balance. If your loan is not subsidized (unsubsidized Stafford, PLUS, or other), all payments made during a deferment will go first to your accrued interest and then to your principal.

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10. How is the interest calculated on my loan?
For loans first disbursed on or before June 30, 2006, the interest rate on student loans is variable, which means it is subject to increases or decreases based on the economy. Interest accrues daily and is calculated on the number of days between the receipt of each payment. For undergraduate subsidized Stafford loans first disbursed on or after July 1, 2006, the interest rate is based on the first disbursement date.

First Disbursement Date	Fixed Interest Rate
July 1, 2006 through June 30, 2008	6.80%
July 1, 2008 through June 30, 2009	6.00%
July 1, 2009 through June 30, 2010	5.60%
July 1, 2010 through June 30, 2011	4.50%
July 1, 2011 through June 30, 2012	3.40%
On or after July 1, 2012	6.80%

For all other Stafford loans first disbursed on or after July 1, 2006, the interest rate is fixed at 6.8%.

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11. Does Nelnet own my student loan?
It is possible that Nelnet owns your student loan, although we service loans for many lenders.

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12. May I apply for additional loans from Nelnet?
Yes, if you need funding in addition to Stafford loans, Nelnet offers numerous loan options you can explore, including PLUS and private loans.

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Frequently Asked Question about PLUS loans for parents of undergraduate students

1. What should I do first?
2. Where can I get the FAFSA form?
3. How long does it take to get a response once you submit your FAFSA?
4. Why do I need to fill out a FAFSA?
5. How will I know how much I will need to contribute toward my child’s college tuition?
6. How is the EFC calculated?
7. What is included in the cost of attendance?
8. How do the funds get disbursed?
9. Do I have to take out a PLUS loan?
10. Why would I need to apply for a PLUS loan?
11. Is there a limit to how much I can borrow?
12. Are there any borrowing requirements I have to meet?
13. What other options do I have if I don’t pass the pre-approval process for a PLUS loan?
14. Who is responsible for repayment of this loan?
15. What happens if my child drops out before the loan has been fully disbursed?
16. Can I apply for more than one PLUS loan during the school year?
17. Can I borrow more than what I need?
18. If I am pre-approved for the loan, is there a certain amount of time I have to apply?
19. What’s the interest rate on PLUS Loans?
20. Are there any fees associated with the loan?
21. Can both parents apply for the PLUS loan?
22. When do I begin repaying the PLUS loan?
23. How long do I have to repay the loan?
24. What will my monthly payments be?
25. Is it possible to postpone repayment of a PLUS Loan?
26. Is there a penalty for paying the loan off early?

Click here to learn even more about parent PLUS loans.

1. What should I do first?
The first thing you should do is complete the Free Application for Federal Student Aid (FAFSA) form.

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2. Where can I get the FAFSA form?
On the Internet at www.fafsa.ed.gov, from the student's high school guidance department or selected school's financial aid office, or from the Nelnet College Planning Center by calling toll-free 1.866.866.7372.

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3. How long does it take to get a response once you submit your FAFSA?
If you file electronically, you will receive a response in 2-3 days. If you mail the FAFSA form, you will receive a response within 3 weeks.

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4. Why do I need to fill out a FAFSA?
The FAFSA will let you know how much you are expected to contribute toward your child’s educational costs.

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5. How will I know how much I will need to contribute toward my child’s college tuition?
Once your child’s FAFSA is processed, s/he will receive his/her Student Aid Report (SAR). This report will detail the Expected Family Contribution (EFC).

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6. How is the EFC calculated?
The federal government prescribes an official federal EFC calculation. This calculation determines family resources available from a family’s income and assets. A portion of these available amounts are considered as EFC.

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7. What is included in the cost of attendance?

•  Tuition	•  Fees
•  Transportation	•  Room & Board
•  Miscellaneous & personal	•  Computer (upon request)
•  Student loan fees	•  Study abroad (if applicable)
•  Other special program fees	•  Books & supplies
•  Expenses for students w/ disabilities (if applicable)

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8. How do the funds get disbursed?
The school determines how and when the funds will be disbursed. The school can set up 1 to 4 separate disbursements. The school can receive the funds electronically or by paper; it depends on how the school is set up to receive the funds.

