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Loan Servicing
- Does a student who attends “less than half time” during some semesters use any of the grace period as it relates to beginning repayment?
If a Federal Stafford-loan borrower drops to less-than-half-time status for a period that exceeds six months, the student is considered to have used the entire grace period and will be moved into repayment status.
If the student's period of less-than-half-time enrollment is shorter than the six-month grace period, the student regains the entire grace-period eligibility when returning to at-least-half-time enrollment. One example is a student who enrolls and continues at-least-half-time enrollment for two years. Then that student’s enrollment status drops to less than half time for a period from May to the end of September, or five months. On Sept. 20, the student re-enrolls at a half-time level and completes all degree requirements in May of the following year. The student at that point is entitled to the full six-month grace period prior to entering repayment.
- Do federal regulations specify how an income-sensitive repayment schedule is calculated, or is this left to the discretion of the lender or servicer?
There are no regulatory or statutory provisions specific to income-sensitive payment calculations. These issues should be addressed as part of each lender's policies.
- When borrowers wish to revise their choice of repayment schedule, must borrowers submit a signed, written request, or is a verbal request acceptable?
The borrower is not required to submit the request in writing. Verbal or e-mail requests are acceptable. The lender should maintain an accurate record of the request in the borrower's loan history or loan file.
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