Entering repayment
Exit counselling
This must be undertaken prior to your departure from La Trobe University. Complete an Exit Counselling Interview before you leave University or graduate.
You will be counseled on your obligations, rights and options under the terms of your loan including repayment options, deferments and other important information you may need during your repayment term.
During this session you will need to provide the following information:
- Name and address of closest living relative
- Two references (not the same as closest living relative) and with different addresses.
Repayment plans
When you leave university or drop below half-time enrolment, your grace period begins. This gives you up to six months before you must start making monthly principal and interest payments on your loans. If you re-enter university at least half time during your grace period, it is renewed for another six months so you have the full grace period available when you leave university again.
Before repayment starts, you will be provided with repayment options and a Repayment Schedule from your lender or servicer for each type of loan you have.
If you do not receive these schedules towards the end of your grace period, contact your lender because repayment begins whether or not you’re aware of it. Also, all of the borrower benefits will only apply IF you make your first payment on time.
If you plan ahead, the repayment process will go smoothly. Start by knowing all your options. You will have a choice to make regarding the type of repayment plan you would like to use:
- Standard Repayment
Under this plan, your monthly payment will remain the same over the entire repayment period. This repayment plan is the most economical. The term is for a maximum of 10 years. - Graduated Repayment
As the name suggests, this plan typically begins with smaller payments, followed by a gradual increase in payments at specified intervals. Under this plan you will probably pay more interest over the term of the loan. The term is for a maximum of 10 years. - Income-Sensitive Repayment
This plan ties the size of your payment to your income level, with adjustments to your payment made annually. The monthly payment must be large enough to cover accrued interest charges. This plan also may increase the amount of interest you pay over the term of your loan. The term is up to 10 years. However, your lender can use forbearance to lengthen the term for up to five additional years (15 years total). - Extended Repayment
This option is available for those who first borrowed on or after October 7, 1998, and who then accumulated loans that totalled more than $30,000. If you’re one of these borrowers, you may extend your Standard or Graduated Repayment plan for up to a total of 25 years. - Income-based Repayment
This option caps your payments at no more than 15 per cent of your discretionary income, which is based on your income, family size, and total amount borrowed. This plan may extend your repayment period, which will result in you paying more interest over the life of the loan. However, after 25 years of payments, any remaining debt is discharged. To qualify for this plan, you must show partial financial hardship. For more information on the Income-Based Repayment option, please refer to this information page or the ASA website.
A typical repayment plan assumes the loan principal plus interest, spread out over 10 years. An example is shown below and you can also download (pdf 15KB) and print this repayment plan example.
Student debt on graduation
Students attending La Trobe University have a variety of differing educational experiences, and the debt levels of each student reflects individual choices and knowledge about the usage of the loan program options.
We are committed to ensuring that students leave this institution with the lowest amount of debt possible and we will actively work with you to ensure this. Through your life cycle as a student, we will be actively tracking your debt and benchmarking it with others who have studied in the same method and course that you are enrolled in.
For more information on loan replayment options, please visit the ASA website.
Loan consolidation
By the time you finish university, you may have a number of loans. These loans may be with more than one lender and may have different terms. Repayment can become fairly complicated if you have to make different payments at different times of the month. Consolidation is a way to make repayment of multiple loans less complicated.
You can consolidate all your student loans into one loan with a fixed rate and a single, lower monthly payment. You pay no additional fees to consolidate your loans. More importantly, you may reduce the amount of each monthly payment by extending your repayment term. But remember that a longer repayment term increases the amount of interest you pay over the term of your loan.
Consolidation loans offer terms ranging from 10 to 30 years. Repayment options on consolidation loans include: Standard, Graduated and Income Sensitive repayment plans. To be eligible for a consolidation loan, you must be in a grace period, repayment, deferment, or forbearance.
You should first discuss consolidation with your existing lenders. If your lender does not consolidate, they will most likely be able to recommend another lender.
While interest rates and length of repayment will not vary between lenders, some may offer incentives (such as interest rate reductions for on-time repayments) to their customers that others do not. It is highly recommended that you shop around for those incentives before deciding on a consolidating lender.
For more information about consolidation, its benefits and disadvantages, please refer to the ASA website.
