Educational Loan

Organizer
Your Guide to Student Loans through the
Federal Family Education Loan Program

www.mgaloan.com
1-800-642-5626
 TABLE OF CONTENTS

Managing Your Student Loans................................................................................................................................................... 1

Budgeting..................................................................................................................................................................................... 5
Reporting Changes...................................................................................................................................................................... 9
Loan Repayment........................................................................................................................................................................ 11
Protecting Your Credit Rating.................................................................................................................................................. 21
Glossary of Terms and Record Keeping.................................................................................................................................. 23

INTRODUCTION

The Federal Stafford and PLUS Master Promissory Notes (MPN) replaced the common Federal Stafford and PLUS
applications and promissory notes. The MPN basically opens a line of credit with a lender for education expenses during
your academic career. By signing it, you are agreeing to repay the loan under its terms and conditions and also agreeing
to use the loan only for educational expenses. The prevailing interest rate, fees, and repayment terms and conditions are
specified in the MPN and/or the loan disclosure statement that you will receive.
If you attend an eligible Title IV institution, you may be able to take advantage of the serial loan feature of the MPN. The
serial loan feature of the MPN allows you the option to sign one MPN, which could potentially cover all loans requested
over a maximum ten (10) year time period. You do not have to sign a new MPN if your school or guarantor changes;
however, you will need to sign a new MPN if you use a new lender. If you attend an institution that is not eligible or
elects not to participate in the serial loan feature of the MPN, you must complete a new MPN each time you request a
new loan.

Ombudsman
The U.S. Department of Education has a Student Loan Ombudsman’s Office. This office was established to help resolve
disputes between borrowers and their schools, lenders, guarantors, or loan servicers. The Ombudsman’s office can be
contacted at:
U.S. Department of Education
FSA Ombudsman
830 First Street, N.E., Fourth Floor
Washington, DC 20202-5144

Their toll-free telephone number is 1-877-557-2575, or you can access their Web site at www.fsahelp.ed.gov or
www.ombudsman.ed.gov.
Additional information concerning student loans, grants, and scholarships is available on the Michigan Guaranty Agency’s
Web site located at www.mgaloan.com.

National Student Loan Data System

The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s central database for student aid.
It receives data from schools, agencies that guarantee loans, the Federal Direct Loan Program, the Pell Grant Program,
and the other U.S. Department of Education programs. NSLDS provides a centralized, integrated view of Title IV loans
and Pell grants that are tracked through their entire cycle; from aid approval through closure. You may visit the Web site
of the NSLDS at www.nslds.ed.gov or call the Federal Student Aid Information Center toll-free at 1-800-4-FED-AID or
TDD 1-800-730-8913.

In order to use the NSLDS Student Access Web site, you will need to provide your Social Security Number (SSN), the
first two letters of your last name, your date of birth, and your PIN (formerly known as EAC). You can use the Web site
to make inquiries about your Title IV loans and/or Pell grants. The site displays information on loan and/or grant amounts,
outstanding balances, loan statuses, and disbursements.
 MANAGING YOUR STUDENT LOANS
A student loan is an investment in your future. It provides you an opportunity to obtain
an education that might otherwise be beyond your financial reach. With a loan comes
responsibilities that exist while you are enrolled in school, as well as during your repayment
period. Borrowing money through the Federal Family Education Loan Program to finance
your education will have long-term implications for your financial future. The Michigan
Guaranty Agency (MGA) has compiled this folder to help explain what you need to know
about borrowing and repaying your student loans.
Things to Consider Before You Borrow
Qualifying for a student loan may be a fairly easy process, but repaying it is more difficult. Before
borrowing, consider the following items:

• A LOAN MUST BE REPAID. It is not a grant. Signing the promissory note is a legal and binding
promise to repay a loan. Read your note for terms and conditions of the loan. Repayment is expected
even if you do not complete your education, fail to complete your program of study within the regular
time for program completion, are dissatisfied with your education, do not graduate, or do not find a job
after you complete your program. Failure to repay your educational loans in a timely manner can affect
your credit rating and your future ability to borrow for other purposes such as a car or a house.
• Know when repayment begins. Some loans go into repayment shortly after final disbursement; other

Managing Your Student Loans

loans have a period where payments of principal and/or interest are deferred. Your lender will provide
a repayment schedule which lists repayment terms and conditions.
• Check your finances before you apply for a loan. Consider how much you and/or your family can
contribute toward your education. Apply for other financial aid resources such as scholarships, grants,
and work opportunities through your college financial aid office.
• Consider your expected salary and other expenses when you leave school. Can you afford monthly
educational loan payments ranging from $250 to $600 over a ten (10) year repayment period? Too large
a debt may prevent the “good life” you expected to experience after graduation. THE MORE YOU
BORROW, THE MORE YOU PAY EACH MONTH.
• If you must borrow, borrow only what you need and what you can reasonably expect to repay.
Current information regarding educational loan eligibility and applications can be obtained from the
financial aid office at your school. The financial aid office must advise you of the effect of accepting
the loan on eligibility or other types of student financial assistance.
• Borrower benefits may differ between lenders. Check with lenders regarding their borrower benefits.

How Much Can I Borrow?

Federal Stafford Loans (Subsidized and Unsubsidized)
Maximum Annual Loan Amounts — Federal Stafford Loans1, 2 (including Federal Direct Loans)

Dependent 3 Student Independent Student

Borrower’s Academic Level
Sub + Unsub Subsidized Unsubsidized Total
1st Year Undergraduate Student
$5,500 $3,500 + $6,000 = $9,500
one academic year in length4
2nd Year Undergraduate Student
$6,500 $4,500 + $6,000 = $10,500
one academic year in length4
3rd Year and Remaining
Undergraduate Student $7,500 $5,500 + $7,000 = $12,500
one academic year in length4
Graduate or Professional Student N/A $8,500 + $12,000 = $20,500

1 Eligible students in certain health professions may be qualified to receive increased unsubsidized loan amounts. Check with your school.
2 Effective for loans disbursed on or after July 1, 2008, and with a loan period end date greater than July 1, 2008.
3 For dependent students whose parents do not qualify under the PLUS Program, the amount a student can borrow under the unsubsidized
program is the same as for an independent student.
4 Loan limits may be subject to proration. Check with your school for eligible loan limits.

Educational Loan Organizer, Page 1

Maximum Aggregate Loan Amounts — Federal Stafford Loans *

Borrower’s Academic Level Subsidized and Unsubsidized

Dependent Undergraduate Student $31,000
Independent Undergraduate Student $57,500
Graduate or Professional Student $138,500

* The aggregate loan limits also include any portion of a borrower’s Consolidation loan which was used to repay a Federal Stafford loan.

Federal Grad PLUS Loans

If you have applied for a Federal Grad PLUS loan (available only to graduate and professional students), the financial
aid office has advised you of your eligibility to borrow Federal Stafford loans and the differences between the terms and
conditions of Stafford and PLUS loans. If you allow the interest to be capitalized, you will be charged interest on top of
interest when your loans enter repayment. It is your option to pay the interest on a Grad PLUS loan while you are in school.

Academic Year All Grade Levels

Graduate/Professional Cost Minus Aid (no cap)

How Much Can My Parent(s) Borrow on My Behalf?

Federal PLUS Loans
Academic Year All Grade Levels
Undergraduate Cost Minus Aid (no cap)

Can You Afford Your Student Loans?