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9. Do I have to take out a PLUS loan?
No, you are not required to take out a PLUS loan.

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10. Why would I need to apply for a PLUS loan?
You would need to apply if your child has used all his/her subsidized Stafford funds for that academic year and still has a financial shortfall.

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11. Is there a limit to how much I can borrow?
No, you can borrow up to the full cost of education minus any other form of financial aid received by the student.

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12. Are there any borrowing requirements I have to meet?
Yes. To be eligible to receive a PLUS loan, you will need to pass a credit check.

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13. What other options do I have if I don’t pass the pre-approval process for a PLUS loan?
You can appeal the credit decision, obtain an endorser for the PLUS loan, or the student can apply for an unsubsidized Stafford loan.

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14. Who is responsible for repayment of this loan?
You, the parent, are responsible for repayment of the loan.

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15. What happens if my child drops out before the loan has been fully disbursed?
You can instruct the school to return or cancel any remaining disbursements.

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16. Can I apply for more than one PLUS loan during the school year?
Yes, if it is determined more funds are needed to pay the educational cost.

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17. Can I borrow more than what I need?
No, you can only borrow what the school has certified on your application.

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18. If I am pre-approved for the loan, is there a certain amount of time I have to apply?
Yes, your pre-approval decision is good for 90 days on our system. You will need to apply within 90 days or you will need to go through the pre-approval process again.

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19. What’s the interest rate on PLUS Loans?
For loans first disbursed on or before June 30, 2006, the interest rate can change each year of repayment By law, it will never exceed 9%. The interest rate is adjusted each year on July 1. You will be notified of interest rate changes throughout the life of the loan. For loans first disbursed on or after July 1, 2006, the interest rate is fixed at 8.5%.

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20. Are there any fees associated with the loan?
Yes, there is a 3% origination fee and a 1% federal default fee. These fees will be deducted from the loan amount.

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21. Can both parents apply for the PLUS loan?
Yes, as long as their loans do not exceed the cost of the child’s education.

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22. When do I begin repaying the PLUS loan?
Generally, repayment begins within 60 days after the final loan disbursement. There is no grace period. Interest begins to accumulate at the time the first disbursement is made.

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23. How long do I have to repay the loan?
You have up to 10 years to repay the loan.

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24. What will my monthly payments be?
Your monthly payment depends on the repayment plan you choose. The minimum monthly payment is $50 for a standard repayment plan.

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25. Is it possible to postpone repayment of a PLUS Loan?
Yes. Under certain circumstances, parents can receive a deferment or forbearance on their loan. However, since all PLUS loans are unsubsidized, parents will be charged interest during periods of deferment or forbearance. If you do not pay the interest as it accrues, it will be capitalized to the principal balance.

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26. Is there a penalty for paying the loan off early?
No, there is no penalty for early pay off.

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Frequently Asked Questions about private loans

1. How do I know if I should apply for a Nelnet Education Private Academic Loan?
2. How do I know if I am eligible for the Nelnet Education Private Academic Loan?
3. How do I know if my school is eligible?
4. How much am I allowed to borrow?
5. What are the interest rates and will there be any fees?
6. What is the benefit of seeking a co-borrower?
7. What borrower benefits are available?
8. Why is a credit check necessary?
9. What items on my credit history would prevent me from getting a loan?
10. If I am approved, when will I get my money?
11. When will I start repaying the loan?
12. What type of documentation is required when applying for a loan?

Click here to learn even more about private loans.

1. How do I know if I should apply for a Nelnet Education Private Academic Loan?
Nelnet strongly encourages students to maximize their funding under federal programs before considering a private loan. After you have completed the Free Application for Federal Student Aid (FAFSA) and you have received your financial aid award information, you then may want to consider private loans to cover any financial need that was not met with federal funds. You should receive your aid award information from your school in the spring or early in the summer.

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2. How do I know if I am eligible for the Nelnet Education Private Academic Loan?
To be eligible, you must be:

• An undergraduate, graduate or professional student enrolled at least half-time in a degree-granting program at a college or university with Department of Education eligibility
• Making satisfactory academic progress
• The age of majority in your state of permanent residency (18 in most states)
• A U.S. citizen or permanent resident (international students may apply with an eligible co-borrower who is a U.S. citizen or permanent resident)
• Able to meet minimum credit criteria

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3. How do I know if my school is eligible?

