Be informed, not afraid, about student loan repayment
Student LoanDown readers, recently we received this question (typos and all — we publish 'em as is) on one of my older posts from kat s., a concerned grandmother:
I would like to ask you a queston. My grandson was attendin college. One semester he could not go because he had gotten mononucleosis. He was so sick from that. He was going to school through having a studeent loan. He also went on the Pell Grant. He has his own apartment and his only means of support is what he makes at Applee's. Whgich he makes pretty good money. He wants so badly to go back to college and finish ge4tting his degree, but even though the student loan place where he got his loan has so far said nothing since he had to skip the one semester, he feels thagt if he applies again that they will turn him down and make him try to pay back his loan at one time. He wants to go on the Pell Grant instgead of taking the ute of increasing the student loan. Is there a way that this can be done while having the outstanding loan balance from the student loan or will they make him pay back everything right away before he can go back.
Well kat, you and your grandson certainly are not alone in your concerns about student loan repayment. I hope my answers will calm your fears and help get your grandson back to school, where he belongs!
First of all, if your grandson is not currently attending school but has not heard from his lender yet, it's possible that he is in his grace period. On Federal Stafford Loans (the most common type of student loan, and the one I'm assuming he has) students have a six-month grace period between the time they graduate, leave school, or drop below half-time enrollment and the time that they have to begin making payments.
Once your grandson does have to start making payments, he won't have to pay back the full student loan amount all at once. Generally student loans are repaid over time — not in an immediate lump sum.
However, if your grandson doesn't know what's happening with his loans right now, ultimately it's HIS responsibility to find out. The worst thing he could do is bury his head in the sand 
and pretend like those obligations don't exist. Please encourage him to contact his student loan lender, let them know that he is not attending school right now, and work out a repayment plan. Ignoring the issue could damage his credit and/or impact his eligibility for future student loans — big risks, in my opinion.
When your grandson is ready to go back to school, he also should contact his lender. The lender will put his loans into an "in-school" status, and then he will not be required to make payments as long as he is enrolled at least half-time.
In terms of the Pell Grant , I certainly can see why your grandson would prefer to use that to fund his education — it's a grant, which doesn't need to be repaid! However, please keep in mind that Pell Grants are based on financial need and are awarded to low-income students. If he qualified for a Pell Grant when he initially started school but now is making more money at his job, it's possible that he won't be able to qualify for it again. Your grandson's best bet would be to talk with the financial aid office at his school and see what kind of funding he's eligible for when he's ready to return.
Sure, student loan repayment can be scary, but when you have some information on your side, it doesn't have to be.
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Comments (7)
Found in Back to school, College, Federal loans, Financial aid, Financial education, Grants, Paying, Preparing, Student loans, Tuition, Wells Fargo Bank
Comments
Upon graduating, I consolidated my undergraduate loans with a company called CFS. A few months later, I decided to go to grad school and qualified for in-school deferment.
Now I have completed grad school (in December 2007) and haven't heard anything from CFS. Since there were rumors that the interest rate might drop after the T-bill was set (May 31), I have been waiting to consolidate those loans.
I'm a bit lost now. I know a lot of companies have recently opted out of loan consolidation and last I checked with CFS, they have been bought by another company. I wanted to consolidate all my loans with the same company so it's easier to keep track of my repayment. What are the chances that CFS cancelled my first consolidation? Should they be contacting me, or is it my job to track them down? Since my 6-months grace period is ending soon, would it be wise to consolidate my grad loans with another company now?
Thanks!
Posted by: Candice | June 3, 2008 02:24 PM
Hi Candice--Thanks for your question.
I did a bit of research, and it appears that CFS was purchsed by Chase. While I can't speculate on what happened with your loans, my advice to you would be to contact Chase directly to find out. Go to the Chase Student Loan Servicing web site (www.cslservicing.com) and click on "Contact Us" in the right-hand navigation bar.
Even if you haven't received a notice from your lender/servicer, you are still responsible for repaying the loan--with or without a monthly statement. It is likely your lender/servicer will send something around 60 days before the due date, but you should contact your lender if you haven't heard from them about repayment of the Consolidation Loan or your graduate school loans.
If your loans have variable interest rates, those rates will drop significantly on July 1. Therefore, it may be better for you to apply for the new Consolidation loan in early July because the new repayment rate will be lower than your current grace rate.
Hope that helps. Please let me know if I can answer any other questions.
Posted by: Staci Schiller | June 9, 2008 12:35 PM
My daughter is having a hard time getting in college she went for a year then she couldnt get no finanial assistance she been trying find low rate student loan can u help and long would this take she dosent have but like a couple weeks to get evrything worked
Posted by: Donna | July 24, 2008 01:27 PM
Donna, has your daughter spoken with the financial aid office at her school? That's the first and best place she should go for help.
Depending on what type of school she attends, most likely the financial aid office will encourage her to apply for federal aid first. In order to do so, she'll need to complete the FAFSA (Free Application for Federal Student Aid). If she hasn't already submitted the FAFSA, she needs to do it immediately because it takes a couple of weeks to get the results.
Even if she doesn't qualify for need-based aid, she should be eligible for some federal loan funds. Federal loans have the lowest interest rates and the most options for repayment, so after any grants or scholarships, these are your daughter's best bet. If she needs additional funding once she has exhausted those resources, she could seek a private student loan from a lender like Wells Fargo.
The process can take awhile, though, so encourage her to get started now!
Posted by: Staci Schiller | July 25, 2008 07:46 AM
I recently applied for a student loan online. I have a previous student loan with Wells Fargo and Iam going back to school this Fall and needed a loan to pay for it. How long does it take before Wells Fargo gives me a yes or no answer to the loan?
Posted by: Courtney | July 26, 2008 10:49 PM
Hi Courtney--Sorry for the delayed response to your question! If you didn't receive an instant credit decision online, you should've received a phone call from our fulfillment team within 24-48 hours (two business days) after you applied. You also should have received a letter.
Posted by: Staci Schiller | August 4, 2008 09:07 AM
Hi my name is kiya I'm looking for additional fundind for my exspense. I attend colorado technical university. What do I need to do to help my problems in try to get this funding. how long will it take.
Posted by: kiya | August 19, 2008 03:03 PM