You will be entering a very financially demanding period of your life. Your new earnings will quickly disappear
as you find a place to live, build a wardrobe, buy a car, pay for meals, as well as make monthly payments on
your educational loans. Your ability to repay your student loans depends upon: your future income; your monthly
living expenses; and your total educational loan debt. Some students borrow the maximum amount each year
thinking they can afford the future monthly payments. However, after leaving school, jobs may be difficult to
find and you may not start at the top of the pay scale. Also, the cost of living is often more than expected.

Estimated Average Entry Level Salaries

Source:  www.salary.com, January 2009
The following salaries may be lower or higher depending on state and location.
*Note: www.salary.com is a helpful Web site to view potential salaries by geographic area
Annual Annual
Occupation Gross Income Occupation Gross Income
Accountant $41,643 Environmental Engineering Technician $41,748
Accounting Clerk $30,466 Financial Analyst $47,223
Advertising Clerk $38,874 Fire Fighter $40,117
Aircraft Electrician $42,220 Loan Processing Clerk $32,532
Auditor-Internal $48,863 Massage Therapist $46,932
Benefits Clerk $35,379 Mechanic-Airframe and Engine $48,039
Branch Management Trainee $36,521 Nurse-Licensed Practical $39,185
Broadcast Technician $41,182 Nurse-Registered $61,314
Budget Analyst $47,591 Operations Clerk $23,941
CAD Drafter $41,001 Payroll Clerk $33,684
Cartoonist/Animator $51,927 Physical Therapist $69,548
Chauffeur $31,048 Proofreader $41,153
Claims Clerk $29,753 Public Relations Specialist $43,541
Commercial Loan Officer $64,457 Reporter $30,949
Computer Maintenance Technician $41,912 Restaurant Manager-Assistant $37,373
Computer Operator $34,553 Secretary $31,672
Computer Programmer $53,634 Social Worker-BSW $43,808
Conservation Technician $38,615 Tax Accountant $47,318
Consumer Loan Collection Clerk $24,277 Teacher-Elementary $50,110
Consumer Loan Processor $29,908 Teacher-High School $51,252
Copywriter $41,835 Telecommunications Analyst $46,971
Data Control Clerk $29,509 Veterinary Assistant $26,383
Dispatcher $35,143 Web Designer $47,775
E-Commerce Customer Svc. Rep. $32,979

Educational Loan Organizer, Page 2

Potential Earnings vs. Loan Debt

Gross Annual Salary

Gross Monthly Salary Amount Borrowed* Monthly Payment*
After Graduation
$10,000 $ 833 $5,200 $ 60
15,000 1,250 7,800 90
20,000 1,667 10,500 121
25,000 2,083 13,100 151
30,000 2,500 15,750 181
35,000 2,917 18,300 211
40,000 3,333 21,000 242
45,000 3,750 23,600 272
50,000 4,167 26,200 302

*The amount you can afford and your monthly payment are approximate, and are based on an 6.8% interest rate and a ten (10) year
repayment term.

Getting Organized
Accepting an educational loan means accepting personal responsibility for the timely repayment of your loan.
You may not realize the many responsibilities involved in managing a large debt like a student loan. Student
loans have many of the same legal requirements as consumer loans. How well you manage your loan depends
upon how seriously you accept responsibility.

To properly manage your student loan, you should do the following:

1. Start a file. Keep all loan documents for future reference. Keep application, promissory note, disclosure
statement, deferment forms, and all other correspondence.
2. Always keep your lender and school officials informed in writing of any name, address, enrollment
status, and school changes. Dropping below half-time, withdrawing, or extending your studies changes the
date your first payment is due.
3. Keep documentation. If you telephone or write your lender regarding changes to your student loan status,
keep documentation and follow up within six (6) weeks if you have not received confirmation of the
requested change. Your lender relies on you for current information.
4. For information regarding your rights and responsibilities, contact your lender, school, servicer, or
MGA.

Key Points
• Before you borrow, know what your loan payments will be and be sure you can afford the payments you
are planning to undertake.
• Keep a file of all loan documents and correspondence.
• Keep your school and lender informed of changes in your name, address, or student enrollment status.

Educational Loan Organizer, Page 3

Educational Loan Organizer, Page 4
 BUDGETING
Deciding Whether to Borrow Again
Before you take out another loan, ask yourself:

• Instead of borrowing, what other sources such as grants, financial aid, or part-time work are available?
• If I need to borrow, what is the minimum amount I need?
• What are the advantages of staying with the same lender and guarantor?
• How much will my monthly payments increase if I borrow again?
• Considering my future salary potential, what size loan payments will fit into my budget?

If you are an undergraduate student, plan to keep your monthly student loan payments to no more than
8% of your gross monthly income.

If you are a graduate student, plan to keep your monthly student loan payments to no more than 15% of
your gross monthly income.

A variety of calculators are available on our Web site (www.mgaloan.com) to help you manage your
money.

Borrowing from the Same Lender and Guaranty Agency

If you must borrow again, it is recommended that you stay with the same lender and guaranty agency.

Budgeting
Borrowing from the same lender means you notify only one lender or servicer when you change your
name, address, enrollment status, or school. Borrowing from more than one lender could increase your
total monthly payments and make it more difficult to budget your money successfully. If this does happen
to you, upon repayment, consolidation is an option.

Although your guaranty agency keeps records of the loans it guarantees, your lender maintains all specific
information regarding your loan. Contact your lender for this information.

Saving on Your Total Interest Payment

Students who pay interest on their loans while in school can save on the total interest paid over the life
of the loan, and also realize lower monthly payments after they leave school. See the chart on page 6.

Budget Planning

Begin to manage your money today to ensure your future ability to successfully allocate what may be
a limited income among an OVERWHELMING number of expenses. Use the worksheet on page 7 to
determine the total amount of student loan debt you will be able to handle and still cover your other
living expenses.

Educational Loan Organizer, Page 5

 ESTIMATED MONTHLY
ESTIMATED MONTHLY IN-SCHOOL
IN-SCHOOL INTEREST
INTERESTPAYMENT
PAYMENT
Students who choose to pay interest on their loans while in school can save on total interest paid
and also realize lower monthly payments after they leave school.
(Formula used: (Principal x Interest  y 12 months)
PRINCIPAL 3.40% 4.50% 5.60% 6.0% 6.25% 6.50% 6.80% 7.0% 7.25% 8.50%
3,500 10.00 13.00 16.00 17.00 18.00 19.00 20.00 20.00 21.00 25.00
4,000 11.00 15.00 19.00 20.00 21.00 22.00 23.00 23.00 24.00 28.00
4,500 13.00 17.00 21.00 22.00 23.00 24.00 25.00 26.00 27.00 32.00
5,000 14.00 19.00 23.00 25.00 26.00 27.00 28.00 29.00 30.00 35.00
6,000 17.00 23.00 28.00 30.00 31.00 32.00 34.00 35.00 36.00 42.00
7,000 20.00 26.00 33.00 35.00 36.00 38.00 40.00 41.00 42.00 50.00
8,000 23.00 30.00 37.00 40.00 42.00 43.00 45.00 47.00 48.00 57.00
9,000 26.00 34.00 42.00 45.00 47.00 49.00 51.00 52.00 54.00 64.00
10,000 28.00 38.00 47.00 50.00 52.00 54.00 57.00 58.00 60.00 71.00
12,000 34.00 45.00 56.00 60.00 62.00 65.00 68.00 70.00 72.00 85.00
15,000 43.00 56.00 70.00 75.00 78.00 81.00 85.00 87.00 91.00 106.00
20,000 57.00 75.00 93.00 100.00 104.00 108.00 113.00 117.00 121.00 142.00
23,000 65.00 86.00 107.00 115.00 119.80 125.00 130.00 134.00 139.00 163.00
30,000 85.00 113.00 140.00 150.00 156.00 162.00 170.00 175.00 181.00 212.00
40,000 113.00 150.00 187.00 200.00 208.00 217.00 227.00 233.00 242.00 283.00
46,000 130.00 173.00 215.00 230.00 240.00 249.00 261.00 268.00 278.00 326.00
50,000 142.00 188.00 233.00 250.00 260.00 271.00 283.00 292.00 302.00 354.00
55,000 156.00 206.00 257.00 275.00 286.00 298.00 312.00 321.00 332.00 390.00
65,500 186.00 246.00 306.00 327.00 341.00 355.00 371.00 382.00 396.00 464.00

NOTE: Most lenders/servicers mail statements on a quarterly basis, but the interest may be paid monthly with arrangements made through the lender/servicer.