Your school must be a degree-granting college or university with Department of Education eligibility and must be approved by Nelnet.

Trade schools and technical schools are not eligible.

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4. How much am I allowed to borrow?

The minimum loan amount is $2,500.

The annual maximum loan amount is $30,000 and the aggregate maximum loan amount is $120,000 (which includes all federal and non-federal loan debt).

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5. What are the interest rates and will there be any fees?

• Interest rates and fees vary, depending on your credit history and that of your co-borrower (if you have one). Co-borrowers are strongly encouraged.
• Interest rate is based on the prime rate and rates start as low as Prime + 0%
• There are no origination fees, but there may be fees at repayment. These fees range from 0 to 5%.
• The prime rate is a variable rate and may change as often as monthly. To find out more about the Annual Percentage Rate (APR) and any fees that may be assessed, click here*.
• If approved, your credit agreement will contain the specific interest rate information for your loan

* In order to view, you must have Adobe Acrobat Reader 5.0 or greater installed.

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6. What is the benefit of seeking a co-borrower?

If you have no credit history, you must be able to obtain a creditworthy co-borrower in order to be eligible for a Nelnet Education Private Academic Loan. Also, if you have a low credit score, you may need to find a creditworthy co-borrower.

If you have a qualified co-borrower, you may be able to obtain lower interest rates and fees. Consider using your parents or grandparents as co-borrowers as they probably have more complete credit histories.

Finally, your co-borrower may be released if you are a qualified borrower who makes 48 consecutive on-time payments.

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7. What borrower benefits are available?
Borrower benefits include:

• 0.50% interest rate reduction to qualified borrowers who make 48 consecutive on-time payments
• 0.25% interest rate reduction for auto-debit payments
• Co-borrower release available to qualified* borrowers who make 48 consecutive on-time payments

* Qualified borrowers are borrowers who not only make consecutive on-time payments, but who also have either Federal Stafford or Federal Consolidation Loans that are serviced with Nelnet.

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8. Why is a credit check necessary?
A credit check is used for most consumer loans to determine how reliable you (and your co-borrower, if applicable) are regarding repaying debt. Our Nelnet Education Private Academic Loans essentially are consumer loans for education and therefore we conduct credit check for all applicants and their co-borrowers.

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9. What items on my credit history would prevent me from getting a loan?
Some derogatory items on your (or your co-borrower’s) credit history that would preclude you from eligibility include:

• Student loan default
• Bankruptcies within a specified timeframe
• Accounts delinquent for more than a specific number of days
• A low credit score or inadequate credit history
• Unpaid tax lien, foreclosure, repossession, pen judgment or suit
• Excessive charge offs or write offs

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10. If I am approved, when will I get my money?
Nelnet will mail a check for the loan funds directly to you prior to the start of each quarter or semester. However, we cannot disburse loan funds until we have received any and all information required for completing the application process.

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11. When will I start repaying the loan?

• Full deferral of principal and interest is available
• If the loan is fully deferred, then repayment will start 180 days after graduation, school separation or residency end date
• In-school deferment lasts up to five and one half years from the first disbursement, plus three years for eligible graduate programs
• Repayment terms are up to 25 years and a $50 minimum monthly payment is required

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12. What type of documentation is required when applying for a loan?

a) What is acceptable Proof of Income documentation?

