Repaying Your Student Loans

Making loan payments internationally

Perkins loan and Mount Holyoke College and Global loan borrowers living abroad may use Flywire to make loan payments via the student portal login at ECSI.

What is a consolidation loan?

Consolidation allows you to simplify the repayment process by combining several types of federal education loans into one loan so you make one payment a month. MHC Loans cannot be federally consolidated. A consolidation loan replaces and is used to pay off these existing loans. The interest rate is fixed and is calculated according to a formula established by law. The rate is the weighted average of the current rates charged on the loans being consolidated, rounded up to the nearest one-eighth of a percent. This rate is fixed for the life of the consolidation loan.

You should carefully consider whether consolidation is right for you and for which loans. For example, you might lose some cancellation or interest deferment benefits if you include a Federal Perkins Loan. Also, you wouldn’t want to lose any borrower benefits offered under your existing nonconsolidated loans, such as interest rate discounts or principal rebates, which can significantly reduce the cost of repaying your loans.

You may have a longer period of time to repay your consolidation loan than you would for the individual student loans you’re repaying, and thus possibly a lower monthly payment, but this means you’ll also pay more interest over time. In fact, consolidation can double the total interest expense.

Once made, consolidation loans cannot be unmade because the loans that were consolidated have been paid off and no longer exist. Take the time to study your consolidation options before you apply.

What is loan deferment?

A loan deferment allows you to temporarily halt making payments on your loan. You may be eligible for a deferment if you are enrolled at least half-time as a regular student at an eligible, accredited institution in the United States or at a comparable institution outside the United States.

During a deferment you do not have to pay either principal or interest on Federal Perkins Loans, subsidized Federal Direct Stafford Loans or Mount Holyoke College/Global Loans. For unsubsidized Federal Direct Stafford Loans, Direct PLUS Loans and FFEL PLUS Loans, you can postpone paying principal, but interest will continue to accrue.

What is forbearance?

A forbearance allows for a temporary postponement of payments, extension of time allowed for making payments or acceptance of a lesser payment amount. Interest continues to accrue during any period of forbearance. You may request a forbearance if you are willing but financially unable to make the required payments on a loan.

In order to obtain a forbearance, you must request it in writing and provide supporting documentation to support your claim that you are financially unable to make payments. The following documentation must be supplied to support the request for forbearance:

• Copies of the most recent monthly pay statement showing gross income, and
• Copies of the most recent monthly statements showing the amount owed on your Title IV loans.

Forbearance may also be granted for one of the following reasons:

• Extended illness.
• Department of Education authorized periods due to local/national emergency or national military mobilization.
• Service in Americorps.

What is default?

Default occurs if you don't make an installment payment when due or don't comply with the promissory note's other terms. The consequences of default are severe and long lasting. Make sure to contact your lender as soon as you think you might have trouble making payments. Consequences of default include the following:

• The entire loan balance can be immediately due and payable.
• You will lose your deferment options.
• You won't be eligible for additional federal student aid.
• Your account might be turned over to a collection agency.
• Your credit rating can be damaged. You might find it difficult to receive credit cards, car loans, mortgages or rent an apartment. Poor credit can even affect getting a job. Default will remain on your credit report for up to seven years.
• Your federal tax refunds might be withheld.
• Your employer, at the request of the loan holder, may withhold part of your wages.
• You might be unable to obtain a professional license in some states.

What is discharge and cancellation?

In some cases, federal student loans can be discharged (canceled) or reduced. A discharge releases you from all obligations to repay the loan. The most common reasons for discharge are total and permanent disability, or death. Discharge provisions vary depending on whether you have a Federal Perkins Loan or Federal Direct Stafford Loan.

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Cancellation (also called forgiveness) can be granted if you perform certain types of service. (Note: A defaulted loan cannot be canceled based on qualifying service).

See the Federal Student Aid website for details on discharge and cancellation of federal loans.

If you think you qualify for discharge, you must apply to the holder of your loan. For Perkins Loans, contact ECSI. For Federal Direct Stafford Loans, contact the Direct Loan Servicing Center. FAFSA loan discharge and cancellation forms are also available online.