EXAMPLE 1 - Carol borrows $18,000 total during her four years in school and pays monthly interest payments while in school.
Monthly interest payment based on 6.8%: 1st Year--1st Loan $ 23.00 based on $4,000 borrowed
2nd Year--2nd Loan $ 45.00 based on an additional $4,000 borrowed
3rd Year--3rd Loan $ 74.00 based on an additional $5,000 borrowed
4th Year--4th Loan $102.00 based on an additional $5,000 borrowed
Total interest paid over four years during school = $2,928.00
Repayment
Monthly payment (principal and interest) based on a ten (10) year payback = $207.14
Monthly payment if interest had not been paid during school = $240.84
Total amount paid for the loan = $24,856.80
Total amount of loan if interest had not been paid during school = $28,900.80
Carol saves $1,116.00 in interest over ten (10) years by making interest payments during school.

EXAMPLE 2 - John borrows $9,000 total during his four years in school and pays monthly interest payments while in school.
Monthly interest payment based on 6.8%: 1st Year--1st Loan $ 6.00 based on $1,000 borrowed
2nd Year--2nd Loan $ 17.00 based on an additional $2,000 borrowed
3rd Year--3rd Loan $ 34.00 based on an additional $3,000 borrowed
4th Year--4th Loan $ 51.00 based on an additional $3,000 borrowed
Total interest paid over four years during school = $1,296.00
Repayment
Monthly payment (principal and interest) based on a ten (10) year payback = $103.57
Monthly payment if interest had not been paid during school = $118.49
Total amount paid for the loan = $12,428.40
Total amount of loan if interest had not been paid during school = $14,218.00
John saves $493.60 in interest over ten (10) years by making interest payments during school.

BENEFITS OF PAYING INTEREST WHILE IN SCHOOL

Î Monthly payments are lower during repayment Î
Î Total interest paid is less Î

Educational Loan Organizer, Page 6

 YOUR BUDGET WORKSHEET

Educational Loan Debt

Amount Borrowed to Date
Federal Stafford Loan (subsidized) $
Federal Stafford Loan (unsubsidized)
Federal Perkins Loan
Graduate/Professional PLUS Loan
Other Educational Loans
Total $
Monthly Loan Payment
(see page 12—Sample Loan Repayment Schedule) $
Estimated Income
Gross Annual Income $ ________________ Gross Monthly Income $
(see page 3—Estimated Average Entry Level Salaries)
Net Monthly Income (take-home pay) $
(gross monthly income minus deductions)
Estimated Monthly Expenses
Rent/Mortgage Payments $
Utilities
Food
Car Expenses
Insurances
Clothing
Medical
Credit Cards
Savings
Miscellaneous Expenses
Monthly Student Loan Repayment
Total Monthly Expenses $
Net Disposable Income $
(net monthly income minus total monthly expenses)

The net disposable income is your discretionary or available monthly spending income after all your expenses have been
deducted. Your ability to repay a loan will be directly affected by your monthly income after graduation. Your income
will be determined by the type of career you select and by your average living expenses.

Educational Loan Organizer, Page 7

Debt Management

Taking the time to plan for repayment of your student loan now can save you hundreds of dollars in interest costs and
possible harm to your credit. The following are ways that you can plan for successful debt management and repayment
of your student loans:

• Organize all student loan documents in a folder that you have easy access to.
• Estimate your monthly student loan payments by using a repayment calculator.
• Choose a repayment plan that creates a monthly payment you can afford, but also repays your loan as quickly as
possible, so you avoid paying additional interest.
• Develop a realistic monthly budget based on your minimum salary requirement and expenses, including your monthly
student loan payment.
• Ask your lender about starting automatic deduction of your loan payments from your bank account to guarantee on-
time payment.
• You should limit the amount of other types of debt, particularly credit card debt, while you are repaying your student
loans.

Key Points

• Consider your expected income and monthly living expenses before you burden yourself with too large a debt.
• Staying with one lender and guaranty agency helps you manage your loans more easily.
• Paying interest on your loan(s) while in school can save you money in the long run.
• Only borrow when necessary.
• Taking time to plan for successful debt management now can save you money and prevent possible harm to your
credit in the future.
WARNING:
Expensive debts may be hazardous to your “future dreams.”

Educational Loan Organizer, Page 8

 REPORTING CHANGES

Many borrowers think they do not have to worry about managing their educational loans until they
graduate or finish school. NOT TRUE. If you transfer schools, drop credits or extend your studies, YOU
are responsible for keeping your loan in good standing and for reporting certain changes.

Schools periodically update enrollment status, but YOU ultimately are responsible for meeting the terms
of your promissory note. Otherwise, your loan can go into repayment without your knowledge, become
delinquent, and then be placed in default. Keep your lender and current school informed of any name,
address, enrollment status, and school changes.

Avoid problems by immediately notifying your lender and current school in writing if you:
• Change your name.
• Change your address. Do not assume that filing an address change with the post office is enough.
• Change your telephone number.
• Change your Social Security Number (SSN).
• Fail to enroll for the loan period certified.
• Transfer to a new school.
• Drop below half-time enrollment, withdraw, or graduate.
• Have graduation date changes.

Graduating, Dropping Credits, or Leaving School

Reporting Changes
Do not wait for your lender to contact you. If you graduate, leave school, or drop below half-time
enrollment, arrange a repayment schedule.

The financial aid office must advise you of the definition of half-time enrollment at your school, during
regular terms and summer school. If your enrollment status drops to less than half-time, you no longer
qualify for in-school deferment of your loan payments, and you either begin your grace period or your
loans enter repayment. During your grace period, you are not required to make payments, although
unsubsidized interest will continue to accrue.

Transferring Schools or Extending Enrollment

Lenders use the anticipated graduation date listed on your most recent loan application to put your loan
into repayment unless otherwise advised by the school. If the date you complete your studies is different
because you transfer to another school or extend your studies, inform your lender. If you transfer to another
school, inform your lender . . . even if you do not get another loan . . . so that enrollment verification can be
obtained. Otherwise, you may be billed while you are still in school. Request an extension by completing
an in-school deferment form from your servicer or lender and have the school mail it to your servicer or
lender.

Key Points
• Contact your lender in writing when you change your name, address, telephone number, SSN,
enrollment status, school or fail to enroll for the loan period certified.
• Always keep copies of all correspondence relating to your loans for future reference.
• Avoid unexpected early repayment by informing your lender if you transfer schools, even if you
don’t take out another loan, or if you change the date you expect to complete your studies.