Consolidation loan terms
| Loan term | Amount owed |
|---|---|
| 10 years | Less than $7,500 |
| 12 years | $7,500 to $9,999 |
| 15 years | $10,000 to $19,999 |
| 20 years | $20,000 to $39,999 |
| 25 years | $40,000 to $59,999 |
| 30 years | $60,000 or more |
Deferment
One major advantage of borrowing through the Federal Family Education Loan Program (FFELP) is the option you have to postpone repayment for a period of time under certain conditions. However, it is important to note how interest must be paid or not paid on various loans:
- Federal Subsidized Stafford Loans: interest is paid by the federal government during in-university, grace, and authorized deferment periods.
- Federal Unsubsidized Stafford Loans: the borrower is responsible for paying the interest that accrues during in-university, grace, and authorized deferment periods.
Some Common Deferment Options (for borrowers whose first loan was disbursed on or after July 1, 1993)
| Type of deferment | Deferment period | Loans eligible | PDF application forms |
|---|---|---|---|
| In-university at least half time | No time limit (however you must still be progressing toward a degree) | Federal Subsidized Stafford, Unsubsidized Stafford, SLS, PLUS, Perkins, and Consolidation loans | PDF 61.9 KB |
| Temporary Total Disability Deferment Request | Federal Subsidized Stafford, Unsubsidized Stafford, PLUS, Consolidation loans | PDF 68.8KB |
|
| Parental Leave/Working Mother Deferment Request | Federal Subsidized Stafford, Unsubsidized Stafford, PLUS, Consolidation loans | PDF 70KB |
|
| Public Service Deferment | Federal Subsidized Stafford, Unsubsidized Stafford, PLUS, Consolidation loans | PDF 71.7KB |
|
| Unemployment | 3-year limit (granted for 6 months at a time to a maximum of 36 months) | Federal Subsidized Stafford, Unsubsidized Stafford, SLS, PLUS, Perkins, and Consolidation loans | PDF 61.8KB |
| Economic Hardship (earning less than minimum wage, poverty level wage, or other specified criteria) | 3-year limit (granted for no more than one year at a time) | Federal Subsidized Stafford, Unsubsidized Stafford, SLS, PLUS, Perkins, and Consolidation loans | PDF 64.5KB |
| Military |
Federal Subsidized Stafford, Unsubsidized Stafford, SLS, PLUS, Perkins, and Consolidation loans | PDF 94.4KB |
|
| Parent PLUS borrower |
2 to 3 years, depending on the lender's and/or servicers' terms |
Federal Subsidized Stafford, Unsubsidized Stafford, SLS, PLUS, Perkins, and Consolidation loans | PDF 73.2KB |
You may need to complete and submit separate deferment forms for different types of loans. With FFELP loans, one deferment form is usually all that is necessary.
You should continue making loan payments until you have been notified that the deferment is granted.
Keep copies of all forms and correspondence related to your deferment.
For more information on defrement, please visit the ASA website.
Forbearance
If you find yourself in temporary financial difficulty and no deferment option applies to you, you can request forbearance from your lender or servicer. Forbearance is granted at the lender’s discretion and allows you to have months added to the term of your loan, temporarily reduce the amount of your monthly payment or temporarily suspend monthly payments.
There are several forbearance options available. The two most common types of forbearance are:
- Economic Hardship Forbearance: If your student loan payments exceed 20% of your total monthly income you can apply for this type of forbearance. It is given in 12- month increments for a maximum of three years.
- Administrative Forbearance: May be granted by your lender if you are delinquent on payments prior to entering a period of deferment.
Note that interest continues to accrue on your loan during forbearance. That interest must be repaid, which can result in higher monthly payments once the forbearance has ended. The federal government does not pay the interest on Subsidized Stafford loans while your loans are in forbearance.
For more information on forebearance, please visit the ASA website.
Delinquency and default
When your monthly payment is 30 days or more overdue you are considered to be delinquent on your loan. Most lenders and servicers will contact you directly about delinquent payments and begin collection activity. Your delinquency may be reported to a credit bureau which could damage your credit rating.
If you expect to have a problem making a monthly payment, contact your lender immediately. It is always easier to discuss alternatives before the due date rather than after a payment is late.
If you fall 270 days behind on a scheduled payment you are legally in default on your loan agreement. The lender can assume that you are not going to repay; and the lender may declare the entire amount you owe, including interest, as immediately due and payable.
Defaults are reported to credit bureaus and stay on your credit record, whether or not you eventually pay off the loan. The consequences of default are severe.
For more information on delinquency and default, borrowers' options and timelines, please visit the ASA's webpages on delinquency and default.
