Managing Loan Debt and Financial Literacy

The best information about your federal student loans can be found on Studentaid.gov, which will provide information on your loan servicer(s) and loan amount(s). Use the Repayment Estimator to compare repayment plans. For non-federal student loan debt, check annualcreditreport.com.

Many federal loans have a 6-month grace period following graduation. Examples include: loans borrowed at Syracuse Law, Graduate PLUS Loans borrowed after 7/1/08, and undergraduate federal loans that did not go into repayment prior to law school). Loans that DO NOT  have a 6-month grace period following graduation include: Federal Consolidation Loans, Federal Student Loan debt that was in repayment prior to the student attending law school, and Graduate PLUS Loans borrowed prior to July 1, 2008.

Deferments are an entitlement if you meet the requirements as specified in the promissory note and provide the necessary documentation to the loan holder/servicer. Requirements can be any of the following:

• In school (enrolled at least 1/2 time in a degree program)
• Post Enrollment (Graduate PLUS)
• Full-time enrollment in an eligible graduate fellowship program
• Serving on active duty in the military

Forbearance is an agreement between you and your loan holder/servicer that allows for a temporary postponement or reduction of payments due to one of the following circumstances:

• Loan Debt Burden (loan payment is 20% or more than your total monthly gross income)
• Acquired role in a National Service position (such as AmeriCorps)
• National Guard
• Hardship or reduced payment may be available (contact your loan servicer for approval)

Once borrowers leave their “In-School” status, they may combine multiple federal student loans into one new loan with a fixed interest rate (based on the weighted average interest rate of the loans that are being consolidated).  Federal student loan consolidation is available through the William D. Ford Direct Loan program. Consolidation is NOT the best choice for every borrower–it is a “forever” decision that cannot be reversed! Before making this decision, we recommend either contacting the Financial Aid Office or consulting with a counselor through AccessConnex by AccessLex at AccessLex.org.

If you do choose to consolidate, apply at Studentaid.gov.

• Do I have more than one servicer? Borrowers with multiple lenders and/or multiple loan servicers may elect to consolidate for the convenience of making a single payment to a single servicer.

• Do I hope to pursue Public Service Loan Forgiveness? Borrowers with FFEL debt who plan to pursue public interest jobs must consolidate eligible loans into a Direct Consolidation Loan in order to make qualifying payments for Public Service Loan Forgiveness.

• Are my monthly payments manageable? Depending on your total debt, a consolidation loan could extend repayment up to 30 years. A longer repayment period lowers the monthly payment (but increases the grand total paid).

Repayment Plans Based on Loans Owed

For Income-Based Repayment Plans, payment is adjusted annually based on household income, household size, federal poverty guideline, and state of residence. Negative amortization is allowed. Payment amount won’t exceed 10 year Standard Plan amount. Loan balance forgiven at end of repayment period. Amount forgiven may be subject to income tax liability.

An income-driven repayment (IDR) plan bases your monthly student loan payment amount on your income and family size. Monthly payments in IDR are generally a percentage of your discretionary income. Each year, borrowers must recertify their IDR plan, updating income and family size.

A federal court issued an injunction preventing the U.S. Department of Education (ED) from implementing parts of the Saving on a Valuable Education (SAVE) Plan and other IDR plans, including—for example—SAVE’s monthly payment formula and loan forgiveness under the SAVE, PAYE, and ICR Plans. Please visit StudentAid.gov/saveaction for further information.

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The PSLF Program was developed to encourage borrowers to enter into full-time public service employment. Eligible loans may be forgiven after 120 months of qualifying payments while the borrower works in an eligible public service position.

• Qualifying repayment plans include all income-driven repayment (IDR) plans (plans that base your monthly payment on your income and household size) and the 10-year Standard Repayment Plan. The four IDR plans include: SAVE, PAYE, IBR, & ICR.
• Eligible employers include: non-profit, tax exempt 501 (c) (3) organizations; federal, state, local, or tribal government; law enforcement, military, public interest law services (including prosecution or public defense or legal advocacy in low-income communities at a non-profit organization); public education, etc.
• The 120 qualifying payments do NOT need to be made consecutively.

You may be eligible to deduct a portion of the student loan interest you pay on your federal income tax return.  Student loan interest is interest you paid during the year on a qualified student loan.  Eligibility for the student loan interest deduction is based on your adjusted gross income.  The student loan interest deduction is taken as an adjustment to income, meaning, you are not required to itemize deductions on Form 1040’s Schedule A. Refer to the IRS website for more information on Tax Benefits for Education.

Federal student loans may be discharged if you become totally and permanently disabled or if you die. Discharge will also occur if a loan was falsely certified in your name as a result of identity theft. Additional details about loan discharge can be found on studentaid.gov.