Educational Loan Organizer, Page 9

Educational Loan Organizer, Page 10
 LOAN REPAYMENT
Beginning Repayment
When you applied for a student loan, YOU SIGNED A LEGAL AND BINDING NOTE to repay your
lender. As you leave school, it is important that YOU FULFILL THIS OBLIGATION.
• Repayment is YOUR responsibility.
• Contact your lender to arrange repayment of your loan and be aware that you are able to prepay all
or part of your loan(s) without penalty.
• Know when your first payment is due.
• Explore alternative repayment options with your lender.

Contact Your Lender and Arrange Repayment

Immediately after dropping below half-time, leaving, or graduating from school, contact your lender
regarding:
• Available Repayment Options: There are many repayment choices which are available to you. You will
find a brief description of them on pages 13-14. See page 15 for a more in-depth financial breakdown
of your choice. Study options carefully and discuss them with your lender. There IS a repayment plan
that will best meet your needs.
• A Repayment Schedule:  You are allowed at least a six-month grace period on Stafford loans to arrange
a repayment schedule and to gain employment. The schedule lists repayment terms and conditions.
• A Deferment:  Deferments are used after your grace period, if applicable. Contact your lender for
specific information regarding the types of deferments available.

Loan Repayment
• A Forbearance or Hardship Deferment:  If you are willing but unable to meet your repayment
obligation, contact your lender. You may be eligible for a full or partial discharge, forgiveness, or
cancellation of your federal student loan(s) under special circumstances.
• In-School Verification:  Submit enrollment documentation from your new school to your lender if you
transfer schools before the end of your grace period.

Your lender may transfer or sell your loan to a secondary market or employ a servicing agency to disburse
and/or service your loan. If your loan is transferred from the original lender to a new holder, you will
send all payments and information to the new holder. You will be advised of the transfer by mail, so keep
your lender informed of your current address. Otherwise, you will be unaware of the transfer or sale, and
your loan could become delinquent.
NOTE: The terms of your promissory note will remain the same even if your loans are transferred or sold.

Educational Loan Organizer, Page 11

 Sample Loan Repayment Schedule

Finance Finance Finance Finance Finance Finance Finance

Charge Charge Charge Charge Charge Charge Charge
@ @ @ @ @ @ @
3.40% 4.50% 4.72% 5.60% 6.0% 6.8% 8.25%
Loan # of Int. Int. Int. Int. Int. Int. Int.
Amount Pmts Pmt Rate* Pmt Rate* Pmt Rate* Pmt Rate* Pmt Rate* Pmt Rate* Pmt Rate*
3,500 84 $50.00 $407 $50.00 $568 $50.00 $602 $50.00 $748 $50.00 $932 $50.00 $971 $50.00 $1,290
4,000 91 50.00 542 50.00 765 50.00 813 50.00 1,019 50.00 1,286 50.00 1,344 50.00 1,827
4,500 105 50.00 702 50.00 1,000 50.00 1,065 50.00 1,350 51.32 1,659 51.78 1,715 55.19 2,123
5,000 120 50.00 887 51.81 1,219 52.35 1,282 54.51 1,541 57.02 1,844 57.54 1,905 61.32 2,360
5,500 120 54.12 996 57.00 1,340 57.58 1,411 59.96 1,696 62.73 2,028 63.29 2,096 67.45 2,596
7,500 120 73.81 1,358 77.72 1,828 78.52 1,923 81.76 2,312 85.54 2,765 86.31 2,857 91.98 3,539
8,500 120 83.65 1,539 88.09 2,071 88.99 2,180 92.66 2,621 96.94 3,134 97.81 3,239 104.25 4,011
9,000 120 88.57 1,629 93.27 2,193 94.23 2,308 98.12 2,774 102.65 3,318 103.57 3,429 110.38 4,247
10,500 120 103.33 1,901 108.82 2,558 109.93 2,693 114.47 3,237 119.76 3,871 120.83 4,001 128.78 4,955
12,000 120 118.10 2,172 124.36 2,924 125.64 3,077 130.82 3,700 136.86 4,425 138.09 4,572 147.18 5,662
15,000 120 147.62 2,715 155.45 3,655 157.05 3,847 163.53 4,624 176.08 5,531 172.62 5,715 183.97 7,078
20,000 120 196.83 3,620 207.27 4,873 209.40 5,129 218.04 6,166 228.11 7,374 230.16 7,619 245.30 9,437
23,000 120 226.36 4,163 238.36 5,605 240.81 5,898 250.75 7,090 262.33 8,480 264.68 8,762 282.10 10,852
30,000 120 295.25 5,431 310.91 7,310 314.10 7,693 327.06 9,248 342.11 11,061 345.24 11,429 367.95 14,156

Educational Loan Organizer, Page 12

40,000 120 393.17 7,241 414.55 9,747 418.80 10,257 436.08 12,331 456.22 14,748 460.32 15,239 490.61 18,873
46,000 120 452.72 8,327 476.73 11,209 481.63 11,796 501.50 14,181 524.66 16,960 529.36 17,525 564.20 21,704
50,000 120 492.09 9,051 518.19 12,183 523.51 12,821 545.11 15,414 570.28 18,435 575.40 19,048 613.26 23,592
55,000 120 541.29 9,956 570.01 13,401 575.86 14,103 599.62 16,955 627.31 20,278 632.94 20,953 674.58 25,951
60,000 120 590.50 10,561 621.83 14,620 628.21 15,386 654.13 18,496 684.34 22,122 690.48 22,858 735.91 28,310
65,500 120 644.63 11,857 678.83 15,960 685.79 16,796 714.09 20,192 747.07 241.50 753.77 24,953 803.37 30,905

*Figures in this column indicate approximate total interest amount you will pay over the life of your loan.
NOTE: Minimum monthly payment is $50. Borrowers with variable interest rates should contact their lenders to determine current rates and/or monthly payment amounts.
Loan Repayment Options
Making the right choice about your repayment options can give you an advantage in meeting your future loan
debt obligations. Your minimum monthly payment will depend on the type of loan and amount borrowed, but
generally will not be less than $50 per month. You must repay your loan(s) within ten (10) years unless your loans
are consolidated or you have selected special repayment options such as income-sensitive repayment, graduated
or extended repayment, or income-based repayment, or have qualified for a deferment or forbearance. You may
request a shorter repayment schedule and/or change repayment plans. A brief description of the repayment choices
for both the Federal Family Education Loan Program (FFELP) and the Federal Direct Loan Program (FDLP)
are listed below. For more detailed information, please refer to MGA’s brochure, “Loan Repayment Options.”
(Contact your school or MGA for a copy.)
Standard Repayment
• Most common repayment option in both FFELP and FDLP.
• Fixed monthly payments of at least $50 and loan(s) are repaid in full within ten (10) years, excluding periods
of deferment or forbearance.
• Well-suited for borrowers with loan balances of $10,000 or less or for borrowers with higher loan balances
and sufficient income to make monthly payments.
• Minimizes total interest charges, offers a stable payment schedule, and secures a faster payoff.

Graduated Repayment
• Available for both FFELP and FDLP borrowers.
• Monthly payment amount will increase over time, but no payment will be more than three times greater than
any other payment.
• Appealing to borrowers with at least $10,000 in loans, those who have other financial obligations requiring
attention, or whose incomes start low but increase steadily.
• Lower initial payments with a predictable schedule, but the borrower will pay higher interest costs than under
the Standard Repayment option.

Extended Repayment Plan (FFELP)

• Available to first-time FFELP borrowers on or after October 7, 1998.
• Loans must total $30,000 or more.
• Loan repayment has a fixed annual or graduated repayment amount paid over an extended period of time,
with a maximum of 25 years.