Type of Income	Acceptable Documentation
Wages (provide one)	Acceptable documentation: A pay stub dated within thirty days of application signed date Signed letter from employer indicating still employed Signed copy of the first and second page of prior year Federal tax return W-2 Note: the preferred method is pay stub dated within 30 days of application signed date.
Interest/Dividends (provide all that apply)	Last year’s 1099 forms, Year-end account brokerage house statement, or Signed copy of the first and second page of prior year Federal tax return
Net Rental Income	A signed copy of the first and second page of prior year Federal tax return.
Social Security (provide one)	Signed copy of the first and second page of prior year Federal tax return Benefits summary statement
Annuity/Retirement Income (provide one for each source of annuity/retirement income)	Last year’s Statement of Annuity Paid (Form 1099), or Signed copy of the first and second page of prior year Federal tax return Benefits summary statement
Alimony/Child Support (provide one) Important note: Alimony, child support, or separate maintenance income need not be revealed if you do not wish to have it considered as a basis for repaying this obligation.	Signed copy of the first and second page of prior year Federal tax return Copy of divorce decree, separation or child support agreement specifying the amount and duration of the payments, Six consecutive months of bank statements with the corresponding deposits clearly identified. Six consecutive months of cancelled checks, or Affidavit from the co-borrower’s counsel that payments have been received for six consecutive months

Note: A previous year's tax return is acceptable with proper documents showing an extension for the next year's tax return and proof of payment to the IRS for the estimated tax liability. One extension is valid through August 15, the last extension is valid until October 15th. After October 15th the new tax return must be received. E-filed tax returns are acceptable.

b) What is acceptable CIS Documentation?

U.S. Permanent residents and other eligible aliens must submit a copy of the front and back of their current Citizenship and Immigration Services Form I-551 (Resident Alien Card); this form cannot be marked “waived”. Cards marked waived or that have expired will not be accepted.

If the student borrower does not have a current I-551 form, we will accept a temporary CIS Form I-551, a passport stamped “Temporary 551, or Form I-90 (Application to Replace Alien Registration Card), and a copy of the student’s passport.

Foreign students must submit a copy of one the following:

• Student VISA (type F1 or J1). If the student is already in the U.S., and the expiration date on the student visa has occurred, we require an I-20 with USCIS admission number.
• Copy of a valid passport with photo and Current CIS Form I-20 with USCIS admission number designated with any of the following classifications:
  • F-1 and D/S; J-1 and D/S; M-1 and D/S; or H1B,
  • Public Interest Parolee (PIP)
  • Asylum status granted indefinitely
  • Refugee status granted indefinitely
• Foreign students must also apply with a credit-worthy co-borrower who is a U.S. citizen or permanent resident. Co-borrowers must provide proof of income.

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Frequently Asked Questions about Stafford loans for graduate/professional students

1. How do I get a federal student loan?
2. What kinds of Stafford loans are there?
3. Do I have to get Stafford loans before I get a PLUS loan?
4. What if I drop out of school?
5. What if I default on my loan?
6. What if I miss a payment on my loan?
7. What if I foresee difficulty in making my payments?
8. What is a deferment and how do I apply?
9. What is forbearance and how do I apply?
10. How can I change my repayment plan?
11. How are my payments applied to my account?
12. How is the interest calculated on my account?
13. Does Nelnet own my student loan?
14. May I get additional student loans from Nelnet?

Click here to learn even more about Stafford loans for graduate/professional students.

1. How do I get a federal student loan?
A student loan is a loan that the federal government insures. In other words, you do not need collateral to receive a federal loan. In addition, the interest rates are often lower, and in some cases, the government will pay the interest on the loan for the entire time you are enrolled at least half-time in college. In order to apply and be eligible for a student loan, you must first submit a Free Application for Federal Student Aid (FAFSA) - see www.fafsa.ed.gov for more information and to apply online. This form will help the government determine your financial need. Upon approval, you may then apply for a number of other federally supported financial aid programs. The most common type of student loan is the Stafford loan.

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2. What kinds of Stafford loans are there?
The Stafford loan is a low-interest loan and comes in two categories:

Subsidized Stafford loan: The federal government pays the interest while you are enrolled at least half-time in school, during your grace period, and during authorized periods of deferment. Subsidized Stafford loans are based on financial need.

Unsubsidized Stafford loan: You are responsible for all the interest that accrues on unsubsidized Stafford loans. Unsubsidized loans are not based on financial need.

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3. Do I have to get Stafford loans before I get a PLUS loan?
No. A graduate or professional student must apply for and the school must determine the student's eligibility for the maximum annual subsidized and/or unsubsidized Federal Stafford Loan amount. However, a graduate or professional student is not required to receive Federal Stafford Loan funds as a condition for receiving a Federal PLUS Loan, and a school may not require a graduate or professional student to receive Federal Stafford Loan funds before the student applies for a Federal PLUS Loan.

