Loan Repayment/Default Prevention and Financial Literacy
Student Loan Repayment/Debt Management
Tompkins Cortland Community College participates in the Federal Direct Student Loan program. We encourage students to make informed decisions when taking out a student loan. Only borrow the amount of funds you need to successfully complete your education. Students are legally obligated to repay a student loan once it is disbursed, even if they do not complete their program. We encourage you to fully read and understand the terms and conditions of each loan type before accepting a loan. Federal student loans are available to students after completing the Free Application for Federal Student Aid (FAFSA) at Student Aid | FAFSA.
The Federal Direct Student Loan program allows students to:
- borrow directly from the federal government and have a single contact - the National Student Loan Database System (NSLDS)- for everything related to the repayment of your loans, even if you receive Federal Direct Loans at different schools.
- have online access to your Federal Direct Loan account information 24 hours a day, 7 days a week, at NSLDS online: https://studentaid.gov.
- choose from several repayment plans that are designed to meet the needs of almost any borrower, including income-based repayment. You may also switch repayment plans at any time if your needs change.
- Please note that if you are OFFERED a student loan at Tompkins Cortland Community College, it does not mean you have received it. You must accept your offered loans by going to your MyTC3 and then to Self Service and under Finances to complete the Loan Request form. The Entrance Counseling and a Master Promissory Note will need to be completed by going to https://studentaid.gov before your loans can be processed. You must be enrolled and attending at least 6 credit hours that are required by your declared major, and you must meet general aid eligibility requirements.
If you withdraw or drop below 6 credit hours, you must complete Exit Counseling. All students that have received proceeds from the Federal Direct Student Loan Program and are not returning to TC3 are required to complete an Exit Counseling session. If you never receive Federal Direct Student Loans, you are not required to complete Exit Counseling. This counseling session is intended to review your listed rights and responsibilities as a loan holder. The counseling session is completed online and includes the following topics:
- The necessity of repaying your student loan
- Subsidized vs. Unsubsidized Stafford Loans
- Your repayment options
- Deferment and forbearance
- Reasons for loan cancellation
- Loan consolidation and loan serialization
- Keeping in touch with your lender/servicer
- Update contact information with your lender/servicer
- Avoiding delinquency & default
- Other information resources
In order to receive the best possible information concerning your Federal Student Loans you must sign in to StudentAid.gov to complete exit counseling. Once you have completed counseling, TC3 will be electronically notified. You will need your Federal PIN to login into the StudentAid.gov site, if you do not remember your Federal PIN you can Request a Duplicate PIN by going to Student Aid | Forgot ID.
You are not alone when it comes to student loans. Tompkins Cortland Community College has partnered with Inceptia, a National Student Loan Program (NSLP) division, to provide you with FREE assistance on your Federal student loan obligations to ensure successful loan repayment. Inceptia’s friendly customer representatives may reach out to you if your loan(s) become delinquent. Inceptia is not a collection agency. We have partnered with them to help you explore a wide variety of possibilities such as alternative repayment plans, deferment, consolidation, discharge, forgiveness, and forbearance options. Inceptia will stay in touch with you via phone calls, letters, and/or emails to help you find answers to your questions and solutions to your issues. For additional resources including information on repayment options, please visit Inceptia’s Federal Student Loan Overview website Student Knowledge HQ | Home Page
Resources for Students:
- National Student Loan Data System (NSLDS)
The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s central database for student financial aid records. Federal loans disbursed to students or parents will be submitted to NSLDS and will be accessible by guaranty agencies, lenders, and institutions determined to be authorized users of the data system. Student and parent borrowers can track and manage their federal student loans and grants online at https://studentaid.gov. This secured site displays information on loans and grants, including amounts, outstanding balances, and status. Student and parent borrowers can also find contact information for their loan servicer.
- To learn about repayment. You may also complete the loan exit counseling at any time—even if the student plans to receive more loans.