Extended Repayment Plan (FDLP)

• Available for Stafford and PLUS loans.
• Appropriate for borrowers with loan balances of $10,000 or more or for borrowers who are facing monetary
difficulties and want to reduce their monthly payments.
• Reduces monthly payments, providing long-term budget relief, although long-term interest costs will rise
substantially.

Income-based Repayment Plan

Effective July 1, 2009, Stafford, Grad PLUS, and some Consolidation loan borrowers who meet the definition
for Partial Financial Hardship will be able to limit their monthly payment to 15 percent of the amount by which
adjusted gross income exceeds 150 percent of the poverty line applicable to the borrower’s family size.

Educational Loan Organizer, Page 13

Income-sensitive Repayment
• Available to FFELP borrowers.
• Attractive to borrowers with loan balances of $10,000 or more, those at risk of defaulting, or those anticipating
initially low incomes which are expected to increase as time passes.
• Repayment terms can be adjusted annually to adapt to income changes, but by reducing early payments and
extending the repayment period, long-term interest costs will increase.
• Requires an annual eligibility determination based on the borrower’s income.
• Extends the permissible income-based repayment period beyond ten (10) years regardless of size of debt.
• May be canceled after a total of 25 years if the borrower qualifies as being economically challenged.

Income-contingent Repayment
• Available to FDLP Stafford borrowers only.
• Appealing to borrowers with loan balances of $10,000 or more, those at risk of defaulting, or those anticipating
initially low incomes that are expected to increase as time passes.
• Payments rise and fall with income changes, but borrowers with low or modest incomes and large loan
balances may experience a major negative amortization and incur extensive interest expenses.

Loan Consolidation
• Available to both FFELP and FDLP borrowers.
• For borrowers with large educational debts, because it allows borrowers to combine multiple educational
loans into a single loan.
• Lower monthly payments; up to 30-year repayment period.
• Longer repayment period means more interest paid.
• Consolidation loans may be prepaid without penalty.

Consolidation loans are not for everyone. Borrower benefits may differ between lenders. Before choosing loan
consolidation, review all options to be sure it’s the right choice. You may be able to change your Consolidation
loan repayment plan. Depending on what types of loans you consolidate and when you consolidate, you may
lose your grace period, deferment options, as well as loan forgiveness benefits and loan cancellation.

Whatever loan repayment option you choose, at some point you may find yourself unable to meet your
debt obligation. CONTACT YOUR LENDER AT ONCE and ask about a deferment or forbearance. See
charts on page 17 and 18.

Deferments and Forbearances

• Provide relief in both FFELP and FDLP for borrowers who find it hard to make monthly payments.
• Allow temporary postponement, suspension, or reduction of payments.
• Help borrowers avoid defaulting on educational loans.
• May increase long-term interest costs.
• Can be used with all previously described repayment options.

Loan Discharge, Forgiveness, and Cancellation

A loan discharge, forgiveness, or cancellation releases a borrower from all obligations to repay the loan. A borrower
may be eligible for a full or partial discharge of federal student loan(s), under the following circumstances:
• If the borrower dies.
• If a physician certifies that the borrower is totally and permanently disabled or the Department of Veterans
Affairs has determined that the borrower meets certain disability criteria.
• The borrower’s school closes and the borrower is unable to complete the course of study.
• If the borrower establishes undue hardship in an adversary proceeding before a bankruptcy court.
• As a result of the crime of identity theft, the borrower’s loan was falsely certified.
• If the borrower’s school falsely certified eligibility for the loan.
• If the borrower’s school failed to make a required refund to the lender on the borrower’s behalf.

Educational Loan Organizer, Page 14

A borrower may be eligible for forgiveness of a portion of the outstanding Stafford or PLUS loan indebtedness
based on certain service as a teacher or in other defined areas of national need. A borrower may qualify for
full or partial cancellation of outstanding Perkins loan debt based on service in certain occupations.

The U.S. Department of Education has provided additional information on deferment, forbearance, loan cancellation,
and forgiveness in the publication Funding Education Beyond High School: The Guide to Federal Student Aid.
To view this publication, visit www.studentaid.ed.gov.

Examples of Debt Levels, Beginning Monthly Payments, and Total Amounts Repaid for All FFELP 1
2
2 Income-sensitive Income-based Repayment
Standard Graduated Extended Repayment
Initial Debt Repayment Income - $25,0003
When Loan
Enters Per Per
Repayment Month Month Max
Per Per after two Per after two First 10th year Monthly
Month Total Month years Total Per Month Total Month years Total Month payment payment Total
$2,500 $50.00 $2,948 $N/A $N/A $N/A $N/A $N/A $N/A $N/A $N/A $28.77 $28.77 $28.77 $3,452
5,000 57.54 6,905 N/A N/A N/A N/A N/A N/A N/A N/A 50.00 50.00 57.54 7,017
7,500 86.31 10,357 N/A N/A N/A N/A N/A N/A N/A N/A 50.00 50.00 86.31 11,882
10,000 115.08 13,810 79.02 96.07 14,556 N/A N/A 83.33 126.09 14,105 50.00 102.28 115.08 18,389
15,000 172.62 20,715 118.53 144.10 21,833 N/A N/A 83.33 203.60 21,545 50.00 102.28 172.62 36,331
20,000 230.16 27,619 158.04 192.14 29,111 N/A N/A 83.33 281.10 28,985 50.00 102.28 230.16 40,525
25,000 287.70 34,524 197.54 240.16 36,389 N/A N/A 83.33 358.60 36,425 50.00 102.28 267.42 41,325
30,000 345.24 41,429 237.05 288.19 43,667 208.22 62,467 83.33 436.10 43,865 50.00 102.28 267.42 41,325
40,000 460.32 55,239 316.07 384.26 58,222 277.63 83,289 83.33 591.10 58,745 50.00 102.28 267.42 41,325
50,000 575.40 69,048 395.09 480.33 72,778 347.04 104,109 83.33 746.10 73,626 50.00 102.28 267.42 41,325
75,000 863.10 103,572 592.63 720.49 109,167 520.55 156,168 83.33 1,133.61 110,826 50.00 102.28 267.42 41,325
100,000 1150.80 138,096 790.18 960.61 145,556 694.07 208,223 83.33 1,521.11 148,026 50.00 102.28 267.42 41,325
3
1
Payments are calculated using the repayment interest rate of 6.8 percent. Assumes a 4 percent annual income growth (Source: Census Bureau), a discount rate
2
Under Graduated repayment and Income-sensitive repayment the monthly payment amount of 5.8 percent, a family size of two, up to $31,000 Subsidized Stafford and the remainder
will increase every two years throughout the repayment schedule. Unsubsidized Stafford. Any outstanding eligible loan balance is forgiven after 25 years.

Educational Loan Organizer, Page 15

Repayment Guidelines

Federal Stafford Loans — Subsidized

Payment of principal and interest on student loans where the federal government pays the interest (subsidized)
begins approximately six (6) months after enrollment ceases to be at least half-time (grace period).

Federal Stafford Loans — Unsubsidized

Payment of principal on student loans where the federal government does NOT pay interest (unsubsidized)
begins approximately six (6) months after enrollment ceases to be at least half-time (grace period); however,
the borrower is responsible for interest payments once the loan is disbursed.

