If you have taken federal Federal Direct Subsidized or Unsubsidized Loans or a Federal Direct GradPLUS loan prior to entering HLS you qualify for deferment of those loans while enrolled at HLS. In addition, since all of the federal loan programs and the Harvard Law School loans have an in-school deferment option, not only can you defer your prior education loans now, you can also defer these types of loans in the future should you decide to pursue an additional degree with an accredited institution.
Loan Deferment
In order to defer the payment of your loans, it is always best to confirm with each of your lenders the process through which the deferment will take place. It may be that you do not have to submit any paperwork to defer your loan. This is true if your particular lender participates in the National Student Loan Data System (NSLDS). NSLDS is a database that receives enrollment information from university registrars at participating schools (Harvard University is a participating school). Lenders are allowed to download enrollment information directly from this clearinghouse. They can then match the data they download with their borrower records, thereby verifying whether a student/borrower is enrolled in a full-time degree program. If the student meets the enrollment requirement for deferment, the student is automatically deferred without any necessary paper documentation.
If your school or lender does not use the services of NSLDS, then you must obtain a paper deferment form from each lender and submit it to the Law School Registrar’s Office at the time of registration in the fall. The Registrar will verify that you are enrolled in a full-time degree program and will forward your deferment form to the lender.
Regardless of which process is used, it is your responsibility to follow up with your lenders to be sure that your deferment has been approved and received by the lender in order to avoid a negative impact on your credit by missing monthly loan payments. Furthermore, you should be prepared to make an additional month’s payment on your loan(s) in case the deferment form does not go through before your next due date.
Once your deferment is approved, your loans will defer in the same manner as they did when you were previously enrolled. For example, if you had a subsidized Stafford loan and interest did not accrue while you were enrolled, then the loan will not accrue interest while you are enrolled here at the Law School. Similarly, if your loan did accrue interest while you were previously enrolled, your loan will accrue interest while you are here at the Law School.
Each lender has their own policy on how often they will verify your enrollment status, therefore, you will need to ask your lender if you need to submit a deferment form each semester while enrolled, or once at the beginning of each academic year. Students who are denied a supplemental loan are often denied because they did not file for deferment. The lender does not know that you want to defer payments on your loans unless you inform them by submitting either an electronic or paper deferment form.
Loan Forbearance
If you are temporarily unable to meet your repayment schedule and are not eligible for a deferment, you may be eligible to receive forbearance. Interest continues to accrue on loans during any period of forbearance. You may also be required to make monthly interest payments. Forbearance is different from deferment in that it helps students experiencing financial hardship to lower their monthly payment amount during repayment. Lenders may grant forbearance for various reasons: financial hardship, poor health, national military mobilization, national emergency, or service in AmeriCorps. You must continue making scheduled payments until you are notified that the forbearance has been granted. Failure to do so may result in a past due status and a negative credit rating.
Forbearance is not tied to enrollment status. If you have borrowed federal student loans, you are eligible for up to three years of forbearance. It is unlikely that a lender will give you three years of forbearance all at once. You will most likely receive six to nine months of forbearance and then have to re-apply if more time is needed. In order to obtain forbearance, you must submit the appropriate paperwork to each lender from whom you are requesting forbearance. The lender will review your application and negotiate a lower monthly payment with you. Sometimes the lender will give you a zero monthly payment amount based on your income and debt; however, many lenders will require you to make interest-only payments to minimize the amount of interest you will pay overall, since interest accrues during forbearance.
Keep in mind that during forbearance any unpaid interest is capitalized and added onto the principal balance when the loan comes out of forbearance. If you choose to consolidate your loans and at some point need to request forbearance, you may lose any repayment incentive benefits that a specific lender offered. Check with the lender before applying for forbearance, then weigh the pros and cons according to your personal finances. There are also certain types of forbearance and you will want to check with your lender regarding the type of forbearance that is best for you given your specific situation at the time of your request. See if you qualify for an Economic Hardship Deferment before you request forbearance. This type of forbearance will give you the added benefit of minimizing the amount of interest you accrue during forbearance since Economic Hardship Deferment will allow your subsidized loans to remain subsidized.