- Navigate the student loan repayment process with confidence. Learn about your repayment options using Loan Simulator. This tool helps you calculate your student loan payments, and choose a repayment option that best fits your budget https://studentaid.gov/loan-simulator/.
Loan Debt Management:
Loan Repayment Information and Resources
It's never too early to explore your loan repayment options. This Loan Simulator can help!
Loan Simulator is a new tool to help you make decisions about your student loans. Use it to find a repayment plan that meets your budget, or to plan for future borrowing. This new tool from the Department of Education will guide you through a series of questions based on your intended goals:
- Find out how making extra payments will pay your loan faster
- Decide whether you want to temporarily stop payments or lower your monthly payment
- Use Loan Simulator as a planning tool to find out what happens when you borrow more money to pay for future education expenses
Federal regulations require TC3 to conduct “exit loan counseling” once your enrollment falls below half-time (six credit hours). Your loan servicer must also be notified, and the six-month “Grace Period” begins.
Borrower Grace Periods
After you graduate, leave school, or drop below half-time enrollment, you have a period of time before you have to begin repayment. This “grace period” will be six months for Direct Federal Student Loans.
PLUS Borrowers—The repayment period for all PLUS loans begins on the date the loan is fully disbursed, and the first payment is due within 60 days of the final disbursement. However, a PLUS borrower can defer repayment while the student is enrolled at least half-time, and, for PLUS loans first disbursed on or after July 1, 2008, for an additional six months after the student is no longer enrolled at least half-time. Interest that accrues during these periods will be capitalized if not paid by the borrower during the deferment period.
Make Your Payments on Time
Your loan servicer will provide information about repayment and will notify you of the date loan repayment begins. It is very important that you make your full loan payment on time either monthly (which is usually when you’ll pay) or according to your repayment schedule. If you don’t, you could end up in default, which has serious consequences. (See Default below.) Student loans are just as real as car loans or mortgages. You have to pay back your student loans.
Get Your Loan Information
The U.S. Department of Educations’ National Student Loan Data System (NSLDS) provides information on your federal loans, including loan types, disbursed amounts, outstanding principal and interest, and the total amount of all your loans. To access your Federal Student loans, go to Student Aid | Manage Loans.
If you are not sure who your loan servicer is, you can look it up at Student Aid | Servicers or call the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243; TTY 1-800-730-8913).
You have a choice of several repayment plans that are designed to meet the different needs of individual borrowers. The amount you pay and the length of time to repay your loans will vary depending on the repayment plan you choose. Contact your student loan servicer or visit studentloans.gov for more information about the various repayment plans and to calculate your estimated repayment amount under each of the different plans.
Difficulty Making Payments
If you’re having trouble making payments on your loans, remember that if something causes you to not be able to afford your payments at all, it's important to contact the loan servicer right away. Especially with federal loans, there's almost always something your loan holder can do to provide relief and help you avoid late fees and credit hits.
- Changing repayment plans.
- Requesting a deferment—If you meet certain requirements, a deferment allows you to temporarily stop making payments on your loan. Interest continues to accrue during deferment periods.
- Requesting forbearance—In limited circumstances, if you don’t meet the eligibility requirements for a deferment but are temporarily unable to make your loan payments, forbearance would allow you to temporarily stop making payments on your loan, temporarily make smaller payments, or extend the time for making payments. Interest continues to accrue during periods of forbearance.
- Consolidation—Allows you to combine your federal student loans into a single loan. Visit the Loan Consolidation page at studentaid.gov to see whether consolidation is right for you.
If you stop making payments and do not get a deferment or forbearance, your loan could go into default, which has serious consequences (see below).
Loan Default Prevention:
A student loan will go into default when you fail to make payments and your account is 270 days delinquent. Once the loan is considered in default, the entire balance (principal, interest, and collection fees) is immediately due and payable. If you default, it means you failed to make payments on your student loan according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. In other words, you failed to make your loan payments as scheduled. Your school, the financial institution that made or owns your loan, your loan guarantor and the federal government can all take action to recover the money you owe.