You must pay or capitalize interest on unsubsidized loans regardless of enrollment status. If you allow interest
to be capitalized, you will be charged interest on top of interest when your loans enter repayment. It is your
option to pay the interest on an unsubsidized Stafford loan while you are in school. (See chart on page 6 for
information on paying interest while in school.) If you pay qualifying interest on your federal student loans
during a tax year, you may be eligible to deduct all or a portion of it from your federal income tax liability.
See Publication 970, Tax Benefits for Education.

Federal Supplemental Loans for Students (SLS)

The Federal SLS Loan Program was eliminated effective with loan periods beginning on July 1, 1994. However,
those borrowers with active SLS loans should continue to follow the repayment guidelines. Payment of principal
and interest on a Federal SLS loan began within 60 days after the date of final disbursement. While in school,
a deferment of principal and interest may be authorized by the lender. SLS borrowers who also have a Stafford
loan may defer payment of principal during the six-month grace period; however, interest must be paid to the
lender or capitalized during this period.

Key Points
• Be sure to contact your lender whenever you have a problem or question.
• Always inform your lender of changes in name, address, telephone number, SSN, enrollment status, school,
or fail to enroll for the loan period certified. Loans can be defaulted without your knowledge if your lender
is unable to contact you.
• Your lender schedules your first payment based on the anticipated graduation date listed on your most recent
application unless otherwise advised by your school. Inform your lender of any change in your graduation
date.
• Keep a copy of your loan application, promissory note, disclosure statement, deferment forms, and all other
correspondence to prevent payment disputes in the future.
• Your original lender may transfer or sell your loan to another holder, or employ a servicing agency to handle your
loan. Make all payments to the new holder.
• After you have chosen the repayment option which best fits your needs and have been making regular
payments on your loan, you should periodically review the list of repayment options. Your circumstances
may change over time, and a different option might answer your needs better than the original one you
chose. Contact your lender to discuss the possibilities.

Educational Loan Organizer, Page 16

 Deferment Options
FORM DEFERMENT TYPE TIME CONSOLIDATION
STAFFORD AND SLS LOANS PLUS LOANS
LIMIT LOANS
New1 New1
Borrower Borrower
Pre- 7/1/87 New2 Loans Pre- 7/1/87 New2 Pre New
7/1/87 to Borrower Before 7/1/87 to Borrower 7/1/93 Borrower
Borrower-Based Deferments Borrower 6/30/93 7/1/93 8/15/83 Borrower 6/30/93 7/1/93 Borrower8 7/1/939
In-School: Full-time none x x x x x x x x x
SCH
In-School: Half-time 7 none x x x x x x
Graduate fellowship none x x x x x x x x x
Rehabilitation training none x x x x x x x x x
EDU
Teacher shortage 3 years x
Internship/Residency
2 years x x x
training
TDIS Temporary Total Disability3 3 years x x x x x x
Armed Forces or
3 years x x x
Public Health Services4
National Oceanic and
Atmospheric 3 years x
PUB
Administration Corps 4
Peace Corps, ACTION
Program, and Tax-exempt 3 years x x x
organization volunteer
UNE Unemployment 2 years x x x x x x
M Unemployment 3 years x x x
Parental leave5 6 months x x
PLW
M Mother entering/reentering
1 year x
work force
HRD Economic Hardship 3 years x x x
In-School: Full-time none x
PLU
In-School: Half-time none x
S6
Rehabilitation training none x x x
Military Service10 none x x x x x x x x x
MIL 13
Post-Active Duty Students11 x x x x x x x x x
months12

Note: For more detailed information regarding each
deferment situation, please contact your lender.
1 “New Borrower” 7/1/87 to 6/30/93: A borrower whose first Federal Family
Educational Loan Program (FFELP) loan was made on or after
July 1, 1987, and before July 1, 1993, or who had an outstanding balance on a loan
obtained on or after July 1, 1987, and before July 1, 1993, when he or she obtained a
loan on or after July 1, 1993, or who had no outstanding balance on a Federal
Consolidation loan made before July 1, 1993, that repaid a loan first disbursed before
July 1, 1987.
2 “New Borrower” 7/1/93: A borrower whose outstanding FFELP loans were all made
on or after July 1, 1993, and when his or her first FFELP loan was made on or after
July 1, 1993, had no outstanding FFELP loans that were made before July 1, 1993.
3 A deferment may be granted during periods when the borrower is temporarily totally
disabled or during which the borrower is unable to secure employment because the
borrower is caring for a dependent (including the borrower’s spouse) who is
temporarily totally disabled.
4 Borrowers are eligible for a combined maximum of three (3) years of deferment for
service in the National Oceanic and Atmospheric Administration Corps, Public Health
Services, and U.S. Armed Forces.
5 A parental leave deferment may be granted to a borrower in periods of no more than
six (6) months each time the borrower qualifies.
6 Deferment for parent borrower during which the dependent student for whom the
parent obtained a PLUS loan meets the deferment eligibility requirements.
7 A borrower who received a Federal Consolidation loan before July 1, 1993,
that repaid a loan made before July 1, 1987, or who had an outstanding
balance on a FFELP loan obtained prior to July 1, 1987, when the Federal
Consolidation loan was obtained, is eligible for in-school deferment only if the
borrower attends school full time.
8 A borrower with a Federal Consolidation loan made before July 1, 1993, or a
borrower who receives a Consolidation loan on or after July 1, 1993, who has
any outstanding FFELP loan(s) at the time of consolidation that was first
distributed before
July 1, 1993.
9 A borrower who receives a Federal Consolidation loan made on or after July 1,
1993, who has no outstanding FFELP loans at the time of consolidation that
were on or before July 1, 1993.
10 A deferment may be granted to a borrower who is serving active duty during a
war or other military operation or national emergency (including qualifying
National Guard duty). The borrower’s military service must begin on or after
October 1, 2007, or include that date.
11 A deferment may be granted to a borrower called to active National or State
duty who is a member of the National Guard or Reserves (including retired
members) and who was enrolled at least half time at an eligible school at the
time of, or within six (6) months prior to, being activated. The borrower’s
military service must begin on or after October 1, 2007, or include that date.
12 A post-active duty student deferment may be granted to a borrower for a
period of no more than 13 months each time the borrower qualifies. There is
no limit to how many deferments of this type a borrower may receive. If a
borrower is also eligible for a military service deferment, the 13-month period
may run concurrently with the 180-day post-military mobilization period.
Source: Common Manual, July 2009

Educational Loan Organizer, Page 17

 FORBEARANCE ELIGIBILITY CHART
TYPE LENGTH
Discretionary
Financial difficulties due to personal problems when the
borrower is unable to make regularly scheduled payments1. The period established in the terms of the forbearance agreement (not to exceed 12-month increments); no maximum.
Reduced-payment forbearance1
Mandatory
Medical or dental internship/residency2, 3
Department of Defense student loan repayment programs3
12-month increments (or a lesser period equal to actual period during which the borrower is eligible); no maximum.
National service2, 3
Active Military State Duty2, 3, 9
Debt exceeds monthly income4, 5 12-month increments; three (3) years maximum.
Teacher Loan Forgiveness2, 3 Period while borrower maintains forgiveness eligibility. 12-month increments.
Mandatory Administrative
Local or national emergency7
Military mobilization8 Period specified by the U.S. Department of Education or guarantor, plus 30 days following the period.
Designated disaster area7
Repayment accommodation Three-year maximum for variable interest rate; Five-year maximum for income-sensitive repayment.
Death Date lender receives reliable notification of death to date lender receives death certificate or other acceptable documentation, not to exceed 60 days.
The period while the lender is awaiting a completed loan forgiveness application, not to exceed 60 days.
Teacher Loan Forgiveness2, 6
Date lender receives a completed loan forgiveness application to date lender receives either a denial or the loan forgiveness amount from the guarantor.
Administrative
Borrower ineligible for deferment6 Beginning date to ending date of the ineligible deferment.
Delinquency before a deferment or certain forbearances6 First date of overdue payment to the day before the beginning date of deferment or other forbearance type.
Forgiveness under Income-Based Repayment6 60 days for lender to collect and process documentation to determine a borrower’s eligibility.
Late notification of out-of-school dates6 Date borrower should have entered repayment to date first or next payment was established.
Bankruptcy filing6 The earlier of the first date of overdue payment or receipt of reliable information that the borrower has filed bankruptcy to date of discharge determination or repurchase.
Date lender receives physician’s written request for additional time to date lender receives a complete, certified loan discharge application or other form(s) approved by