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4. What if I drop out of school?
If you withdraw from school, drop below a half-time status, or graduate, you enter into your grace period. Your grace period begins the day after your last official date of attendance as noted by your school's registrar. Your school will notify the lender of this date. All Federal Stafford Loans have a six-month grace period. Other loans have different grace periods, so it's important to know your loan type. Your grace period gives you time to prepare for your loan repayment, to apply for a deferment, to re-enroll in school, or to contact your lender if you foresee difficulty in making your payments. See What if I foresee difficulty in making payments?. If you decide to return to school any time during this six-month period, the calendar stops, and you begin another six-month grace period when you leave school, graduate, withdraw, or drop below half-time status again.

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5. What if I default on my loan?
When you fail to make payments on your loans - usually by being delinquent, or late, for 270 days (about nine months) - you are in default on your student loan. If your lender cannot communicate with you, your loans can go into default without your awareness. That's why it is so important to keep an updated address and phone number on file with your lender. After default occurs, the lender may be reimbursed for the unpaid balance of your loan. Then the guaranty agency and/or federal government will begin collection activities to recover the money you owe. Consequences of default:

• The entire amount of your loan, including interest, will become immediately due.
• You will not be eligible for any more deferments and forbearances.
• You can be prevented from obtaining more student assistance.
• Your federal and state tax refunds could be taken to pay off your loan balance.
• Your default will be reported to credit agencies and your credit rating could be ruined for up to seven years, which practically eliminates any chance of new bank credit or loans (including auto loans, credit cards, and store credit).
• Collection agencies can force you to pay attorney fees, court costs, penalties, and additional interest.
• Your wages can be garnished (kept from you) to pay on the loan.
• Legal action can be taken against you.

If you default, start immediately to repair the damage of this action. Contact your guaranty agency and work with them to establish a workable repayment schedule. By making 9 on-time payments in 10 consecutive months, you could obtain rehabilitation. That will restore your status (and benefits) as a good borrower.

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6. What if I miss a payment on my loan?
If you miss a payment on your loan, contact your lender immediately. You may incur late charges. If you miss one payment, you may have a double payment plus your late charge due on your next due date. If you miss two payments, you will have a triple payment, plus two late charges due on your third due date. As you can see, if you miss payments, you'll have a substantially larger amount due at one time. If you are having trouble making your payments, or foresee trouble ahead, see What if I foresee difficulty in making my payments?.

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7. What if I foresee difficulty making my payments?
If you encounter hardship and are concerned that making your payments may become difficult, contact your lender or guaranty agency immediately so you can still take advantage of other options. By taking early action to help yourself, you will encourage your lender or guaranty agency to help you avoid default. Some options that are available to you are:

• Deferments, which let you postpone monthly payments
• Forbearance, which allows you to reduce or delay payments
• Forgiveness, which eliminates your obligation to repay all or part of your loan (forgiveness is primarily granted for permanent and total disability or death)
• Changing your repayment plan to either Standard Repayment, Income-Sensitive Repayment,Graduated Repayment, or Extended Repayment (if eligible)
• Consolidating your loans, which combines your loans, often extending your repayment and offering smaller monthly payments

The most important thing is to contact your lender or guaranty agency before any problems arise. This will allow you to work together to find a suitable solution.

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8. What is a deferment and how do I apply?
A deferment entitles you to postpone monthly payments on your student loan. Deferments are important because they give you flexibility and save you money. For example, on subsidized Federal Stafford Loans, the federal government pays your interest during a deferment, and deferment is not counted in your repayment period. You can qualify for a deferment for a number of reasons, such as:

• Education (continuing your education)
• Public service
• Family/parental leave
• Disability
• Unemployment
• Economic hardship
• Military or National Guard Service

To obtain a deferment in a timely manner, file your request form a month or two before you want the deferment to start. For an in-school deferment, file your form when your enrollment status is verified by the registrar's office. A deferment may be renewed, but some deferment types have a maximum time limit. For example, a deferment for economic hardship may be renewed for a maximum of three years.