Ways to Avoid Student Loan Default
- Understand your rights and responsibilities regarding your repayment obligation as well as your repayment options.
- Borrow for college expenses only. Borrow only the amount you need and only what you can reasonably expect to be able to repay.
- Keep all records regarding your loan and make copies of all letters, canceled checks, and any documents you sign.
- Notify your lender or servicer when you have a change of address, phone number, or name. Also, notify your lender or servicer if you change schools or your enrollment status changes.
- Seek help as early as possible if you have any difficulty maintaining your student loan repayment arrangement.
- Talk to your lender or student loan guarantor if you have any questions about the particular terms of your loan.
- Keep credit card debt to a minimum or avoid credit card debt completely.
- Create and maintain a budget that is within your monthly income.
- Consider making nominal loan payments while in school. This will reduce the amount you owe after graduation.
What are the Consequences of Loan Default?
The consequences of default can be severe:
- The entire unpaid balance of your loan and any interest is immediately due and payable.
- You lose eligibility for deferment, forbearance, and repayment plans.
- You lose eligibility for additional federal student aid.
- Your loan account is assigned to a collection agency.
- Your loan will be reported as delinquent to credit bureaus, damaging your credit rating. This will affect your ability to buy a car or house or to get a credit card.
- Your federal and state taxes may be withheld through a tax offset. This means that the Internal Revenue Service can take your federal and state tax refund to collect any of your defaulted student loan debt.
- Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney’s fees, and any other costs associated with the collection process.
- Your employer (at the request of the federal government) can withhold money from your paycheck and send the money to the government. This process is called wage garnishment.
- The loan holder can take legal action against you, and you may not be able to purchase or sell assets such as real estate.
- Federal employees face the possibility of having 15% of their disposable pay offset by their employer toward repayment of their loan through Federal Salary Offset.
- It will take years to reestablish your credit and recover from default.
For more information, and to learn what actions to take if you default on your loan, contact the Department of Education’s Default Resolution Group at 1-800-621-3115.
FSA Student Loan Ombudsman Contact
The Federal Student Aid Ombudsman Group of the U.S. Department of Education is dedicated to helping resolve disputes related to Direct Loans, Federal Family Education loan (FFEL) Program, Guaranteed Student Loans, and Perkins Loans. The Ombudsman Group is a neutral, informal, and confidential resource to help resolve disputes about your federal student loans. Before contacting the Ombudsman Group, be sure to follow the recommendations provided to you at Student Aid | Common Issues. If you have tried to resolve the problems with your loan, but haven’t been able to, use the information below to contact the FSA Student Loan Ombudsman Group.
Via online assistance: https://studentaid.gov/feedback-ombudsman/disputes/prepare
Via telephone: 877-557-2575
Via fax: 606-396-4821
Via mail: FSA Ombudsman Group, P.O. Box 1843, Monticello, KY 42633
Financial Literacy and Default Prevention
College is a time of newfound freedom for many students. But that can spell trouble if that freedom applies to personal finances too. Students need to understand basic money management skills such as living within a budget and handling credit and debt. A solid financial foundation can lead to a lifetime of financial success.
The following publications provide important information about protecting yourself from scams and getting the most for your money.
Credit and Debt Management
Credit is the ability to borrow money or access goods or services with the promise that you’ll repay it in the future, often with interest. It can be a useful tool, but it can also get you into trouble. Your creditworthiness can affect your ability to finish your education, buy a car or house, or even get a job since a good repayment history demonstrates responsibility, a trait most employers seek. The goal of good debt management is to show those who inquire about your credit that you are responsible and in control of your spending.
What is a credit report?
A credit report is an organized list of the information related to your credit activity. Credit reports may include:
- To total amount of each loan you have borrowed or the credit limit for each credit card
- How often you paid your credit or loan payment on time, and the amount you paid
- Any missed or late payments as well as any bad debts
It is important to review your credit report at least once a year to ensure that the information is accurate. If you find a mistake, you should contact the credit reporting agency that provided the report containing the error. The major credit reporting companies are:
Where to obtain a free credit report?
