VCOM College Catalog and Student Handbook

Loan Consolidation A borrower with multiple federal loans or multiple loan servicers for federal loans may want to consider the option of loan consolidation to help in managing their finances. Loan consolidation combines all the federal loans into one loan and stretches the repayment period out to 30 years; therefore, loan consolidation should be avoided if possible. This process can reduce monthly loan payments; however, extending the term of a loan increases the total interest you accrue and the total amount that you are required to repay. Additionally, federal loans that are already at fixed interest rates may not be good candidates for consolidation because the consolidation interest rate calculation will round the rate up to the nearest one-eighth of a percent, resulting in more interest charges over the life of the loan. Loan Deferment Borrowers who qualify may defer (postpone) principal payments on their federal loans. Private loans are eligible for deferments only according to the terms of their promissory notes and do not follow the same rules as federal loans. The following are some of the deferment options available for federal loans: • In-School - Borrower attends school at an eligible institution at least half-time. • Unemployment - Borrower is seeking employment but has not been able to secure full-time employment. • Rehabilitation Training - Borrower participates in a full-time rehabilitation training program. • Graduate Fellowship - Borrower is studying full-time in an eligible graduate fellowship program. • Economic Hardship - Borrower is experiencing an unusual economic hardship. • Cancer treatment deferment • Military service and post-active-duty student deferment Loan Forbearance Temporary, unexpected hardships that do not qualify for a deferment may be approved by a lender for forbearance. This is at the discretion of the lender and is usually for a temporary situation. Forbearance may be available on all loans, both federal and private. Principal payments are postponed or reduced, but interest continues to accrue. Interest may be paid during forbearance, or it can be capitalized at the end of the forbearance period. Loan Forgiveness Programs and Service Contracts Loan Forgiveness Programs and Service Contracts are offered by various state agencies, organizations, hospitals, and others. There is no national listing available; however, students are encouraged to research the possibilities. Programs such as the National Health Service Corps Scholarship Program and the Armed Forces Health Professions Scholarship Program pay for tuition and other costs of attendance and may be applied for as early as their first year. Currently, the federal government offers loan repayment to graduates of residencies who work in certain federally qualified health centers or with the Indian Health Service. Loan forgiveness may also exist when working for certain non-profits. Loan Forgiveness Programs and Service Contracts generally require a commitment from the student to practice in designated geographical locations for minimum time periods and may also include stipulations as to the type of practice specialty. In return, the programs may pay for tuition, books, supplies, equipment, health insurance, living stipends, or a combination of these expenses while the student is in school. A student may also contact a hospital or organization directly and request this type of financial assistance. The VCOM Office of Financial Aid has sample contracts for hospitals or organizations that have no history or experience in this type of assistance.

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