Educational Loan Organizer, Page 18

the Department, if the borrower submits the certification to the lender within 90 days of the date the physician certified the application, not to exceed 60 days.
Total and Permanent Disablilty6
For a non-disabled comaker, the earlier of the date that the lender receives the loan discharge application or the date the lender receives notice from the guarantor that
one comaker is totally and permanently disabled, to the date that the lender receives notice of the final discharge determination.

Spouses and parents of September 11, 2001, victims6 60 days from date application sent to borrower if application is not received by lender, and from date guarantor receives documentation to date of determination.

Repurchase of a non-bankruptcy claim6
Death
Closed school
Closed school or false certification6
False Certification--Identity Theft6
Delinquency after deferment or Mandatory Forbearance6
The period that the loan was held by the guarantor due to a claim purchase.
Date after mandatory administrative forbearance due to reliable notification of death ends to date lender receives death certificate or other acceptable documentation,
not to exceed 60 days.
Period of unofficial closure notice as specified by guarantor.
60 days from date application sent to borrower if application is not received by lender, and from date guarantor receives documentation to date of determination.
Date eligibility requirements sent to individual to date request and documentation returned, not to exceed 60 days; and from date guarantor receives documentation to
date of determination.
Deferment or mandatory forbearance end date to establishment of next payment due date.
 Date borrower requests deferment, forbearance, change in repayment plan, or loan consolidation to date supporting documentation is processed by lender, not to
Documentation collection and processing6
exceed 60 days.
60 days from date application sent to borrower if application is not received by lender, and from date guarantor receives documentation to date of determination.
Unpaid refund discharge The period during guarantor review and ending on the date lender receives the guarantor’s determination for a borrower who requests a review of a denial
determination.
Unpaid refund6 End date of initial 60-day mandatory administrative forbearance to receipt of completed discharge request, and during period of determination of discharge eligibility.
New out-of-school dates after conversion6 Original repayment start date to adjusted start date.
Loan sale or transfer6 First date of delinquency to date loan is sold or transferred, if the loan is less than 60 days delinquent.
Ineligible summer bridge extension6 Day after expiration of borrower’s last in-school deferment to the 30th day after fall classes begin.
Cure6 Date of earliest unexcused violation to date lender receives a full payment or new signed repayment agreement.
Natural disasters, local or national emergencies, military mobilization6 From date borrower affected, not to exceed three (3) months for each occurrence.
Repayment alignment-SLS/Stafford4 First payment due date to last day of the longest applicable Stafford loan grace period.

Note: For more detailed information regarding each forbearance situation, please contact your lender.
1 Lender must document the borrower’s request, the reason for the forbearance, and the terms of the forbearance agreement.
2 For borrowers only.
3 A request, supporting documentation from the authorized official(s) indicating the beginning and ending dates, and a verbal or written agreement are required.
4 A request is required.
5 A request and supporting documentation of monthly income and monthly payments on Title IV education loan

obligations, and a verbal or written agreement are required.

6 Lender must notify the borrower (or individual or endorser, if applicable) and document the beginning and ending

dates and reason for the forbearance in borrower history record.

7 Notice from the U.S. Department of Education or guarantor is required.
8 Documentation showing borrower is subject to a military mobilization is required.
9 For military service that begins on or after October 1, 2007, or includes that date.

Source: Common Manual, July 2009

Educational Loan Organizer, Page 19

Educational Loan Organizer, Page 20
 PROTECTING YOUR CREDIT RATING
Beware of Identity Theft
Identity theft is a serious crime. It occurs when your personal information is stolen and used without your
knowledge to commit fraud or other crimes. Identity theft can cost you time and money. It can destroy
your credit and ruin your good name.

Working with other government agencies and organizations, the Federal Trade Commission (FTC) has
developed a Web site www.ftc.gov/bcp/edu/microsites/idtheft// to educate consumers about identity theft.
The site provides information about what steps to take, your legal rights, how to handle specific problems
you may encounter on the way to clearing your name, and what to watch for in the future.

Establishing Good Credit

Knowing and accepting the terms of repayment on your student loan is vital to establishing and maintaining
good credit. Here are a few steps you need to follow:

• Keep in contact with your lender at all times. Your lender depends on you for all current
information.
• Initiate a repayment schedule with your lender.

Protecting Your Credit Rating

• Make all scheduled payments on time. If you miss a payment, contact your lender.
• If you need to extend or delay repayment obligations, contact your lender.

What Is a Delinquent Loan?

If you are willing but unable to make scheduled payments, request assistance from your lender within 30
days of your loan payment due date. If payment is not received, your loan will become delinquent. When
your loan is delinquent, the lender, servicer, and the Michigan Guaranty Agency will attempt to contact
you by letter(s), telephone, and by contacting your references.

Avoiding Delinquency
If you are having difficulty making your scheduled student loan payments, contact your lender for possible
solutions. You may use the following steps:

1. Review your situation with your lender and ask about deferments for which you qualify.
2. Request a forbearance from your lender to either lower or stop your student loan payments for a short
period of time.

What Is a Defaulted Loan?

If you refuse to repay your loan or cannot be located, your lender places the loan into default. Your lender
will default your loan when it is determined that you have not complied with the terms of your promissory
note, or after 270 days of delinquency. After default, your loan is purchased by the Michigan Guaranty
Agency for collection. The full amount of the loan, accrued interest, collection costs, and other costs are
due and payable to the Michigan Guaranty Agency. For details regarding repayment of a defaulted loan,
contact MGA’s Collections Unit at 1-800-642-5626, ext. 60600. If your defaulted loan(s) is held by the
U.S. Department of Education, call 1-800-621-3115 or visit www.1800IWillPay.com.

Educational Loan Organizer, Page 21

Consequences of Defaulting
If you fail to repay a loan, you will be considered in default, and the following may result:

• Your default status may be reported to a national credit bureau and have a negative effect on your credit
rating for seven years.
• You will be pursued for payment by collection agencies.
• The entire unpaid amount of your loan, including interest, may become due and payable immediately.
• You will lose deferment, repayment, and forgiveness options.
• Your wages may be garnished.
• Your savings account(s) may be attached.
• You may be taken to court if you fail to make satisfactory arrangements and/or payments on your defaulted
loan.
• The U.S. Internal Revenue Service and the State Treasury Department will seize any federal and state income
tax refunds you are owed.
• You will be assessed collection costs, including attorney fees.
• You may not be eligible for future student loans and other federal/state student aid.