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9. What is forbearance and how do I apply?
A borrower who is willing but unable to make payments and who does not qualify for a deferment may request forbearance from the lender. Forbearance allows payments to stop temporarily or decrease in amount for a specific length of time. The lender may grant forbearance of principal, interest, or both. The borrower is always responsible for repayment of accrued interest charges. The borrower can make interest-only payments, or the interest will be capitalized (added to the principal balance). Unlike deferment, forbearance is not an entitlement. It is something the lender may choose to do for the borrower if the borrower is sincere in meeting his/her loan obligation, and if the borrower's circumstances indicate forbearance would be helpful. Forbearances are processed for a maximum of 12 months. Forbearance will not eliminate any prior derogatory credit history. Our online calculator can help you estimate the cost of forbearance or an unsubsidized deferment.

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10. How can I change my repayment plan?
There are three standard repayment plans offered on Federal Stafford Loans; they are:

1. Standard Repayment requires you to pay a set amount monthly (with a minimum of at least $50) for up to a maximum of 10 years. However, this set amount may be changed depending on your interest rate, number of payments, and total principal balance. Don't let the $50 minimum lull you into believing that would be your payment. If you borrowed $10,000 for 10 years at 9% interest, your monthly payments would be $126.70.
2. Income-Sensitive Repayment is adjusted yearly according to your annual income and the amount of your loan. If this plan requires more than 10 years for you to complete your repayment, your lender can put your loan in forbearance to lengthen your repayment time up to five additional years.
3. Graduated Repayment begins with smaller monthly payments and then enlarges the payments over 10 years. The amount of your loan determines how often and by how much your payments increase.

NOTE:New borrowers as of October 7, 1998, who accumulate outstanding loans totaling more than $30,000 may choose to use an Extended Repayment Plan, which allows borrowers to take up to 25 years to repay their loans. Borrowers may choose from either a Standard or Graduated Repayment Plan.

Other payment options include prepaying your loan. You can make prepayments on your loan at any time without penalty. You benefit significantly from making prepayments on subsidized Federal Stafford Loans during the in-school, grace, or deferment periods because no interest is accruing. Some lenders offer other special benefits. For example, if you pay each month with an automatic withdrawal from your checking account, or if you make payments on time for several years, you may be able to obtain a lower interest rate or fee refund. To change your repayment type, you must contact your lender.

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11. How are my payments applied to my account?
Payments are first applied to any outstanding late fees (if applicable), then to any outstanding accrued interest, and lastly to the principal balance. If you choose to make payments during a deferment period and you have a subsidized Federal Stafford Loan, the government pays all interest on your loan. Therefore, any payments you make will go directly to your principal balance. If your loan is not subsidized (unsubsidized Stafford, PLUS, or other), all payments will be applied first to accrued interest and then to principal.

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12. How is the interest calculated on my loan?
Interest accrues daily and is calculated on the number of days between each payment.

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13. Does Nelnet own my student loan?
It is possible that Nelnet owns your student loan, although we service loans for many lenders.

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14. May I get additional student loans from Nelnet?
Yes, if you need funding in addition to Stafford loans, Nelnet offers numerous loan options you can explore, including PLUS and private loans.

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Frequently Asked Questions about PLUS loans for graduate/professional students

1. What should I do first?
2. Where can I get the FAFSA?
3. How long does it take to get a response once you submit the FAFSA?
4. Why do I need to fill out the FAFSA?
5. How will I know how much I need to contribute toward my college tuition?
6. How is my Expected Family Contribution (EFC) calculated?
7. What is included in the COA?
8. How are funds disbursed?
9. Do I have to take out a PLUS loan?
10. Why would I need to apply for a PLUS loan?
11. Is there a limit on how much I can borrow?
12. Are there any borrowing requirements I have to meet?
13. What other options do I have if I don’t pass the pre-approval process for a PLUS loan?
14. Who is responsible for repayment of this loan?
15. What happens if I drop out before the loan has been fully disbursed?
16. Can I apply for more than one PLUS loan during the school year?
17. Can I borrow more than what I need?
18. If I am pre-approved for the loan, is there a certain amount of time I have to apply?
19. What’s the interest rate on PLUS loans?
20. Are there any fees associated with the loan?
21. When do I begin repaying the PLUS loan?
22. How long do I have to repay the loan?
23. What will my monthly payments be?
24. Is it possible to postpone repayment of a PLUS loan?
25. Is there a penalty for paying the loan off early?