Students and alumni who use forbearance will need to be aware that LIPP will not cover any interest that has accrued during a period of forbearance.
Private lenders are not required to offer you any forbearance options but many lenders will work with a borrower in order to assist them in making on-time payments. Additionally, you may lose your borrower benefits if you put your loans into forbearance since many of them require the first 12 payments to be made on time. A private loan lender or servicer may charge a fee for the use of forbearance. For more information on forbearance contact your lender and review the federal guidelines.
Loan Consolidation
There are two types of student loan consolidation programs: Federal Direct Consolidation and private loan consolidation.
FEDERAL DIRECT CONSOLIDATION
Federal Direct Consolidation allows you to combine one or more federal loans (Perkins, Direct/Stafford and Grad PLUS) into one new loan with one interest rate. The interest rate will depending on which loans you consolidate and will be based on the weighted average of your outstanding loan amounts at the loans’ current interest rates. You will lose some federal loan benefits when you consolidate your loans such as loan forgiveness on the Perkins loan program or your grace period depending on when you choose to consolidate. Since determining the interest rate is based on individual borrowing, it is best for you to contact your federal loan servicer and discuss your consolidation options with them. They will be able to tell you the rate you would receive and all of the other details involved in federal loan consolidation. You will have all of the same repayment plan options that are available with non-consolidated loans. Keep in mind that once you consolidate your loans, they cannot be separated out again since the other loans no longer exist. For more general information on Federal Direct Consolidation go to the Federal Student Aid site.
PRIVATE LOAN CONSOLIDATION
Private loan consolidation programs vary according to the lender. This means that some lenders will only consolidate your private loans as others may allow you to consolidate both your federal and your private loans. The interest rate is set by the lender and is not the weighted average like federal loan consolidation. Private loan consolidation generally has shorter repayment terms and you’ll want to review your options carefully before signing off on the consolidation. You will lose all of your federal loan benefits such as deferment and forbearance when you choose to consolidate your loan through a private consolidation group. This means that should you be unable to make your monthly payment you would have that benefit to fall back on.
There are some points you’ll want to look into if you are thinking about consolidation and you are interested in LIPP assistance. The consolidation/refinance needs to be specific to your education loans and maintain the basic characteristics of an education loan in order for it to be eligible for LIPP assistance. To ensure your new loan will remain eligible for LIPP you should contact the LIPP office at LIPP@law.harvard.edu prior to initiating the consolidation/refinance. In order to remain LIPP eligible, your new consolidated/refinanced loan must meet the following conditions:
- It must have a repayment term of no less than 10 years
- It must have a fixed interest rate (some consolidation loans offer variable rates which carry substantial risk of significant interest rate increases in the future)
For your own protection, the benefits that you should be most concerned about maintaining are the 10 year repayment term, the ability to pre-pay on your loans, and your forbearance and deferment options. You should be aware that a consolidation will make you ineligible for the Federal Public Interest Loan Forgiveness Program, since only Federal student loans are covered by that program. Additionally, many consolidation or refinance loans do not offer forbearance or deferment options. There is a substantial risk to giving up these options, because you will not be eligible for a temporary suspension of payment should you need one for financial reasons such as unemployment or returning to school. Should you choose to return for a PhD you will not be eligible for LIPP coverage during the first 2 years of your PhD program on any consolidated/refinanced loan which does not have an in-school deferment option; you would need to make arrangements to cover those payments without LIPP assistance.
Dispute and Problem Resolution Contact
The Federal Student Aid (FSA) Ombudsman works with student loan borrowers to resolve loan disputes that the borrower is unable to resolve on their own. Here is how to reach the FSA Ombudsman:
United States Department of Education
FSA Ombudsman Group
P.O. Box 1843
Monticello, KY 42633
phone (877) 557-2575 fax 606-396-4821
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