Key Points
• Students who repay their loans maintain a good credit record. Students who default face serious penalties
including a bad credit rating.
• Keep in contact with your lender at all times, even while you are a student. Failure to respond to notices
from your lender can cause your loan to go into default.
• Submit written changes of name and address to your lender; otherwise, important mail may not reach
you.
• Keep copies of all correspondence until your loan is fully repaid.
• Check with your lender if you think you may be eligible for a loan deferment. Even after you begin
repaying your loan, you may enter into situations that will permit you to defer principal payments.
• You are legally responsible for the full repayment of your educational loans. You also are fully liable
for the consequences if you default.

Educational Loan Organizer, Page 22

 GLOSSARY OF TERMS AND RECORD KEEPING
Accrued Interest Interest that accumulates on the unpaid balance of a loan.

Capitalization The process of adding unpaid interest to the principal balance of an

educational loan, thereby increasing the monthly payment and the total
amount to be repaid.

Consolidation A loan program that allows a lender to pay off a borrower’s educational
loans by creating one new loan.

Default Failure to meet the terms of the promissory note or other written agreement.
For a loan repayable in monthly installments, a loan is considered to be in
default when this failure to repay persists for 270 days.

Deferment A period of time during repayment in which the borrower, upon meeting
certain conditions, is not required to make payments of loan principal. In
some situations, the federal government will pay the interest.

Delinquency The period which begins when a borrower fails to make the equivalent of
one full payment after the payment is due.

Glossary of Terms and Record Keeping

Disbursement The transfer of loan proceeds by a lender to a borrower, to a borrower in
care of his/her school, to another lender, or to an escrow agent by issuance
of a check or by electronic funds transfer.

Disclosure Statement A statement of the actual cost and terms of the loan including interest rate
and additional finance charges.

Due Diligence Thorough, extensive, and persistent procedure for servicing and collecting
loans by a lender or its lender servicer.

Entrance Interview A loan repayment and debt management counseling session required by
federal regulations that is arranged and conducted by a school’s financial aid
administrator for students who are receiving their first federally guaranteed
student loan associated with attendance at the school. This counseling
session must be conducted before the student can receive the proceeds of
the first disbursement of any federally guaranteed education loan. Some
schools participate in internet online entrance interview programs. Check
with your financial aid office to see if this is an option.

Exit Interview A loan repayment and debt management counseling session required by
federal regulations that is arranged and conducted by a school’s financial
aid adminstrator for students who have received federally guaranteed loans
while attending school. This counseling session must be conducted before
the student graduates or leaves the school, whenever possible. Some schools
participate in internet online exit interview programs. Check with your
financial aid office to see if this is an option.

Garnishment of Wages The deduction of a portion of a borrower’s paycheck, with or without the
borrower’s consent. A lender, guaranty agency, or the government may take
this action to force repayment of a loan that is in default.

Federal Default Fee A fee deducted from the borrower’s loan proceeds prior to disbursement and
paid to the guaranty agency that insures the loan. By law the fee cannot
exceed 1% of the loan amount.

Forbearance An authorized period of time during which the lender agrees to temporarily
postpone a borrower’s principal repayment obligation or to reduce the
amount of the payments. Interest payments continue to be the borrower’s
responsibility. Forbearances may be granted at the lender’s discretion when
a borrower demonstrates good intentions of repaying but is unable to do
so.

Educational Loan Organizer, Page 23

Grace Period The period between the time borrowers leave school or drop below half-time
study and the time they are obligated to begin repaying their loans — usually
six months, depending on the type of loan.

Guaranty Agency State agency or private non-profit institution that insures student loans and
administers the Federal Family Education Loan Program for the federal
government.

Holder The institution with legal title to a borrower’s loan. The holder may be the lender
that originally made the loan, a new lender, or a secondary market to which the
lender has sold the loan, or in the event of a default, the guaranty agency.

Interest A fee charged to a borrower for the use of a lender’s money. Interest is calculated
as a percentage of the principal loan amount. The rate may remain constant
throughout the life of the loan (fixed rate) or it may change at specified times
(variable rate).

Lender A financial institution (bank, credit union, or certain state agencies) that provides
the funds for students and parents to borrow educational loans. Some schools
also are lenders.

Master Promissory Note The promissory note a student signs when taking out a Stafford loan. The Master
Promissory Note covers both the subsidized and unsubsidized Stafford loans the
student may receive for the same enrollment period. The Master Promissory Note
also covers subsidized and unsubsidized Stafford loans the student may receive
for future enrollment periods of up to ten (10) years.

Origination Fee A fee charged by the federal government and deducted from loan proceeds
before disbursement to partially offset administrative costs of the Federal Family
Education Loan Program.

Principal Amount a person borrows (which may increase as a result of capitalized interest)
and the amount on which interest is paid.

Promissory Note The legal document borrowers sign when they get an educational loan. It lists
conditions under which the money is borrowed and the terms under which
borrowers agree to repay the loan with interest. The agreement also includes
information about any grace period, deferment, or cancellation provisions, along
with the borrower’s rights and responsibilities with respect to the loan.

Secondary Market An organization established to purchase educational loans from lenders. This
allows lenders to replenish capital to fund new loans. Selling loans is a common
practice among lenders and does not affect the terms and conditions under which
the loan was originally made.

Servicer A company employed by a lender, secondary market, school, U.S. Department

of Education, or guarantor to perform the administrative tasks that are associated
with educational loans.

Subsidized Loan A need-based loan on which interest is paid by the federal government during
the in-school, grace, and authorized deferment periods, and (if applicable) post-
deferment grace periods, if the loan meets certain eligibility requirements.

Unsubsidized Loan A non-need-based loan on which interest is not paid by the federal government.
Borrowers are responsible for interest on all unsubsidized loans from the date
the loan is disbursed.

Educational Loan Organizer, Page 24

 Educational Loan Record

Create a record of your educational loans by recording the pertinent information for each loan received. Periodically determine your current total educational
borrowing as a reminder of the extent to which you have committed future earnings.
Date of Name of Loan School Enrollment Interest    Loan
Loan Program Lender Attended Period Rate    Amount

Educational Loan Organizer, Page 25

$

Educational Indebtedness Total/Subtotal This Page $

(continued on back)
 Educational Loan Record (continued)

Date of Name of Loan School Enrollment Interest    Loan

Loan Program Lender Attended Period Rate    Amount

Educational Loan Organizer, Page 26

$

Educational Indebtedness Total/Subtotal This Page $

Educational Indebtedness Previous Page $

GRAND TOTAL $
 Educational Loan Record Contacts
School
Contact Person
Phone Number
Lender
Contact Person
Phone Number
Servicer
Contact Person
Phone Number
Holder
Contact Person
Phone Number

School
Contact Person
Phone Number
Lender
Contact Person
Phone Number
Servicer
Contact Person
Phone Number
Holder
Contact Person
Phone Number

School
Contact Person
Phone Number
Lender
Contact Person
Phone Number
Servicer
Contact Person
Phone Number
Holder
Contact Person
Phone Number

Educational Loan Organizer, Page 27

 Telephone Call and Correspondence Log

Keep a record of telephone calls and correspondence you initiate or receive regarding your student loan(s).

Date Individual Organization Reason

This material was prepared by the Michigan Guaranty Agency (MGA) of the Michigan Higher Education Assistance
Authority (MHEAA) under authority of the Higher Education Act of 1965, as amended, and printed in compliance with
Executive Directive 1991-6. MHEAA and MGA comply with all federal laws and regulations prohibiting discrimination
and with all requirements and regulations of the U.S. Department of Education.

Michigan Department of Treasury, 3144 (Rev. 11-09)

Copies Printed: 20,000 Total Cost: $9,336.13 Cost per Copy: $0.47

Educational Loan Organizer, Page 28