Click here to learn even more about PLUS loans for graduate/professional students.

1. What should I do first?
The first thing you should do is complete the FAFSA form.

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2. Where can I get the FAFSA?
You can get the FAFSA on the Internet at www.fafsa.ed.gov, from the student's high school guidance department or selected school's Financial Aid Office, or from the Nelnet College Planning Center by calling toll-free 1.866.866.7372.

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3. How long does it take to get a response once you submit the FAFSA?
If you file electronically, you will receive a response in two to three days. If you mail the FAFSA form, you will receive a response within three weeks.

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4. Why do I need to fill out the FAFSA?
The FAFSA will let you know how much you are expected to contribute toward your educational costs.

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5. How will I know how much I need to contribute toward my college tuition?
Once your FAFSA is processed, you will receive a Student Aid Report (SAR). This report will detail your Expected Family Contribution (EFC).

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6. How is my Expected Family Contribution (EFC) calculated?
The federal government uses an official federal EFC calculation. This calculation determines your resources available from your income and assets. A portion of these available amounts are marked as EFC.

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7. What is included in the Cost of Attendance (COA)?

• Tuition
• Fees
• Transportation
• Room and board
• Miscellaneous and personal
• Computer (upon request)
• Student loan fees
• Study abroad (if applicable)
• Other special program fees
• Books and supplies
• Expenses for students with disabilities (if applicable)

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8. How are funds disbursed?
The school determines how and when the funds will be disbursed. The school can set up one to four electronic or paper disbursements.

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9. Do I have to take out a PLUS loan?
No, you are not required to take out a PLUS loan.

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10. Why would I need to apply for a PLUS loan?
You can use a PLUS loan if you have used all of your subsidized and unsubsidized Stafford funds for that academic year and need additional aid.

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11. Is there a limit on how much I can borrow?
Yes. You can borrow up to the full cost of education minus estimated financial aid.

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12. Are there any borrowing requirements I have to meet?
Yes. You must apply for and your school must determine your eligibility for the maximum annual subsidized and/or unsubsidized Federal Stafford Loan amount. You will also need to pass a credit check.

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13. What other options do I have if I don’t pass the pre-approval process for a PLUS loan?
You can appeal the credit decision and obtain a credit-worthy co-signer for the PLUS loan.

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14. Who is responsible for repayment of this loan?
You are responsible for repayment of the loan.

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15. What happens if I drop out before the loan has been fully disbursed?
You can instruct the school to return or cancel any remaining disbursements.

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16. Can I apply for more than one PLUS loan during the school year?
Yes, if it is determined more funds are needed to pay the educational cost.

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17. Can I borrow more than what I need?
No, you can only borrow what the school has certified on your application.

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18. If I am pre-approved for the loan, is there a certain amount of time I have to apply?
Yes, your pre-approval decision is good for 90 days on our system. If you don’t apply within 90 days, you will have to go through the pre-approval process again.

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19. What’s the interest rate on PLUS loans?
PLUS loans have a fixed interest rate of 8.5%.

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20. Are there any fees associated with the loan?
Yes, there is a 3% origination fee and a 1% federal default fee. These fees will be deducted from the loan amount.

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21. When do I begin repaying the PLUS loan?
Repayment begins within 60 days after the final loan disbursement. There is no grace period. Interest begins to accumulate at the time the first disbursement is made.

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22. How long do I have to repay the loan?
10 years unless you qualify for an extended repayment plan, then the maximum term is 25 years.

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23. What will my monthly payments be?
Your monthly payment depends on the repayment plan you choose, but it will not be less than $50.

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24. Is it possible to postpone repayment of a PLUS loan?
Yes. You can receive a deferment on your loan as long as you remain enrolled in school at least half-time. However, since all PLUS loans are unsubsidized, you will be charged interest during periods of deferment or forbearance. If you do not pay the interest as it accrues, it will be capitalized (added to the principal balance).

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25. Is there a penalty for paying the loan off early?
No, there is no penalty for early pay off.

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