What is a credit score?
A credit score is a prediction of your credit behavior, such as how likely you are to pay a loan back on time, based on information from your credit report. Learn more about credit score at Consumer Finance.gov | What is a credit score
How to maintain a good credit score?
Usually, a higher credit score makes it easier to qualify for a loan and may result in a better interest rate or loan terms. There are some steps you can take to make sure you maintain a good credit score. You can:
*Pay your bills on time.
*Keep your credit card balance(s) low or at zero
*Check your credit report regularly
*Only apply for credit you need
Contact your lender or creditor if you are experiencing difficulties and fear that you might fall behind on your payments.
Ten Warning Signs of Too Much Debt
If you are wondering whether you have too much debt, then there’s a good change that you do. Having too much debt can lead to other financial problems, such as not being able to save money for the future, missing bill payments, or having to borrow more money just to stay afloat.
Here are a few signs that you may have more debt than you can handle:
- You've drained your savings trying to pay off your debt.
- You only make the minimum payment on your credit cards each month.
- You pay bills late because you don't have any money.
- You have at least one credit card that is near, at or over the credit limit.
- You continue to make more purchases on your credit card(s) while trying to pay it off.
- You use cash advances from your credit cards to pay other bills.
- You have been denied credit.
- You don't know how much total debt you have.
- Your finances cause you to lose sleep at night.
- You don’t answer the phone because it might be a bill collector.
Debt Management Resources
If you are overwhelmed with debt, you are not alone. There are resources that can help you overcome your debt burden and help to move toward financial free. You can contact your lender to ask about repayment options, consider debt counseling or consolidation, or contact the National Foundation for Credit Counseling.
For other online resources you can visit:
Balancing student life with your personal finances can be hard; however, with planning, you’ll be able to set yourself up for a healthy financial future. Here are some tips for reaching your financial goals:
- Create a budget that includes a new line item: savings! Break down your budget either weekly or monthly and figure out what takes priority. Start with yourself! Setting aside even a few dollars into your savings account will help you reach your goals.
- Cut down on unnecessary expenses. Balance your needs (those things you need to survive such as food, housing, and clothes) and wants (those things you desire for fun, entertainment, or comfort). Both are important but make sure your wants align with your goals.
- Use the 30 Day Rule. If you want something but don’t need it to survive, take a step back for 30 days. This will give you time to think about whether you should purchase it, if it will truly add value to your life, and if it is worth the price. It will also give you time to search for a better deal.
- Don’t compare your spending and finances with your friends or online influencers. The Fear of Missing Out (FOMO) is real! But you have your own goals and staying true to yourself will help get you there.
- Finally, get help if you need it. Sticking with your budget and saving when you are a student is hard. The National Foundation for Credit Counseling has a nonprofit financial counseling network available to help you.
- Make a list before shopping and stick to it. Don’t shop hungry and use your coupons!
Tips to Save Money While in College
Here are some tips to help you learn how to save some money.
- Look for cheap (or FREE) entertainment. Consider potluck dinners with friends instead of going out to eat. Anyone up for a game night?
- When you do go out, plan! Know how much you want to spend and stick with it. Also, always ask if you can get a discount with your student ID.
- Review your billing statements to make sure you are not charged unnecessary fees.
- Check your subscriptions and get rid of the ones you don’t use.
- Search for cheaper rates for cell phone, internet, or cable providers or call to negotiate your rates.
- Consider taking extra classes each semester to graduate earlier.
- Rent your textbooks or buy them second-hand.
Student Loan Debt Management
Federal student loans are an excellent resource to help pay your educational expenses and a great way to establish a solid financial future. It’s important that you borrow responsibly so you’ll be able to repay your loan and reach your financial goals.
When you borrow a federal student loan, you may not be required to make payments on that loan while you are in school, but you are required to repay the loan—including fees and interest—when you graduate or stop attending school at least half-time. Borrow only what you need and get an idea of your future income so you can realistically afford to repay your loans when you leave school.